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Investment scams


Top tips to ensure your hard earned cash doesn’t end up in the wrong hands.

It’s easy to believe you won’t fall victim to a scammer, but the truth is that it happens a lot. In fact, reports show that investment scams are where Australians tend to lose the most money.

What does an investment scam look like?

There are lots of different types of investment scams to be aware of. Here are some of the more common ones according to Scamwatch.

A cold call

Scams often happen via phone, where the person will claim to be a stockbroker or portfolio manager. They may offer investment advice on shares, mortgages or high return investment schemes, options trading or foreign currency trading.

Share promotions or ‘insider’ tips

These types of scams may be posted in online groups or served to you via email. Generally, it’ll be an urgent offer to pick up shares in a company that’s about to increase in value. The scammer’s trying to boost stock price but if you invest, Scamwatch warn you’ll be left with large losses or virtually worthless shares.

Investment seminars

Ever been tempted to pay for a ticket to see a motivational speaker or ‘self-made millionaire’? These get-rich-quick seminars are usually sold on the premise that you’ll learn priceless investment advice and strategies, and you may be pressured into investing in off-the-plan properties or buying into other programs, only to suffer big losses.

Superannuation scams

If you’re approached by a ‘financial advisor’ or a scammer posing as one who offers to give you early access to your super fund, be wary. You can’t legally get your hands on your super until your preservation age (between 55-60), except for limited exceptions. And a scammer may ask you to agree to a story to get early release of your money, then con the super fund into paying your benefits to them.

Investment scam warning signs

To avoid scammers, you have to become super aware about the tactics they use to approach and to con you. Here are some common red flags to look out for:

  • Phone scammers can be very pushy: And they may phone you several times
  • The incentive is amazing: If it sounds too good to be true, it probably is
  • The offer is supported by big names: Be cautious if you see a celebrity or government agency attached to the offer as it could be a false endorsement
  • There’s a sense of urgency: The scammer may stress how urgent the offer is or tell you that you’ll miss out on the deal if you don’t act fast
  • There’s no Australian Financial Services Licence (AFSL): Or the scammer may tell you they don’t need one, because they operate overseas.

How to protect yourself

To stay one step ahead of a scammer, here are our top tips.

  1. Be wary of anything unsolicited. A weird looking email, a phone number you don’t recognize, a text message with a link or even an approach via your social media channels could all be scammers attempting to con you. 
  2. Be super aware. Mistakes in emails, domain URLs that don’t match the company name, weird grammar or templates that look a bit dodgy are all bad signs. 
  3. Never click on a link. If you suspect an email or text message offer could be a scam and there’s a link for you to click on, don’t do it! Go and research the company and the deal independently online first to be sure you’re buying from the actual source. 
  4. Hang up before giving any information. Unsolicited phone calls about investment deals, bitcoin or cryptocurrency are very likely to be scammers. Don’t give your details, just say ‘Not interested’ or hang up. 
  5. Do your own research. If you are considering an investment, don’t let yourself be bullied into making a decision, even if the person says you’ll miss out. Get the person’s contact details and go and do your own research and seek independent financial advice. 
  6. Invest with local companies. If you invest with overseas companies and something goes wrong, you may not be able to get help or to recoup the funds you’ve put into the investment. 
  7. Choose licensed companies. Always check the ASIC Business Registers, and make sure the companies you’re investing with aren’t on this MoneySmart list of businesses to avoid.

This article is intended to provide general information of an educational nature only. Information in this article is current as at the date of publication. We do not recommend any third party products or services and we are not liable in relation to them. Any links to third party websites are for your information only and we do not endorse their content.

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