Investment scams top the list when it comes to scam losses in Australia. In 2024 to date, reported investment losses have been trending down but remain high, with nearly $80 million lost so far according to Scamwatch data.

What is an investment scam

According to COBA Financial Crimes and Cyber Resilience team, scammers often prey on people’s anxieties and desire for quick financial gains – especially during the cost-of-living crisis – promising high returns with little or no risk.

“Investment scams exploit the desire for financial security to deceive victims into investing money in fake or non-existent opportunities. Investment scams are often high value and can result in victims losing their entire life savings,” COBA Chief of Financial Crimes and Cyber Resilience Leanne Vale said.

“They often impersonate legitimate financial institutions or government agencies, making it difficult for individuals to distinguish between genuine investment opportunities and scams. It’s important to research any investment opportunity to make sure that it matches your expectations and can be verified through the appropriate channels,” she added.

There are a myriad of investment scams floating around, but what they have in common is that there is a promise of high returns, usually with little to no involvement from the investor other than to send funds.

Scammers offer investments in unregistered securities, such as stocks, bonds, or promissory notes, without proper authorisation from regulatory authorities. These investments may be entirely fraudulent or involve exaggerated claims about potential returns.

Scammers promote investments in offshore accounts or entities, claiming they offer higher returns, tax advantages, or secrecy. However, these investments often involve significant risks and lack regulatory oversight, making them vulnerable to fraud.

Investment scams are marketed using very convincing websites, endorsements and collateral, making them difficult to identify.

How to detect an investment scam

Detecting an investment scam requires vigilance and a healthy dose of scepticism.

Here are some red flags to watch out for:

  • Unrealistic promises: Be wary of investments that promise guaranteed high returns with little or no risk. If it sounds too good to be true, it probably is.
  • Unsolicited contact: Be cautious of unsolicited investment offers, especially those that come through email, social media, or phone calls. Legitimate investment firms typically don’t solicit business this way.
  • High-pressure tactics: Scammers often use high-pressure tactics to rush you into deciding to invest. This gives the victim little or no time to investigate the legitimacy of the offer.
  • Lack of transparency: If the person offering the investment is unwilling or unable to provide evidence that the investment or company is real, then it likely isn’t.
  • Unregistered or unlicensed operators: Check if the person or company offering the investment is registered or licensed with the relevant Australian financial authorities, such as the Australian Securities and Investments Commission (ASIC). ASIC’s MoneySmart has an investor alert list which can help you find out which entities are not to be trusted.
  • Difficulty withdrawing funds: If you have difficulty withdrawing funds from an investment, it could be a sign of a scam. Legitimate investments should allow you to access your money when you need it.

What to do you if spot an investment scam

Even if you’ve managed to avoid losing money to an investment scam, reporting it is still crucial – report the scam to the Australian National Anti-Scam Centre (NASC) – Scamwatch.

If you have lost money as part of the investment fraud, immediately report the transaction(s) to Dnister and complete a report through ReportCyber. Dnister are dedicated to safeguarding our members from scams and fraud.

“Dnister wants to ensure all our members and community are safe and protected while roaming the internet. Please think twice before clicking any links, images or anything that looks suspicious, and if hesitant give our team a call to confirm the legitimacy of the item.” Philip Timewell, our Chief Risk Officer said.

Get in touch

Call Dnister today on 1800 353 041 to speak with one of our friendly team members regarding any inquiries about scams and fraud.

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. In providing you with this information you should consider the appropriateness of this advice with regard to your particular financial situation and needs. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.