Australians lose over $70 million to bogus investment opportunities

Older Aussies put off aged care cost plans

Investment scams reported to Scamwatch have cost Australians over $70 million in the first half of this year, more than the total losses reported to Scamwatch for all of 2020, and projected losses are set to reach $140 million by the end of the year.

Data from Scamwatch shows a 53.4 per cent increase in reports about investment scams received so far, up from 3,104 in the first half of 2020 to 4,763 reports so far in 2021.

In addition to taking victims’ money, scammers often commit fraud or identity theft using the information they obtained from the victim.

Cryptocurrency trading scams

“Investment scams are more prevalent than ever, and scammers are capitalising on interest in cryptocurrency in particular,” ACCC Deputy Chair Delia Rickard said.

“More than half of the $70 million in losses were to cryptocurrency, especially through Bitcoin, and cryptocurrency scams were also the most commonly reported type of investment scam, with 2,240 reports.”

Scammers pretend to have highly profitable trading systems based on individual expertise or through algorithms they developed. Many of these scams also use fake celebrity endorsements to try and enhance their legitimacy.

Victims will initially be able to access small returns sourced from other victims’ initial deposits but the scammers soon claim problems with making withdrawals and cut off contact.

“Be wary of investment opportunities with low risk and high returns. If something sounds too good to be true, it probably is,” Ms Rickard said.

Losses to investment scams involving Bitcoin have already reached $25.7 million this year, compared to $17.8 million across all of 2020, representing a 44 per cent increase.

Losses to other types of investment scams, including imposter bond scams, Ponzi scams, and romance baiting scams are also increasing, while traditional investment scams are also still very common.

Imposter bond scams

In imposter bond scams, scammers impersonate legitimate companies and offer victims the opportunity to purchase fake corporate bonds.

In the first half of this year, there were over 58 reports and losses of more than $6.8 million reported to Scamwatch.

Older Australians looking for well-known respected companies to invest their money in have been the most impacted, making up 43 per cent of reports and accounting for almost half of the losses.

“These scams are particularly hard to detect because scammers use the companies’ legitimate prospectuses which are registered with ASIC, link to the actual websites and have the correct ABN/ACN details. However, the scammers change key details such as contact information and bank details,” Ms Rickard said.

“That’s why it’s really important to contact the company using details you source yourself from doing a search online or visiting the company’s website directly, and to seek independent advice no matter how confident you feel.”

Ponzi schemes

Ponzi schemes have also increased. In the first six months of this year, Scamwatch received over 400 reports and more than $1 million in losses to the Hope Business and Wonderful World scams.

These scams used advertising on social media sites and had their applications available via official app stores. People invested their money and were able to make small withdrawals in the beginning before the scammers cut off contact.

The ACCC contacted the Google & Apple apps stores & had the Hope business app removed. The main Wonderful World scam app has also been removed from the stores.

These scams disproportionately affected members of CALD communities including recent migrants from Burma and Sri Lanka.

Overall, more than 13 per cent of losses ($9.6 million) to investment scams were from people who spoke English as a second language.

Romance baiting

Investment scams originating through dating apps and websites are also becoming increasingly common. In these scams, a scammer develops a relationship with the victim and convinces them to invest, usually in cryptocurrency or bond scams.

“These scams predominantly impact younger people, who might be seeing these ‘investment opportunities’ through social media, recommendations from friends, or by registering their interest in cryptocurrency on questionable websites,” Ms Rickard said.

“Remember, never take investment advice, send money or give credit card details, online account details or personal information to anyone you don’t know or trust, and never to someone you have only met online or over the phone, as you never know who you might be dealing with.”

The ACCC is urging everyone to seek independent advice from a qualified financial advisor before making any investments.

The MoneySmart website run by the Australian Securities and Investments Commission (ASIC) has information on different types of investments and how to spot investment scams.

What to do if you think you have been scammed

People who think they’ve been scammed should contact their bank or financial institution as soon as possible. They can also contact IDCARE on 1300 IDCARE (432273) or via if they suspect they are a victim of identity theft. IDCARE is a free, government funded service that will support individuals through the process.

If you are concerned about your investments or think you may have been exposed to a scam, please reach out to the Sherlock Wealth team here. 

Source: Scamwatch, ACCC.

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