Investment Scams that involve investments offer big payouts, quick money, or returns that are guaranteed. Be wary of any investment chances that promise a high return with little or no risk. If it seems too good to be true, it probably is, and it’s likely a scam.
Australians lose more money than anyone else to business scams. They can be hard to spot, so before you invest, you should always get independent legal or financial help from an ASIC-registered financial advisor or lawyer.
Before you spend money
Whenever you think about buying, don’t forget to:
The ASIC website is a good place to find out if a financial advisor is approved. An Australian Financial Services (AFS) license is needed for any business or person who sells or gives advice about financial goods.
Check the ASIC’s list of companies with which you shouldn’t do business. If the company that got in touch with you is on the list, don’t do business with them. But it could still be a scam even if they are not on the list.
On the MoneySmart website, you can also learn how to avoid getting ripped off by financial scams.
Look for the company online plus the words “review”, “complaint”, or “scam”.
Types of financial scams that are common
Scams with cryptocurrency
Cryptocurrencies are digital money. The most well-known type of digital money is Bitcoin. In Australia, cryptocurrency is not considered “money” or a “financial product,” so if you buy and it turns out to be a scam or you lose a lot of money, you have less protection.
It is hard to tell the difference between real Bitcoin investments and scams. Scammers use the hype and the fact that there aren’t as many rules to “invest” on your behalf in Bitcoin or another cryptocurrency.
Before you invest, you should ask yourself if you are ready to lose some or all of the money you have invested. You should also know that if you go ahead, you will be investing with little or no protection behind you.
Scammers who try to get you to invest in cryptocurrency are very appealing. They might market or post on social media that trading in cryptocurrency is a great way to make money. If you click on the ad or post, the trick artist will get in touch with you or send you to a fake website. The con artist will offer to invest for you or give you information about an app or website where you can spend.
Scammers also often use apps like Discord and Telegram to get in touch with people.
Scammers will tell you to buy cryptocurrency through an exchange or ask you to send money to a company so that they can buy it for you. Then, they will say that they will either trade for you or teach you how to trade. You will be able to look at your gains on a website, an app, or a custom MetaTrader platform.
The data you see will be fake and will make it look like you are making money (or losing money to get you to spend more money). At some point, you won’t be able to take any money out.
Scammers will make up reasons why you can’t get your money right away, why you’ve been kicked off the platform, or why the dealing platform is closed. When you try to find out what’s going on, you can’t get in touch with the scammers, and your money is gone.
Unwanted calls and emails about buying
A con artist pretends to be a stock broker or portfolio manager and contacts you by phone, email, or social media to give you financial or investment advice. They might even say they’re from an investment firm or company you’ve heard of since hackers sometimes pretend to be these companies to make themselves seem real.
The scammer will say that what they are selling is low-risk and will give you high returns quickly, or they will try to get you to invest in companies in other countries.
The scammer’s offer will sound real, and they may have websites and other tools that look like they were made by professionals to back up their claims. They will keep trying to get you to spend, and they may keep calling you until you do.
The scammer may say that they don’t need an Australian Financial Services license or that they are approved by a real government agency or part of a real company.
Most of the time, these cold calls are about high-return plans involving stocks, mortgages, real estate, options trading, or foreign currency trading. The scammer usually works from outside of Australia and won’t have a license to do business in Australia.
Trying to get a date
The con artist makes a fake dating page and finds you on a dating website, dating app, or social media site.
The scammer will ask if you want to keep talking to them outside of the dating website or app. Usually, they will suggest a free chat site with encryption, like WhatsApp, Google Hangouts, or WeChat. They might say this is because these chat sites are “more private.”
Scammers will try to gain your trust by doing things like showing you strong feelings in a short amount of time and telling you a lot of “personal” things.
Once they have your trust, the con artist will tell you about a chance to make money by investing. People often say that they put in a small amount and quickly made a lot of money. They will try to get you to send a small amount of your own money at first to show how easy it is to spend. You may get your money back quickly. The con artist will then try to get you to spend more money.
The con artist will tell you to add money to your account to make more money. If you run out of money to send or want to get all of your money back, the scammer will stop talking to you. Then, you won’t be able to get your investments from the site or you’ll be told that something went wrong with the investment.
Celebrity Endorsement Scams
Scammers try to get you to invest by using the picture, name, and personal traits of well-known people without their permission. Scam cryptocurrency schemes often use fake support from celebrities to get the word out.
There are two ways to use the picture of a celebrity:
A celebrity’s picture might show up in an ad on social media or even YouTube. The ad might say that the celebrity backs an investment chance or has made a lot of money from it.
You might see a fake news story about an investment chance that uses a celebrity’s picture to make it look like it came from a well-known news site like ABC News, The Project, or News.com.
Investment ads or news stories say that you can make a lot of money by investing, and they usually link to scam websites. Often, the “opportunity” to invest is in cryptocurrency.
Ponzi scams
Ponzi schemes are frauds in which money from new investors is used to pay off old investors. There is no real investment, and these scams always fail in the end.
Scammers contact people through social media and ask them to download apps or put money into them. They tell you that you will make a lot of money very quickly, and at first, you think they are telling the truth. However, the scammer pays you back with money that other people have put in.
Once you’ve made money, the con artist will try to convince you to get your friends, family, and coworkers to invest in the same plan.
