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Investment scams target your personal wealth by convincing you to invest in fake schemes and companies. They are widespread and can take many different forms. This guide will help you stay informed of the most common types of investment scams, and arm you with the facts needed to make smart investment decisions.
Australians lost $61 million from investment scams in 2019, according to reports made to the Australian Competition and Consumer Commission (ACCC). However, as many cases go unreported, this is likely only the tip of the iceberg.
Investment scams might take different forms. Here are three of the most common:
NAB customers Emma and Ben (names have been changed) are married and own a successful business in central western QLD. With two young children and a growing client base, the couple began to consider investment strategies to support their three main financial goals: early retirement, a university fund for their children, and a sailing trip around the Mediterranean.
“We just wanted to make sure we were making smart decisions with our money,” Emma explained. “I really wanted to make sure that we were planning and had a strategy in place to reach our goals.”
After some initial online research, the couple found several articles and forums on BitCoin investment. It seemed like a good way of making money, but Emma and Ben wanted to seek some advice first. They just didn’t know who to ask.
A man named James then contacted Emma via an investment forum she had subscribed to. He claimed to be a trader and offered a free introductory phone meeting to discuss investment strategies. He sounded convincing and his website had good customer reviews and a credible London address too.
“We opted in and went ahead with the one-hour free meeting, figuring we had nothing to lose. And to be honest, James our Broker was so impressive, we were in hook line and sinker,” said Ben. “The starting investment was only $2,000 and was being invested in new ‘Tech Stock’ which was dealing with emerging crypto currency. We saw dollar signs because, like many, we had read about people making millions off small investments, so it seemed pretty low risk.”
After the initial investment, Emma and Ben logged into their portfolio page. It had doubled in just a few days. James told them they were in a peak growth phase in which the purchase cost was low but increasing each day. The excited couple, predicting they were only months away from achieving their financial dreams, agreed to invest another $20,000.
But things started to turn sour. James began ringing daily – sometimes several times a day – urging them to invest all their savings, totalling $72,000. Convinced that they were on a winner, they invested a further $50,000. And to make investing easier, they also allowed James access to their internet banking so that he could transfer the investment funds himself.
The next day, James rang with bad news - their investment was dropping. Over the next few days he made panicked calls to Emma and Ben with devastating news: the shares were in free fall. Not only had the couple lost their gains, they had lost most of their original investment. According to James, the only way to recover was to take a loan out on their house, and invest in another of his companies.
By now James was calling, texting and emailing almost hourly. “We couldn’t catch a breath,” said Emma. “The pressure was immense, now we were just focused on getting back to square one and we were in such a panic, I couldn’t sleep at night.”
Faced with losing their initial investment, Emma and Ben applied for a loan of $150,000 from their bank. On James’ advice, they claimed it was for a new car and caravan. As soon as the money was available, James logged in to their internet banking and transferred the amount over to the investment company. Ben and Emma waited for the next update.
They never heard from James again. Many calls, emails and text messages were left unanswered. They reported the matter to the police, and the officer on duty checked the MonseySmart list of companies you should not deal with. She found the details of James’ company listed, and let Emma and Ben know they had fallen victim to an investment scam.
Ben is still angry. “They have almost ruined us!” he says. “It has impacted our relationship, our business, and the future of our family. Mostly, I just can’t believe that we fell for that slick sales pitch. Not only have we lost our money, but we feel like idiots.”
Many victims of investment scams feel this way. However, it’s important to remember that investment scammers are extremely professional in their approach. They have their sales pitch down to an art with a fancy website with fake reviews to lure people in. Their job is deceiving people and they are skilled at it.
If you’re a NAB customer and believe you may have fallen victim to a scam, please call 13 22 65 immediately and ask for the Digital Fraud and Scams Team.
Information, resources and tools to keep you safe online.
Stay Smart Online provides up-to-date information on how home internet users and small businesses can protect themselves from cyber security threats. These might include software vulnerabilities, online scams, malicious activities and risky online behaviours.
The Australian Cyber Security Centre (ACSC) brings cyber security capabilities from across the Australian Government together into a single location. It is the hub for private and public sector collaboration and information-sharing to combat cyber security threats.
ACORN is a secure reporting and referral service for cyber crime and online incidents which may be in breach of Australian law. You can also use it to report a cyber crime and access helpful information.
Scamwatch provides information to consumers and small businesses about how to recognise, avoid and report scams using publications, videos and other online resources.
The Office of the eSafety Commissioner provides online safety education for Australian children and young people. It addresses illegal online content and also provides a complaints service for young Australians who experience serious cyberbullying.
The Attorney-General’s Department website provides helpful information and resources about your rights and protections with regards to identity security, freedom of information and cyber crime. The Department has developed a range of resources to assist people protect their identity and recover from the effects of identity crime.
IDCARE is Australia and New Zealand's not-for-profit counselling and support service set up to assist Australians impacted by identity theft and cyber-related crimes.
IDCARE can assist NAB customers to navigate through the process when identity details or credentials have been compromised through fraud or scams. IDCare is a free service for all Australians.
Your identity is your most valuable asset. Protect it. Your freedom depends on it.
Stay in control of who accesses your information when browsing online with these simple tips.
Multi-factor authentication can protect you from cybercriminals.
Don’t be a victim of cyber criminals. Learn how to protect your computer from malware.
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