Investment scams peak in Australia - how you can spot one

October is cyber security awareness month and a good reminder to look at what you could be doing to protect your personal information and your money.

Losses to scams have skyrocketed in recent years, with combined losses reported to different Australian government agencies up a whopping 80% over a 12-month period. 

What’s more, investment scams were identified as the most commonly reported type of scam, which is why it’s important to stay alert and protect what’s yours*.

What is a scam? 

A scam is where someone tricks you into handing over your money or personal details. They often appear real, catch you by surprise, and pressure you to act right away.

What sets an investment scam apart is it generally aims to convince people that an investment is real, that the returns are high, and risks are low. This can be very appealing if it sounds legit.

What scams cost Australians the most?

Over $3 billion in total losses were reported to government agencies in 2022.

Investment scams made up half of all scam-related financial losses and collectively cost us about $1.5 billion*.

What are the common types of investment scams? 

A few of the more common scams to look out for include:

• Super scams – these offer to help you withdraw your super money early or move it into a self-managed super fund, but you never see the money. 
• Crypto scams – these may invite you to invest in fake cryptocurrency exchanges, websites or apps. They may also involve making payments with cryptocurrencies, like bitcoin or ether, which aren’t easily recovered as they can be hard to track.
• Ponzi schemes – these pay existing investors with funds collected from new investors but there’s no real investment.
• Imposter bonds – these provide real looking websites almost identical to well-known financial services companies, offering favourable fake bonds or term deposits.
• Fake initial public offerings – these are timed with legitimate company listings and impersonate companies raising capital and offering shares to the public for the first time.

How do scammers contact you?

The top five contact methods scammers use to target people, and how much Australians have reported losing through each channel are listed below.

1. Text message - $28 million
2. Phone - $141 million
3. Email - $77 million
4. Internet - $74 million
5. Social networking and online forums - $80 million.

While text messages topped the list for contact preference, Australians reported losing substantially more money to phone and social media scams*.

Who’s most likely to be scammed? 

Older Australians are the most at risk with those aged 65 or over losing more money than any other age group, followed by those aged 55 to 64. 

No age group in Australia is immune though, with those under age 18 also reporting hundreds of thousands of dollars lost over a 12-month period*.

How can you spot a scam?

Scams can happen to anyone, and they work because the stories scammers come up with to steal your money and personal information are often very believable.

Scammers are also smart and take advantage of new technology, products, services, and major names and events to convince you that their scam is real.

Here are some red flags to look out for:

1. You’re told you’ll make or save money, or offered a deal that sounds too good to be true (they often are!).
2. You’re promised guaranteed, quick and easy investment returns.
3. There are no risks or low risks as you can get out at any time or be refunded.
4. They pressure you to act fast, so you don’t have time to think things through.
5. They ask you to pay in unusual ways like through cryptocurrencies.
6. They contact you from overseas, so they’re harder to prosecute and track down.
7. They ask for insurance or taxes before they give your money back to get more out of you.
8. They use social media to create fake news stories sometimes with well-known personalities.

What can you do to protect yourself? 

As a general rule, our key government agencies promote a three-step approach* to stay safe:

Stop

If you’re ever unsure, don’t give your money or personal information to anyone. Scammers often pretend they’re from organisations you know and trust like your bank or the ATO to get you to verify who you are and give away your details.

Think

Ask yourself if the text, email or call could be a fake before you click on or agree to anything. Scammers will send you links to fake websites or attachments that have viruses which will steal your money and personal info. If you’re ever unsure, don’t respond and contact the organisation or person you think you’re talking to, using details from official websites.

Protect

If something doesn’t feel right, act immediately. Change your passwords and contact your providers as soon as you notice anything unusual. 

Where can you go for more information? 

Check out the CFS Staying safe online hub. Here you will find other tips and resources that cover:

• Tips for creating stronger passwords
• How to keep your email secure
• Ways to browse the web safely

How can you report a scam?

If you think you may have been targeted by scammers, contact us on 13 13 36 and change your passwords. If CFS becomes aware of any scams that may affect our customers, information will be provided at the top of our Contact us page.

You can get assistance by contacting Australia and New Zealand’s national identity and cyber support service IDCARE. They can help you make a plan to limit the damage, and support you through the process. You can also report anything suspicious to Scamwatch.

If you want some other pointers for boosting your cyber security, the Australian Cyber Security Centre has the following tips this cyber security awareness month:

• Update your devices (and regularly).
• Turn on multi-factor authentication (which adds an extra layer of security to prove your identity).
• Back up important files. 
• Use passphrases and password managers.

^{* Targeting scams: report of the ACCC on scams activity 2022 (published April 2023)}