We still aren't learning to be very wary of get rich quick schemes.
We still aren't learning to be very wary of get rich quick schemes.

New Scams: investment tricksters on the rise

DON'T believe all you hear and see when you get an unsolicited call or email offering trustworthy financial advice and great investment opportunities.

During this year, already more than $26 million has been reported lost to investment scams according to Scamwatch. This is a huge increase on last year's reported total losses of $64.6 million.

A staggering $4.3 million a month is being lost to these scams.

"These scams are very sophisticated and the scammers are very convincing," ACCC Deputy Chair Delia Rickard said. "People aged 45 to 64 are most at risk and make up more than half the reports sent to Scamwatch."

The greatest loss is occurring through scams centred on investment through traditional investment markets like stocks, real estate or commodities.

The clearest warning sign that you could be dealing with an investment scammer is how they contact you and the promises they make.

"It can be very difficult to tell what is and isn't legitimate these days," Ms Rickard said. "If someone calls, emails or texts you out of the blue with investment advice, don't engage with them no matter how legitimate they sound. Hang up the phone or delete the email or text. If you're searching for new investment opportunities online, don't always trust what you read. It's easy for scammers to create professional looking investment websites.

"Any claims like 'risk-free investment', 'low risk, high return', 'be a millionaire in three years', or 'get-rich quick' are also easy tells that you're dealing with a scammer."

What you need to look out for are -

  • A cold call from a person claiming to be a stockbroker or investment portfolio manager.
  • They will offer a hot tip or inside information on a stock or asset that is purportedly about to go up significantly in value.
  • Low risk and high returns will be the hook.
  • The caller will spend a lot of time grooming you.
  • They will use the right technical language and offer professional looking websites and documents to convince you they are legitimate.

"It's often only when people try to cash out their investment that they realise their money is gone," Ms Rickard said.

Two other types of prevalent investments scam are found with cryptocurrency trading and binary options.

Cryptocurrency trading scams have grown significantly in the last 12 months. They are considered the second most common type of investment scam offer pushed on victims.

"The rise in popularity in cryptocurrency trading has not been missed by scammers who are latching onto this new trend to con people," Ms Rickard said. "These are similar to any other investment scam;  the scammer will claim to have inside knowledge about price movements that they will use to make you a fortune. If you invest, your money will quickly disappear.

"Binary options trading involves scammers pretending they can predict the movements of a commodity, asset or index price over a short time. They direct you to a website with a login, account details and a trading platform. They appear to put your money into the account and demonstrate a number of successful trades to encourage you to invest greater sums. Then your money begins to disappear and so too does the scammer."

Ms Rickard recommends investors check ASIC's list of companies you should not deal with before making any new investments. 

Investment scams should be reported to ASIC or Scamwatch.

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