They will give them “returns” and ask them to bring in other people they know.
When the scammer runs out of money or can’t find any more people to hire, he or she will go away and no one will be able to get their money back.
Talk about sales and hot tips
The con artist tells you to buy stock in a company they think is about to go up in value. You might get an email, a message on social media, or a notice on a website. The message looks like a secret tip and typically tells you that you need to act fast. The con artist is trying to drive up the price of the stock so they can sell shares they have already bought and make a big profit. Then, the value of the shares will drop by a lot.
If you buy, you will lose a lot of money or end up with shares that are almost worthless.
Investment classes
Motivational speakers, investment experts, or self-made millionaires may promote investment seminars by saying that they will give you expert tips on investing. Their goal is to get you to follow high-risk investment strategies. Some of these methods include taking out big loans to buy the property or making investments that involve lending money without a guarantee or on other risky terms.
The organizers may charge you a fee to attend, sell you overpriced reports or books, and try to sell you investments and real estate without letting you get help from someone else.
If you put money into something, there’s a good chance you’ll lose it.
Superannuation
Scams related to superannuation offer you early access to your super fund, usually for a fee or through a self-managed super fund. The offer could be from a con artist who is pretending to be a financial advisor. The scammer may ask you to agree to a story so that they can get your money early. Then, they will pose as your financial advisor and trick your superannuation company into sending your benefits directly to them. Once the scammer has your money, they may take out big “fees” or leave you with nothing at all.
Legally, you can’t touch the part of your retirement account that is set aside until you are between 55 and 60 years old, based on when you were born. There are a few exceptions, like extreme financial difficulty or compassionate reasons, but anyone else who gives you early access to your retirement savings is breaking the law.
If you are under 55, keep an eye out for offers that say it will be easy to get your saved retirement benefits. Tax law says that you could be fined if you take money out of your super fund before you are supposed to.
Signs of a fake business scheme
The promise of high gains with low risks: Remember that if something seems too good to be true, it most likely is. If you are told that you will get “guaranteed returns,” this is a red flag.
You receive an unexpected call: You get an unsolicited phone call, email, or message on social media from someone who wants to give you business advice.
Strategies based on pressure: You keep getting calls and emails telling you that you need to spend quickly or you’ll miss out.
Keep in mind that investing in cryptocurrency gives you less safety, and scammers are aware of this.
If you get investment tips from someone you haven’t met in person: Don’t listen to someone you met on social media or a dating app if they tell you how to spend your money.
Use of recommendations from or pictures of famous people: Most of these are fake. Rarely do famous people talk about their investments or money choices in public.
Someone has advertising tools or a website that is convincing: If papers like prospectuses aren’t registered with ASIC, they are probably part of a scam.
For each purchase, you have to put money into a different account: Scammers may say this is for security reasons or because they are an international business.
Guard yourself
Get help from a professional
Before you invest, you should always talk to an independent lawyer or a financial advisor who is registered with ASIC. If you want to trade in cryptocurrency, you should always talk to a lawyer first.
Even if you think you are investing in a well-known company, ask your financial or legal adviser to look over any papers they give you before you put any money in. Scammers often pretend to be real businesses and have websites and sales tools that look real.
Find out more.
Don’t let anyone force you to decide what to do with your money or investments, and don’t make any investments on the spot.
Before investing, take the time to do some study. You can use search sites like Who. is to find out who owns a website. It’s also a good idea to make sure that the name of the company you’re meant to be dealing with matches any account information you’ve been told to send.
If you think an offer to buy shares might be real, always check the company’s stock exchange listing to see its present value and how its shares have done in the past. Some offers to buy your shares may be way below what they are worth on the market.
Before you spend any money, ASIC’s Moneysmart website suggests you do the following checks:
- ASIC’s Offer Notice Board is where you can check to see if the company has given ASIC any disclosure papers.
- Public phone books: Make sure that the address and contact information is right.
- Use ASIC Connect’s professional record search to see if the company has an AFS license or an Australian credit license.
- ASIC’s list of companies you shouldn’t do business with: make sure the company’s name is not on the list.
- Investor alerts from the International Organization of Securities Commissions (IOSCO): Make sure that the company is not mentioned.
- Check the funding offer to see if it is on ASIC’s list of fake regulators and exchanges.
Ignore approaches or help from people you don’t know that you didn’t ask for.
Do not give your personal or financial information to people who call you out of the blue or reply to emails or messages on social media that offer financial advice or investment chances. Just hang up or delete the email or message.
Never take business advice from someone you’ve only met online or give them information about yourself or your money.
Don’t send money to someone you’ve only met online, and don’t put money or digital currencies into an investment chance that someone you’ve only met online told you about.
Have you fallen for a scam?
If you think you gave a scammer your account information or sent money to a scammer, you should call your bank or other financial institution right away to see if the transactions can be undone and to make sure the scammer doesn’t get any more money.
Change your account passwords to keep them safe.
We want you to use the Report a Scam page to tell the ACCC about scams. This lets us let people know about ongoing scams, keep an eye on trends, and stop scams when we can. Please give more information about the scam contact you got, like an email or a picture.
ASIC can also be told about scams that have to do with financial services.
We also tell you how to avoid getting ripped off and where to find help.
Tell your friends and family so they can stay safe.
