According to data gathered by City Index via the ACCC's Scamwatch data, Aussies lost $151,426,745 to investment scams during the first five months of 2023.
- More and more Aussies are losing money to investment scams, particularly around cryptocurrency.
- Experts recommend a healthy dose of skepticism about any investment opportunity, particularly those that seem too good to be true.
- Fradulent trading platforms, 'pig butchering' and imposter scams are the most common.
This was up 180% on losses during the same period in 2021, with 844 different investment scams reported.
According to the ACCC, cryptocurrency investing is particularly catching Australians out, with 78% of the investment scams reported linked to crypto.
With rapidly developing Artificial Intelligence (AI) tools now at scammers' disposal, as well as the deluge of get-rich-quick schemes on social media, it's never been harder to separate the genuine investment opportunities from the fraud.
These are the most commonly reported investment scams to watch out for:
Fraudulent trading platforms
More than a third (36%) of the scams reported involved illegitimate trading platforms.
The scammer sets up a website or application that appears to be a legitimate way to trade, promising investors unique and lucrative opportunities.
They are often extremely convincing, imitating price movements and showing fake gains.
Matt Weller, Head of market research at City Index, recommends skepticism about any unfamiliar trading platform.
"Only trade and invest through reputable and secure cryptocurrency exchange or crypto CFD providers," Mr Weller said.
"Ensure the platform has proper security measures in place, such as two-factor authentication, encryption, and, more importantly, a solid reputation within the crypto community.”
Unless covered by an exemption, trading platforms need to have a licence, usually an Australian Financial Services (AFS) licence, so be wary if it doesn't seem like the site or app you've found does.
Pig butchering scam
Another 31% of reported scams were what's known as 'pig butchering' scams.
The scammer builds trust with the victim through social media or dating apps ('fattening up' the pig) before introducing them to fradulent investment opportunities (the subsequent butchering).
The victim might be directed to illegitimate trading platforms, or the scammer might offer to train them in crypto investing, directing the victim to deposit money somewhere with the promise of large returns.
The pig analogy is a brutal one, but it's apt because these scammers aren't content with tricking you into a quick $400 payment to get a payID transfer over the line; they are going after everything the victim has, the 'full hog'.
Scammers might build up trust over an extended period of time, even maintaining the scam after an initial deposit to get more and more money from the victim.
The scammer might reassure the victim that their money is already generating big returns, convincing them to deposit more.
These are particularly malicious because lonely or vulnerable people are the most likely to be caught out, but the methods are becoming ever more convincing, catching out more people.
Imposter scam
The third most common investment scam, making up 14% of those reported, was scammers impersonating someone or something legitimate - a business, government agent or a well known figure, for example.
The goal is to get access to the victim's systems and personal information, and steal whatever they can.
Mr Weller says old truisms about internet safety are particularly relevant to protect yourself from this kind of thing.
"First and foremost, you must protect your personal information: never share your financial or personal information, such as bank account details or passport information, with unknown or unverified individuals or entities," Mr Weller said.
"Never click on unsolicited links or share sensitive information on inbound calls. Instead, the best practice is to manually visit the appropriate website or look up the appropriate contact number for the firm that is ostensibly reaching out and initiate contact yourself.”
Stay updated on the latest scam innovations
The variety of techniques scammers are using is rapidly expanding.
From fake Linkt charges, to texts purportedly from 'Mum', these criminals are getting innovative, so it's important to stay on top of whatever they come up with next.
Websites like Scamwatch and MoneySmart are regularly updated with information about the latest scams targeting Australians, so it's worth periodically checking in to see what you should be looking out for.
"The investment scams Aussies have lost $151 million to so far this year" was originally published on Savings.com.au and was republished with permission.