Be suspicious of anyone offering you easy money. Scammers are skilled at convincing you that the investment is real, the returns are high and the risks are low. There's always a catch.
If you think you’ve been targeted by scammers, act quickly. For steps to take and where to report a scam, see what to do if you've been scammed.
How investment scams work
There are three main types of investment scams:
- The investment offer is completely fake.
- The investment exists, but the money you give the scammer doesn't go towards that investment.
- The scammer says they represent a well-known company – but they're lying.
In any case, the money you 'invest' goes straight into the scammer's bank account and not towards any real investment. It is extremely hard to recover your money if it goes to a scammer based overseas.
Anyone can be scammed and every scam is different. Scams are often hard to spot and can feel legitimate in the moment. Scammers can use professional-looking websites and apps, and impersonate legitimate companies.
Scammers are promoting fake green bonds from well-known companies through social media or on websites.
Green bonds are bonds that are used to finance new and existing projects that offer climate change and environmental benefits. These bonds are not available to the general public or retail investors.
The only way to invest in any green bond investment is through a managed investment scheme.
How scammers contact you
Scammers can come from anywhere. The most common approaches are:
- Unexpected contact – they may contact you by phone, social media, email or text message. They might pretend to be someone you know, such as your fund manager, financial adviser, bank, or even a friend. They’ll offer guaranteed or unrealistic high returns on an investment.
- Fake investment trading – they use real investment trading platforms to set up fake accounts. Then they offer to trade on your behalf. Once you deposit your money it’s gone for good.
- Fake investment comparison websites – scammers will get you to enter your personal information into their fake website, then contact you to sell their scam investment.
- Websites with fake ASIC endorsements – slick websites with fake investing information and performance figures. They may claim to be endorsed or approved by ASIC by showing the ASIC logo.
- Dating apps – using romance to form a relationship with you, then offering you an 'investment opportunity'. (This is also known as 'romance baiting'.)
- Paid advertising – scammers often pay big money for advertisements, to appear high in online search results. They also advertise through social media. Advertising a scam is illegal.
- Fake news articles – scammers will promote fake articles on social media, impersonating other news outlets and linking to their scam websites.
What scammers may offer you
A scammer may tell you they're offering:
- guaranteed, quick and easy investment returns and sometimes tax-free benefits
- investments in shares, cryptocurrency, mortgage, real estate or virtual investments, all with very 'high returns'
- options trading or foreign currency trading
- commissions for building their client base and getting others to invest
- an opportunity with no risk or low risk, because you will:
- be able to sell anytime
- get a refund for non-performance
- have insured or 'guaranteed' transactions
- be able to swap one investment for another
- inside information on initial public offerings or discounts for early bird investors, often falsely impersonating real companies to pitch their offer
How scammers convince you
Scammers will look at the latest investment trends for opportunities. They often use well-known company names, platforms, and terms (such as 'crypto') to lure investors in and appear credible.
This may include fake:
- crypto (virtual currency) investments
- trading companies, getting you to invest with them through real apps and trading platforms
- offers of inside information on public company floats, often naming ones that have been hyped in the media or on social media
- offers to get your money back from a sharemarket fall, often using losses resulting from the COVID-19 pandemic as bait
Beware of scammers offering investments or asking for payment using crypto. Crypto-assets (for example, cryptocurrency) are largely unregulated in Australia and are high-risk, volatile investments.
Payments made using crypto are very difficult to trace and recover. To find out more, see cryptocurrencies.
Other tactics used by investment scammers
Operate from overseas
Overseas-based scammers target Australians because ASIC does not have international jurisdiction to prosecute them and they are very difficult to track down. They may ask you to deposit into different bank accounts every time you make a payment.
Investing in overseas companies can be risky. If you invest and something goes wrong, you won't be able to get help from ASIC.
Convincing you not to pull out of the investment
They may try to swap your current investment for another one, convincing you the value will increase, or threaten you with legal action or fees.
A common tactic is to ask for ‘insurance’ or ‘taxes’ before funds invested can be released. This is just another method to extract more money out of victims.
‘Pump and dump’ scams
Scammers use social media and online forums to create fake news and excitement in listed stocks to increase (or ‘pump’) the share price.
Then they sell (or ‘dump’) their shares and take a profit, leaving the share price to fall. Any other investors are left with low value shares and will lose money.
Protect yourself from investment scams
Investment scams can look very convincing. It may be hard to tell if they're genuine investments or not.
Check an investment is legit by following the tips on protect yourself from scams.