Investment scams are deceptive schemes designed to trick people into handing over their money with the promise of high returns and little or no risk. Unfortunately, these scams are becoming more sophisticated, leveraging technology, fake endorsements, and high-pressure tactics to lure unsuspecting investors. 

How scammers operate

Fraudsters often pose as legitimate companies or introduce themselves as ‘account managers’ who claim to have insider knowledge of lucrative investment opportunities. They use persuasive marketing techniques, sometimes even incorporating artificial intelligence, to make their offers seem irresistible.

To build trust, scammers may show fake data that suggests your investment is growing. They might also allow small withdrawals at first, giving a false sense of security. However, when you attempt to withdraw a larger sum, they come up with excuses, demand additional fees, or completely block access to your money.

Warning signs of investment scams

According to Scamwatch, these are some red flags that indicate an investment scam:

• Fake endorsements: Scammers use fabricated testimonials or even doctored videos to appear credible.
• Online contacts: A friend or romantic interest you’ve never met in person suddenly starts discussing investment opportunities.
• Cloned profiles/taken-over accounts: A real friend may recommend an investment, but their profile might have been copied or hacked.
• High-pressure tactics: You’re pressured to act quickly to avoid missing out on a ‘once-in-a-lifetime’ deal.
• Lack of licensing: The adviser or company does not have an Australian Financial Services Licence (AFSL).

How to verify an investment opportunity

Before committing your money, take these steps to confirm the legitimacy of an investment offer:

• Check official alerts: Ensure the company or website is not listed on the Moneysmart investor alert list or the International Organisation of Securities Commissions (IOSCO) investor alerts portal.
• Confirm identity: Independently verify that the person you’re dealing with actually works for the organisation they claim to represent.
• Look for a licence: Verify that the person or company offering financial products or advice has a valid AFSL.
• Check contact details: Make sure the company’s address and phone number match those listed in publicly available directories.
• Investigate the website: Look up the domain registration date – if the website was created recently, it may be a scam.

What to do if you’ve been scammed

If you suspect you have fallen victim to an investment scam, take immediate action:

1. Stop further losses:
   • Contact your bank or card provider right away to report the scam and halt any transactions.
   • Change passwords on all your online accounts, including banking, email, government services, and shopping platforms.
2. Seek recovery assistance:
   • IDCARE is Australia and New Zealand’s national identity and cyber support service. They can provide a personalised plan to mitigate the damage. Call them at 1800 595 160 or visit their website for assistance.
3. Report the scam:
   • Once you have secured your details, report the scam to the relevant authorities to help prevent others from being victimised.

The best defence against investment scams is awareness and due diligence. If an opportunity sounds too good to be true, it probably is. Always research thoroughly before making any financial commitments and remain cautious when approached with unsolicited investment offers.

For more educational resources like this, visit our Security Hub page.