Investment scams
💰 The lure of big returns on our investments can be very appealing! 💰
And while there are some great success stories, there are just as many who have been stung by investment scams.
These scams pose a real threat and can trick us into investing our hard-earned cash with promises of a large return – leading to devastating consequences when we realise we have been caught in a scam.
The sophistication of scammers has now reached a level where you can completely believe you’re day trading on the stock exchange or speaking on the phone with a broker – but the reality is you’re funnelling money directly into a scammer’s bank account.
Crime Stoppers Chief Executive Stella Smith said investment scams were a danger often hiding in plain sight.
“Everyone wants to get a better return on their investments. Scammers know this and s are always looking to exploit us, particularly anyone who might be feeling a bit vulnerable or down on their luck,” she said.
“A professional looking website, the background noise of a trading room on a phone call and promises of big returns can all be tricks used by scammers”.
“It’s important that everyone does proper research before ever investing any of their own hard-earned money into something they are not sure about.” – Ms Smith.
BankVic Head of Financial Crime, Warren Kamara, said any offer that guarantees substantial returns with minimal risk was typically a scam.
“If someone promises you high returns for low risk using an unknown, unregistered service, it’s probably a scam.
“Basically, if it’s too good to be true – it usually is.” – BankVic Head of Financial Crime, Warren Kamara.
Whether it’s through a Ponzi scheme or a crypto bro you meet online, let’s look at the different types of investment scams so we can help you keep your money safe:
Some of the most common forms of investment scams involve cryptocurrencies such as Bitcoin or Ethereum.
Due to the decentralised and relatively anonymous nature of the blockchain technology that powers cryptocurrency – it makes it difficult to trace transactions. This means if you meet a crypto ‘expert’ who promises extraordinary returns for an investment – you’re at a very high risk of being scammed and losing your money. Cryptocurrency is a high-risk and volatile market, meaning once your funds are lost, recovery is nearly impossible.
Ponzi schemes operate on a simple principle: the funds from new investors are used to pay previous investors. These scams act as legitimate investment opportunities, but in reality, there’s no actual investment. The scheme’s success is based on new funds continuously being invested, and when it eventually collapses, the majority of those involved lose their entire investment.
Many scammers will impersonate financial institutions such as banks where they’ll offer low-risk investment products such as government bonds and fixed-term loans. The scammers will demonstrate fake documents, websites, and information, often showing they have a solid understanding of the financial market. However, when an unsuspecting victim is lured into one of these scams, they are actually falling prey to fraud – and will most likely lose all of the funds they invested.
IPOs are real processes where companies raise capital by allowing the public to buy shares of their business. However, scammers exploit this by impersonating reputable Australian companies and promoting fake offers that look like legitimate IPOs. These scammers are not affiliated with the companies they claim to represent – and put investors at serious risk of significant financial loss.
Superannuation scams offer the ability to gain early access to your super fund, often for a fee. Scammers will often pose as financial advisors and convince victims to place their hard-earned retirement savings into fake investment schemes. The promise of quick access to superannuation funds can be too hard to resist for some – leading to substantial financial hardship for victims.
In the digital age, romance scams are a distressingly common investment scam. Scammers create fake dating profiles on social media or dating websites and form what appear to be real emotional connections with victims. Once trust is established, scammers introduce investment opportunities, promising significant returns. After victims invest, their ‘romantic’ partner disappears – along with their money.
Using the names and likenesses of celebrities to endorse fake investments, these scams often use fake news stories or social media ads which link them to sham websites. Victims are then tricked into investing into schemes that falsely claim celebrity endorsement – despite the celebrity having no knowledge of the scam.
Some investment scams involve scammers acting as legitimate gambling or sports betting opportunities. These scams typically promise big returns – but fail to deliver. Due to the nature of sports betting, victims are often unable to recover their investments, as the schemes are designed to exploit the blurred lines between gambling and investing. Other betting scams include betting syndicate scams. These involve luring in victims with the promise of joining a group to place bets together. Victims are required to make substantial initial deposits but rarely see any returns. It could be that the scammer never placed a bet at all and simply took your cash, exploiting your trust and leaving you financially devastated.
As investment scams in Australia continue to grow and become increasingly sophisticated.
it’s extremely important for individuals to remain vigilant, use due diligence, and seek professional advice when considering any investment opportunity. Remember that if an investment appears too good to be true – it probably is. Thorough research is your best defence against falling victim to these financial fraudsters.
For more information
For more information, resources and to report a scam, please visit the Australian Government’s National Anti-Scam Centre Click Here.
This article is presented to all Victorians by Crime Stoppers in partnership with BankVic. For more information, podcasts and articles as part of our continued series of content supported by BankVic, please Click Here.
