Investment scams spiked during COVID-19 – here’s how to protect yourself
Investment scams jumped 20% between March and May this year, with fake celebrity endorsements increasingly popular.
Australians were swindled out of $126 million last year through investment scams – a 59% jump from the year before. But that number could increase significantly in 2020 if the last few months are anything to go by.
Investment scams jumped during the COVID-19 lockdown, according to new data from the corporate watchdog ASIC. It found the number of scams reported between the period of March to May 2020 rose 20% from the same time last year.
While phone or email scams are still prevalent, scammers are more often turning to dating sites and social media platforms such as Facebook and Instagram to promote "get rich quick" schemes.
Most scams were related to fake cryptocurrencies, while products such as term deposits, superannuation and forex were also commonly advertised to lure victims.
Cryptocurrency scams alone cost Australians $21 million last year. In most of these cases, there was never any actual cryptocurrency involved.
Fake celebrity endorsements have also become commonplace, according to a report by ACCC's Scamwatch this week. Celebrity-endorsed investment scams resulted in over $1 million lost last year.
One particularly widespread scheme used images of the billionaire Andrew Forrest to promote a Bitcoin trading platform. After signing up, victims were then pressured to continue investing higher amounts until the platform shut down and they lost it all.
ASIC's intelligence director Warren Day said COVID-19 had created the perfect storm.
"Australians are at risk of being scammed and losing money, and scammers are using age-old tactics in new and sophisticated ways to target people," Day said.
What to look out for
It's becoming more and more difficult to tell a fake from the real deal, but there are several common strategies that scammers often use to trick their victims, according to ASIC:
- It offers a range of investment options, from low to high returns in order to appear safer
- You get frequent requests for further investments
- There are endorsements from celebrities or government agencies
- You're asked to pay money into multiple bank accounts
- The investment product originated from a dating site or from social media
How to protect yourself
Investment scams are becoming more prevalent because the scammers have become much more sophisticated. People are easily caught out because the fakes tend to imitate the marketing strategies taken by legitimate providers.
If you're looking for investment opportunities, it's important to take steps to protect yourself from scams:
- Trading platforms. If you're looking to sign up to a trading platform, check whether it has been registered with ASIC.
- Research. Make sure that you're dealing with a trusted provider by doing your own research and reading reputable product reviews.
- Online payments. While it's impossible to avoid making online payments today, never send money to somebody's personal account if you haven't met them before.
- Advertising. Be aware of clickbait ads or "get rich quick" deals.
- Freebies. Be careful of products that are advertised as free because there are always hidden costs.
- Experts. If in doubt, always speak to an independent expert.
- Details. Make sure you do all your checks before providing any details about yourself, such as ID, address or phone number.
In total, Australians were swindled out of $634 million last year alone in scams – a 30% increase from the year prior, according to ACCC.
Of those, investment schemes were the second most common type of scam, after business email scams, followed by romance scams.
While our elderly have a bad rap for being swindled, it was the baby boomer and generation X that lost the most in scams last year. The 55-64 age group reported the highest losses, followed by the 45-54 and 34-44 age groups.
Have you been scammed? It's important to report the incident to Scamwatch.gov.au.
More headlines
- Ethereum price breaks all time high of US$1,448
- Chinese New Year 2021: The best makeup collections we’ve seen so far
- Man United vs Liverpool FA Cup fourth round: Start time and how to watch
- UFC 257 McGregor vs Poirier: Get the Australian live stream here
- Fight time: how to watch UFC 257 Poirier vs McGregor 2 live in Australia