10 Oct Investment scams you need to know
Did you know that investment scams lead to the highest financial losses in Australia? In fact, Australians lost $1.3 billion to investment scams last year. While investment scams may occur less frequently than other types of scams, they can leave a devastating impact.
There are many types of investment scams, here are five that we think are important for you to be aware of right now. Thanks to Macquarie Bank for this information
1 Fake cryptocurrency offers
Cryptocurrency is popular with scammers because it’s so hard to track. Once you lose your money to a crypto scam, it’s unlikely you’ll ever get it back. Crypto is complex and scammers take advantage of this by offering insider tips or guaranteed returns, and often use fraudulent platforms.
2 Ponzi and pyramid schemes
These scams rely on attracting new investors with promises of high returns and low risk. The scammers then use the money from new investors to pay earlier investors. There is no genuine investment. When new money stops coming in, the scheme collapses.
3 Unlicensed investment advisers
Scammers make unsolicited contact with people through emails, phone calls, or social media offering investment opportunities and deals in stocks, bonds, term deposits, or foreign exchange. They’ll often provide fake documents, websites, and investment collateral.
4 Wealth creation schemes
These scams involve ‘get rich quick’ opportunities that target people through social media or online webinars with the tempting promise of big returns, fast. Scammers offer ‘exclusive opportunities’ and convincing ‘ins’ to new markets.
5 Fake initial public offerings (IPOs)
Scammers present ‘rare’ opportunities to invest in shares of a company that’s about to go public. This company may not actually exist. Scammers may also impersonate genuine companies to promote offers.
What can you do? Safety steps
Scammers are relentless in their attempts to catch you out, but you can be on the front foot by following these simple safety steps.
Spot the red flags
Keep an eye out for unsolicited offers, urgency, pressure to act quickly, or guaranteed returns. These are common signs of a scam.
Pause and process
If it seems too good to be true, it probably is. Take a moment to pause and process the information. Investment decisions should never be rushed.
Verify the source
Do your own independent research on the investment opportunity – this information should be publicly available.
Cross-check credentials
Anyone providing you with advice must have an Australian Financial Services Licence. You can visit ASIC’s website to check this.
Get a second opinion
If something doesn’t feel right, talk to a trusted friend or family member, or reach out to our team.
It’s easy to think “It won’t happen to me”, but scammers thrive on catching people off guard and investment scams are becoming increasingly sophisticated. Knowledge is your best defence, so it’s important to arm yourself with the latest information and take steps to protect yourself from the evolving threat of investment scams.