Investment scams are increasing in Australia. In 2016, the number of investment scams reported to Scamwatch increased by 40% from the previous year, according to the ACCC's Targeting Scams report. These scams typically involve getting you or your business to part with money on the promise of a questionable financial opportunity. Here we identify common scams and how you can protect yourself.
1. Investment cold calls
A scammer claims to be a stock broker or portfolio manager calls you and offers financial or investments advice. They claim what they’re offering is low-risk and will provide you with quick and high returns, or encourage you to invest in overseas companies. The scammer's offer will sound legitimate and they may have resources to back up their claims. They will be persistent, and may keep calling you back.
The investments offered in these types of cold calls are usually share, mortgage, or real estate high-return schemes, options trading or foreign currency trading. The scammer is operating from overseas, and will not have an Australian Financial Services licence.
2. Share promotions
The scammer encourages you to buy shares in a company that they predict is about to increase in value. You may be contacted by email or the message will be posted in a forum. The message will seem like an inside tip and stress that you need to act quickly. The scammer is trying to boost the price of stock so they can sell shares they have already bought, and make a huge profit. The share value will then go down dramatically.
3. Investment seminars
Investment seminars are promoted by promising motivational speakers, investment experts, or self-made millionaires who will give you ‘expert’ advice on investing. They’re designed to convince you into following high risk investment strategies.
Promoters make money by charging you an attendance fee, selling overpriced reports or books, and by selling investments and property without letting you get independent advice. The investments on offer are generally overvalued and you may end up having to pay fees and commissions that the promoters did not tell you about. High pressure sales tactics or false and misleading claims are often used to pressure you into investing, such as guaranteed rent or discounts for buying off the plan.
Visit ASIC's MoneySmart for more information about investment seminar scams
Superannuation scams offer to give you early access to your super fund, often through a self-managed super fund or for a fee. The offer may come from a financial adviser, or a scammer posing as one. The scammer may ask you to agree to a story to ensure the early release of your money and then, acting as your financial adviser, they will deceive your superannuation company into paying out your super benefits directly to them. Once they have your money, the scammer may take large 'fees' out of the released fund or leave you with nothing at all.
- Don’t give your details to an unsolicited caller or reply to emails offering financial advice or investment opportunities - just hang up or delete the email.
- Be suspicious of investment opportunities that promise a high return with little or no risk.
- Check if a financial advisor is registered via the ASIC website. Any business or person that offers or advises you about financial products must be an Australian Financial Services (AFS) licence holder.
- Check ASIC's list of companies you should not deal with. If the company that called you is on the list - do not deal with them.
- Don’t be pressured into making decisions about your money or investments and never commit to any investment at a seminar - always get independent legal or financial advice.
- Don’t respond to emails from strangers offering predictions on shares, investment tips, or investment advice.
- If you feel an offer to buy shares might be legitimate, check the company's listing on the stock exchange for its current value and recent shares performance. Some offers to buy your shares may be well below market value.
- Never commit to any investment at a seminar - always take time to consider the opportunity and seek independent financial advice.
- If you’re under 55, watch out for offers promoting easy access to your preserved superannuation benefits. If you illegally access your super early, you may face penalties under taxation law.
If you think you have provided your account details to a scammer, contact us immediately on 132 888.
We also encourage you to report scams to the ACCC via the report a scam page. This helps warn people about current scams, monitor trends and disrupt scams where possible.