We all know if something seems too good to be true, it probably is. But that doesn’t stop plenty of Australians losing money to investment scams. In fact, disturbing figures show that more Australians lose money to investment scams than any other type.
An investment scam involves an investment opportunity, which usually promises high yields or guaranteed returns in a short space of time. Often, you’ll be contacted about the bogus opportunity out of the blue, and it could appear to come from a legitimate source, like a bank, a broker, or a financial advisor. The opportunity could be delivered via a range of means - through an email, phone call, social media ad, or in less common cases, in person - and the scammers usually use high pressure tactics or offer a short window of opportunity to invest.
According to the Australian Competition and Consumer Commission’s (ACCC) Scamwatch website, Australians lost more than $82 million to investment scams in March 2022 alone.
Leanne Vale, Director Financial Crimes and Cyber Resilience for Customer Owned Banking Association says, "If you're presented with an investment opportunity that seems like an incredible deal, before you make any decisions, pause, and ask yourself if it actually does fall into the ‘too good to be true’ basket."
"It’s the same as if you saw a $100,000 caravan advertised somewhere for $10,000. Chances are, you’re going to send your money to a scammer and you’re going to lose it," she says.
Like with most scams, the scammers are using more and more sophisticated tools to dupe people into investing, and just because something looks legitimate at face value, does not necessarily mean it is.
"They're getting harder to spot, so before investing in anything, always seek independent advice and do your due diligence," says Leanne.
If you have access to a financial advisor who is registered with ASIC, you can reach out to them for advice. You can also do your own independent research on who the investment is coming from. For example, if the investment opportunity purports to come from a bank or legitimate and highly regarded company, reach out to that entity separately through their official channels. Find the contact details yourself, don’t just use the phone number or email address given to you by the person offering the investment opportunity. ASIC also has a list of companies you should not deal with.
If you suspect you may have provided your details to a scammer or have already sent money, contact your bank or financial institution immediately to see if any transactions can be reversed, and don't make any further payments unless you have confirmed the investment is not a scam. It is also a good idea to change your banking passwords for extra security.
No matter whether there is a legitimate problem or not, Leanne says a telco or utility company will never ask for access to your device. And if there is an issue and a company does reach out to you, they would never hold it against you for doing your own due diligence and calling them back independently.