Increase in investment scams cost Australians billions

Every day it seems we read of another unfortunate Australian falling victim to another scam.

One day it’s a pensioner who transferred her life savings to a foreign bank offering attractive term deposit rates, only to then find out the email and subsequent website was an elaborate scam and the money is never to be seen again.

The next day it’s a father who loses his family’s life saving by giving money to his son who is caught up in a ‘task scam’ whereby he could earn money by ‘product boosting’ items for sale on a website.

Gone are the days where these scams were easily identifiable and the victims were few and far between.

Australians lose $3.2bn to scams

The latest Targeting scams report by the ACCC has revealed that Australians lost a record $3.1 billion to scams in 2022, with investment scams the highest loss category. 

The report compiled data reported by a number of government agencies and marked an 80 per cent increase in losses from 2021. 

Investment scams comprised $1.5 billion of the total losses and there were more than 9,360 reports to Scamwatch regarding investment scams.

The average scam victim would likely be approached via social media or respond to a scam advertisement and have contact by phone. The scam would likely last for several months and the payment be requested in cryptocurrency or bank transfer.

Addressing scams had been an important part of financial services minister Stephen Jones’ agenda in the last year, with $10 million in funding allocated to the ACCC towards the establishment of a National Anti-Scams Centre (NASC). 

Scammers are now much more sophisticated and more difficult to identify. Impersonating official phone numbers, email addresses and websites of legitimate organisations are common tactics, as well as scam texts that can appear in the same conversation thread as genuine messages. This means that now more than ever, anyone can fall victim to a scam.

In March 2023, an international task force chaired by ASIC and the central bank of Ireland had noted that inappropriate online marketing and ‘finfluencer’ activity increased scams and the vulnerability of consumers.

Last week, finfluencer Tyson Scholz was found by the federal court to have contravened the Corporations Act in December 2022 and received a permanent injunction from ASIC.

Also of concern is that people from culturally and linguistically diverse communities were significantly over-represented in terms of financial losses across a range of scams. They accounted for more than a quarter of total losses associated with identity theft and about a third of losses associated with pyramid schemes.

Avoid falling victim to scams

So, how do we prevent ourselves from becoming victim to scams? 

It’s becoming increasingly difficult to completely avoid being targeted, given the prevalence of social media and digital communication and the ability for scammers to access personal information.

As such, it’s essential for consumers to be aware and suspicious of any unsolicited contact they receive.

There are obvious protection measures that consumers can put in place such as using more difficult passwords, not releasing or posting personal or private information, and embracing more comprehensive security requirements required by their banks and financial institutions.

Importantly, it also comes back to the concept of being wary of any offer of investment or online business that promises high or easy returns – if it looks too good to be true, then it probably is.

If in doubt, speak to a financial professional before making any decisions.