Scams in the 21st Century
There’s no argument that advancing technology has been the one of the biggest game-changers this century. The digital age has revolutionised how we conduct our daily lives. And while technology offers more convenient ways of doing things, it also comes with risk.
Cyber scamming – or digital fraud – (an ever-growing type of crime), targets people through their phones, email and browsers. Fortunately, there are simple measures you can take to protect yourself from being scammed.
What are scams and their impacts?
Scamming is an industry has already robbed Australians of more than $1 billion in 2018. By definition scamming is a fraudulent activity that aims to unlawfully take something from you, whether it be your identity, money, property, or to gain other benefits.
Scammers use phone, email, mobile apps and social media and target both businesses and individuals. The nature of scams ranges from fake charities seeking donations to celebrity endorsements promoting a product such as skin care creams or weight loss pills.
Common scams targeting SMSFs and property investors are hoax property seminars, rent-to-buy and land-banking schemes. These schemes often involve the provision of investment materials that may include advice on obtaining vendor finance.
However, it’s investment scams that steal the most significant portion of money from the Australian public. If you’re an investor, take note. According to the Australian Cybercrime Reporting Network (ACORN), online investment scams accounted for $33 293 476 in reported financial losses for victims last year.
Australian Competition and Consumer Commission (ACCC) statistics reveal that Australians are collectively losing $4.3 million a month to investment scams.
Investment scams can take the following forms:
- Cold calls offering financial advice about shares, mortgage products, options trading or foreign currency trading.
- An invitation to an investment or wealth-creation seminar.
- Superannuation or self-managed superannuation fund sign-ups.
- Real estate, land banking and rent-to-buy schemes.
- Initial stock or coin offerings.
- Brokerage services.
- An investment in software or online trading platforms.
Scams can appear as online advertisements, and professional-looking emails, websites or brochures. One thing they all have in common is the promise of BIG (and often quick) returns!
A scammer may pose as a financial adviser, a stockbroker or portfolio manager, and suck you in by sounding legitimate and having the resources to back-up their story.
ACCC Deputy Chair Delia Rickard said people aged 45–64 are most at risk and make up more than half the reports sent to Scamwatch.
Ms Rickard warned that the vast majority of investment scams centred on traditional investment markets like stocks, real estate or commodities.
“Any claims like ‘risk-free investment’, ‘low risk, high return’, ‘be a millionaire in three years’, or ‘get-rich-quick’ are also easy tells that you’re dealing with a scammer.” Ms Rickard said.
How can I stay informed?
Scamwatch is easy to navigate and teaches you how to ‘recognise, report and protect’ yourself from scams. It contains information for individuals and business including:
- the most common scams
- victims’ stories
- golden rules to protect yourself
- email alerts
- where to report a scam
The ACORN website provides information on how to recognise and avoid cybercrime. It offers advice for victims of cybercrime and makes reporting cybercrimes easy.
ACORN has listed hacking, online scams, online fraud, identity theft and attacks on computer systems as the most common forms of cybercrime.
What should I look out for?
SuperGuide has summarised some of the ways you can stay safe online and help protect yourself from scams. These include:
- Avoid opening unknown links or attachments in emails
- Don’t give out your passwords under any circumstances
- Remember that not everyone online is who they say they are
- Be alert to the fact that scams exist
- Know who you’re dealing with
- Don’t open suspicious texts, pop-up windows or click on links
- Don’t respond to phone calls about your computer asking for remote access – hang up
- Keep your personal details secure
- Keep your mobile devices and computers secure
- Choose your passwords carefully
- Review your privacy and security settings on social media
- Beware of any requests for your details or money
- Be wary of unusual payment requests
- Be careful when shopping online
Scamwatch also provides specific tips for dealing with property spruikers.
- Do not rely on the advice that property spruikers provide.
- Do your own research before making a decision – seek independent financial and legal advice from licensed professionals with their own professional indemnity insurance.
- Be wary of high pressure sales tactics rushing you into decisions, signing contracts or paying fees (including discounts offered to seminar attendees who sign up on the day).
- Be suspicious of claims that the scheme is ‘government approved’ by frequent reference to the Australian Taxation Office (ATO) or Australian Securities & Investments Commission (ASIC).
- Don’t accept an offer of a personal loan or credit to help you pay the enrolment fees for training courses, or any strategy that puts your current home at risk by using the equity to borrow money to invest.
- Be on high alert if the property spruiker side-steps questions or downplays the risks and costs involved.
- Don’t buy an investment property that you haven’t seen, or off-the-plan properties that haven’t been built yet.
If you think you’ve been a victim of a scam, there are many consumer protection agencies that can help you.
Overview of scams reported to the ACCC in order of reported losses in 2017 (compared to 2016 figures).
- Investment scams – up 32.6% with 1,997 reports.
- Other business, employment and investment scams – up 92.2% with 6,131 reports.
- False billing – up 323.9% with 13,455 reports.
- Remote access scams – up 71.6% with 8,685 reports.
- Threats to life, arrest or other – up 1743.7% with 8,297 reports.
The total financial losses reported to the ACCC, ACORN and other state and territory government organisations in 2017 exceeded $340 million.
Combined losses with ACORN reports brings investment scam losses to $64.6 million in 2017, an increase over the $59 million in combined losses reported in 2016.
Most popular methods of scamming
- Phone – 40%
- Email – 31%
- Text message – 12%
Chart 1: Delivery method of investment scams
Age of victims
According to the ACCC, older Australians (55+ years of age) are the group hardest hit by investment scams. Suffering the most significant financial loss compared with other age groups.
This statistic is due to older Australians having more accumulated wealth than other age groups. Within the older Australian age group, individuals aged over 65 accounted for the most reports.