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Investment scams

Reduce the risk of investment scams

Page reading time: 6 minutes

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.

How investment scams work

There are three main types of investment scams:

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 very 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 get you to invest

1. The set up

Scammers can come from anywhere. The most common approaches are:

2. The offer

A scammer may tell you they're offering:

3. The hook

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:

Beware of scammers offering investments or asking for payment using crypto-assets. Crypto-assets (for example, cryptocurrency) are largely unregulated in Australia and are high-risk, volatile investments. Payments using crypto are very difficult to trace and recover. See Cryptocurrencies.

How to spot an investment scam

The investment offer may be a scam if the person:

If you spot any of these signs, hang up the phone or delete the email. If you manage to record any of the scammer's details, report them to the Australian Securities and Investments Commission (ASIC).

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.

How to check an investment is real

1. Ask questions and request information

Check the legitimacy of the person offering the investment by asking them:

If they try to avoid answering these questions, their investment offer is probably a scam. Hang up the phone, do not respond to the email. Stop dealing with the person or delete and block them if it's through social media.

But, even if they can answer these questions, it doesn't always mean the investment is legitimate.

2. Do your own research on the company

Don't rely only on the information the person gives you to make your decision — always verify what they tell you from independent sources. Don't be pressured to make a quick decision you could regret later.

Follow these steps to do your own research — check:

Reduce the risk of investment scams

Protect yourself

Be cautious

If you think you've been scammed

If you think you’ve been targeted by scammers, act quickly. See what to do if you’ve been scammed for steps to take and where to report it.