5 tips to protect yourself from being scammed

Financial scams are on the rise with thousands of people falling victim every year. This article discusses the many different types of scams to be aware of and what to do if you think you have become a victim.

5 tips to protect yourself from being scammed

In 2021 Australians reported over 9,000 investment scams to Scamwatch, well up on the 7,000 reported in 2020. Scamwatch recorded investment scam losses of over $177 million but add in notifications made to other government agencies and the major banks and reported losses across 2021 soared to $701 million. Due to embarrassment many losses go unreported so we may never know the full extent of the damage.

With a high likelihood that we will all be targeted by scammers at some stage, perhaps repeatedly, how can we identify scams and protect ourselves from losses?

Ignore unsolicited offers

Most investment scams start with a phone call. No matter how compelling the story told by the caller, if you haven’t done anything to invite contact from an investment’s promoter, it is likely to be a scam. The simple solution? Hang up early in the call. If the approach is made by e-mail, social media or text message don’t click on any links and delete the message.

Eating the nest egg

The federal government’s COVID-19 Superannuation Early Release Scheme saw 4.9 million applications to withdraw a total of $36.4 billion from super accounts. Many young people withdrew their full balance and will have a hard time playing catch up, even if it will be decades before they retire.

Beware of promises of large and guaranteed returns

In times of low interest rates it’s hard to find a good return on lower risk investments such as term deposits and bonds. The promise of high returns, perhaps with a built in guarantee may look compelling. But the age old saying holds: if it seems too good to be true, it probably is.

Some investors are willing to put such promises to the test by making a small investment. When professional looking statements show that the promised performance is being delivered, the investor makes a much larger deposit. Not long after that the promoter seemingly disappears.

Research the promoter through independent and official channels

Are they based overseas? This is a big red flag. If Australian, are they (and their prospectus) registered with ASIC? Do they have an Australian Financial Services Licence? Do they appear on the list of companies you should not deal with (available at moneysmart.gov.au)? Is their street address genuine and do they have a physical office? How long have they been in business?

Get independent advice before investing

Even with a legitimate investment an independent assessment is a good idea. With a questionable investment it might just save you from being scammed.

Educate yourself

Scams are evolving all the time. Government websites moneysmart.gov.au and scamwatch.gov.au provide information on a wide range of scams and are updated as new scams appear. They also provide advice on how you can protect yourself.

What can you do if you’re the victim of a scam?

You can make a report via the Scamwatch website (operated by ACCC), to ASIC and to your local police. Stop sending money to the scammer and beware of the double sting where scammers offer to help you recover your losses, for a fee, of course.

While ASIC and ACCC do not provide direct assistance to scam victims, the information can help with investigation and law enforcement, and provide intelligence on scam activity. Police may also be limited in their ability to identify and prosecute scammers, particularly if they are located overseas. The sad fact is that most victims of scams never see their money again.

Practical help is available from IDCARE. This is a free support service that can assist businesses and individuals with a range of cyber issues including identity theft, romance scams and investment scams.

Some helpful links:

Please note that this information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.  It is strongly recommended that you do not act on any information contained before seeking personalised advice from a licensed financial adviser.

Need financial advice in Adelaide?

We are qualified to discuss everything covered in this article and encourage you to contact us if you have further questions.

Prominent Financial Services would welcome the opportunity to help you. We provide financial advice and guidance to ensure our clients are financially educated to make smart financial decisions. Book a ‘Free’ Discovery Call Today

Share This

Related Posts