How to avoid investment scams in Australia
Investment scams cost Australians millions of dollars each year. The cost of living crisis is pushing people to reduce their spending and find other ways to cover expenses which can leave them open to investment scams. These scams often promise big returns with typically minimal effort and can be tempting when people are experiencing hard times.
So, how do you avoid investment scams in Australia?
What is an investment scam?
Investment scams prey on your trust in online connections and desire to grow your wealth. Some scams appear promoted by celebrities, or by your social media friends, and ask you to invest into a wealth-growth opportunity, such as cryptocurrency or gold. Most of these promotions are too good to be true, and are fabricated with fake endorsements to persuade you into handing over money that you likely won’t see again.
Common types of investment scams include:
- Cryptocurrency scams
- Unsolicited contact about investing
- Romance baiting
- Celebrity endorsement scams
- Superannuation scams
How much do investment scams cost Australians?
Scammers are becoming more sophisticated in the tactics they use, with $945m lost to investment scams in 2024, according to data from the ACCC. Losing money to a scam can be devastating.How confident are Australians in identifying investment scams?
A survey commissioned by the Customer Owned Banking Association (COBA) showed more than four-in-five investors were confident they could identify an investment scam, regardless of their level of experience.
However, less experienced investors were twice as likely to use online forums and social media as a trusted source to verify an investment opportunity. This is a risky strategy as fraudsters and ‘finfluencers’ frequent these sites too and can easily share information. Finfluencers are social media influencers that provide trading, investment or financial advice, which they are not always qualified to do.
Amongst more experienced investors there is a misconception that investing in bonds is low risk, however according to a recent Scamwatch article imposter bond scams are a significant issue.
Scammers encourage individuals to register their name, mobile number and email on a fake website. They then steal money by getting people to buy fake investment bonds. The National Anti-Scam Centre are working closely with the Australian Securities and Investment Commission (ASIC) to remove investment scam websites, which led to thousands of websites being taken down in 2024.
According to Scamwatch statistics, of the $192m lost they reported to investment scams in 2024, over half of the losses were reported by people over the age of 55. Common methods of contact were phone calls (40%), social media (37%) and email (22%).
In positive news, Australian reports of investment scams are down 14.6% in 2024 vs. 2023 (6861 vs 7412).
Check before you invest
Always check if a financial advisor holds an Australian Financial Services Licence by searching the ASIC website.
Check ASIC’s list of companies you should not deal with. If the company that contacted you is on the list – do not deal with them. Even if they are not on this list, it could still be a scam. The MoneySmart website also contains information about how to avoid investment scams.
Do your homework on the investment by running a company search online for any reviews, complaints or scams.
Ways to spot investment scams:
Look out for red flags
- Promise of low risks with high returns – if it looks too good to be true, it probably is.
- You are contacted out of the blue – receiving a call, email or message on social media from someone offering you unsolicited advice on investments.
- High-pressure tactics – repeatedly being contacted by someone telling you to act quickly and invest or you will miss out.
- Someone you haven’t met in person offers you investment advice – never take investment advice from someone you meet on social media or a dating app.
- Use of a celebrity or high-profile person as an endorsement – these are often fake, and their name and image are used without the individual’s permission.
- You are asked to deposit funds into different accounts for each transaction – scammers may claim this is for security reasons or because they are an international company.
- The advisor who is helping you claims you don’t need an Australian Financial Services Licence.
- You are asked to promote the scheme to friends and family to earn commission.
Ways to Protect yourself
- Get professional advice. This could be independent legal advice, or financial advice from a financial advisor registered with ASIC.
- If it is cryptocurrency investment, always speak with a qualified legal and/or financial adviser first.
- Do your research and do not let anyone pressure you into an investment. Never commit to anything on the spot.
- Never take investment advice from anyone you’ve met online or provide them with personal or financial information.
- Check the legitimacy of the individual or organisation using contact details you find independently.
- Ensure the person who is trying to sell you a product or give you advice has an Australian Financial Services License.
Always remember to 'Stop, Check, Report'
Heritage Bank will never contact you to request your current passwords, card details, verification, access, or SMS passcodes, or to move money from your account. If you’re unsure of an email, SMS or phone call is real, please contact us directly before actioning. Find out more about how we protect our members from scams.
Think you’ve been scammed?
If you think you have been a victim of a scam it’s important to call Heritage on 13 14 22 (available 24/7) promptly to limit any further loss and to see if the transactions can be reversed or disputed. If you are overseas please call +61 7 4694 9000.