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In January 2023 alone, over $35 million was lost by Australians in investment scams. That’s more than half of the total $53.5 million lost in scams in that one month, according to the Australian Competition & Consumer Commission’s scam statistics.
It’s also quite an increase on the $2.4 million that was reportedly lost to investment scams, and $33.1 million in scams overall, in January 2020.
“We have seen a marked decline in some of the older, low-end scams and an enormous increase in more sophisticated ‘white-collar’ fraud, such as cryptocurrency investment scams,” ACCC deputy chair Delia Rickard said in July last year
Superannuation, self-managed superannuation funds (SMSFs) and individuals’ investment funds are increasingly being targeted by scammers. This is due not only to the sheer amount of money available in super, but advancements in technology enabling fraudsters to steal people’s identities and savings.
Scams are evolving every day and it is important to be aware of how easy it might be to have your superannuation accessed.
The growing cost of scams
In all of 2022, Australians lost more than $568 million to scams, according to ACCC Scamwatch. Investment scams accounted for most of those losses – at $377 million. That’s a big jump from the $177 million lost in investment scams during 2021.
Investment scams also accounted for 9,361 reports to the ACCC out of a total 239,225 reports in 2022.
Men lost more money than women – $190.9 million compared to $123.6 million. And people aged over 65 were more likely to lose money than younger investors, with the 65-years-plus group recording the biggest aggregate losses of any age group at $73.8 million.
Traditional SMSF scams
SMSFs are frequently used by fraudulent operators and scammers when trying to access people’s retirement savings. Scammers may promise early access to super and encourage people to roll their super out of a larger Australian Prudential Regulation Authority (APRA) regulated fund into an SMSF.
The scammer may have convinced the person that they will be able to access the funds once they have set up the SMSF. Acting as a financial adviser for the fund’s rollover, the scammer steals a percentage, or all, of the funds.
Being encouraged to set up an SMSF to invest in cryptocurrency or property
Scam operators have also lobbied people to move their super from large APRA-regulated funds into SMSFs because SMSF trustees have more flexibility in what they can invest in.
Traditionally these types of operators targeted property investments, for example through seminars or newspaper advertisements, and encouraged people to set up an SMSF to buy an investment property and get into the property market.
However, people who did this often didn’t understand the complexity of SMSFs and property investing and would end up breaching the sole purpose test while the spruiker skimmed a commission off the top.
Such spruikers may also trick investors into using SMSFs to buy fraudulent cryptocurrency assets. ASIC has reported an increasing number of scams involving crypto assets this year and during the pandemic.
ASIC deputy chair Sarah Court has said that one of the main drivers of the increase in investment scams are cryptocurrency investment scams.
“If you think you’ve been the victim of a crypto scam, it’s important to act quickly. Draw a line under it. Don’t send any more money. Block all contact from the scammer,” Court said.
Identity theft investment scams
These scams involve extracting information – through phishing, social media sites, breaking into physical mailboxes and the like – and stealing an identity. The identity can then be used to access bank accounts, credit card details and online shopping websites.
Identity theft can also be used to access super funds. In the past, organised syndicates have stolen identities to access millions in superannuation monies from a number of large super funds.
In one of these cases, ASIC and the Australian Federal Police (AFP) alleged identity information was purchased from dark net marketplaces and the syndicate used that information, along with single use SIM cards and fake email accounts, to undertake ‘identity takeover’.
These ‘identities’ then opened bank accounts, into which the syndicate transferred super and money from investment accounts.
Remote access scams
Remote access scams – whereby a scammer will contact you pretending to be from a well-known organisation (such as Telstra, Amazon or one of the big banks) and asks for remote access to your computer – are also on the rise according the ACCC’s Scamwatch.
Once a computer is accessed, super fund details may be extracted just as easily as bank account details. So, it is vitally important not to let anyone who contacts you out of the blue access your devices.
How to avoid scams
The adage ‘If something sounds too good to be true, it probably is’, is worth remembering when it comes to avoiding scams.
- Don’t invest in anything from an unsolicited contact – such as phone calls, emails or even door knocking – promising a hot investment. Scammers will often call repeatedly and are known to target the vulnerable and elderly, but you should just hang up or shut the door.
- The ACCC’s Rickard advises that if you believe an unsolicited communication may have been legitimate, independently source the contact details for the organisation to contact them to verify the information, but don’t use the contact details in their communication or click on any links.
- Don’t invest in anything at an investment seminar. Always do your own due diligence and research into any kind of offer. Look up share values on the Australian Stock Exchange (ASX) and seek independent financial advice if needed (see our list of independent financial advisers).
- To avoid identity theft, and the investment scams that stem from it, use strong, hard-to-replicate passwords, don’t share them, don’t give away too much information on social media and don’t open emails (or especially links in emails) from unknown or unverified sources. Lock your letterbox, shred important documents and make sure your computer is secure.
- Consider getting two-factor or multi-factor authentication for important accounts and services that may be linked to your bank or super details.
- You can also check whether somebody calling themselves a financial adviser is registered as having an Australian Financial Services Licence on ASIC’s website. They also have a list of companies you should not deal with.
What to do if you are scammed
- If you think you might have been caught up in a scam, contact your financial institution immediately to freeze your accounts and credit cards.
- Report it to the police if money has been stolen.
- ASIC also suggests getting a copy of your credit report to check who might be running up debts in your name.
- You can also report the scam at Scamwatch and at the Australian Cyber Security Centre.
How, and if, you can recover your funds
It may be difficult to recover funds lost in a scam. There are some organisations that may be able to help you retrieve funds if they have been stolen as a result of identity theft such as iDcare and you can also apply for a Commonwealth Victim’s Certificate.
A Victim’s Certificate might help you negotiate with your financial institution or super fund to remove a fraudulent transaction.
Financial institutions and super funds also have their own systems in place to protect against fraud and will often contact customers if they notice irregular transactions and may reimburse them.