Investment scams have taken over from online dating scams as the biggest source of losses from consumer frauds. The Australian Competition and Consumer Commission reports that losses from investment scams doubled last year, suggesting that more work needs to be done on investor education in this area.
Total scam reports to the consumer watchdog rose last year, along with the amount lost. The ACCC says it received 105,200 scam complaints in 2015, with losses of $85 million. In 2014, there were 91,600 complaints and $82 million of losses.
Other common types of scams include Nigerian scams, unexpected prize and lottery scams and fake charities.
Investment scams accounted for 1262 complaints and $24 million of losses. Losses from investment scams doubled from $12.5 million in 2014. Six people reported losses of $1 million or more.
In addition, reports of investment scams to the Australian Cybercrime Online Reporting Network took the total loss from investment scams last year to $41 million.
Delia Rickard, the deputy chair of the ACCC, says the big increase in losses from investment scams was the most concerning trend in last year’s figures.
“It is not hard to see why many Australians are losing large sums of money in these scams, given how difficult they are to identify,” Richard says.
“These more sophisticated scams often involve scammers who use accurate technical jargon in carefully crafted cold calling scripts and accompany this with glossy brochures backed up by professional looking websites.”
Almost half (48.5 per cent) of scammer contact was by telephone, followed by email (24.9 per cent), internet (9.9 per cent) and mail (6.9 per cent).
Investment scams come in a number of forms, including business ventures, superannuation schemes, managed funds and the sale or purchase of shares or property.
Investment scams typically promise high, but not too high, rewards for low risk. Scammers go to a great deal of trouble to give the appearance of credibility, including reference to other investors who have made money from the scheme.
“With high potential profits from these scams, scammers can afford to investment significant time and resources, which has led to a number of large individual losses,” the ACCC says.
Typical marketing ploys include warnings that the offer is limited or the supply scarce, and offers of reduced commissions for a limited period.
ASIC says any investment offer that comes out of the blue should be treated with caution.
Last year the ACCC upgraded its Scamwatch website, with a range of new tools, and started sending Scamwatch alerts to subscribers.
The ACCC also has a targeted intervention strategy, launched in August 2014, which operates in conjunction with police and consumer affairs agencies. Financial intelligence is used to identify Australians sending money to high-risk jurisdictions, and those people are contacted to warn them they may be the target of a scam.
Since the start of the project the ACCC has sent out 6500 warning letters.
Article by John Kavanagh
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