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Investment scams

Protect yourself from investment scams

Page reading time: 6 minutes

Be suspicious of anyone that offers you easy money. Scammers are skilled at convincing you that the investment is real, the returns are high and the risks are low. But there's always a catch.

How to spot an investment scam

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.

How scammers get you to invest

To get you to give them your money, a scammer may tell you they're offering:

Warning signs of investment scams

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).

Tactics used by investment scammers

Some of the common tactics scammers use to trick you into investing:

COVID-19 phishing scams

A scammer may try to steal your information using 'investment opportunities' to make your money back from sharemarket losses. The scammer may pretend to be someone you know, like your fund manager or your financial adviser. They may contact you by email, phone or text, or on social media.

Signs of a phishing scam:

  • The email address doesn't match the company name (also look for hotmail, gmail or outlook in the address).
  • There are spelling mistakes or the information doesn't make sense.
  • You're asked to update or confirm your personal details.
  • You're asked for immediate payment.

Don't click on any links. Delete the email or message straight away.

Directing you to a fake website

Scammers use sophisticated websites and issue fake online press releases that make false claims of outstanding corporate performance. They may provide some victims with logins to view fake investment balances and growing returns.

Stopping you pulling out of the deal

If you try to pull out of the deal, scammers may try to:

  • swap your current investment for another one
  • convince you that your investment will increase in value soon

Threatening legal action

Scammers may threaten you with prosecution or hefty fees to keep you from pulling out of the deal.

Using social media to approach you or your friends

Scammers may message you, advertise or send you a 'friend' request.

They may pose as someone you know or are connected to. If you 'friend' them they get access to your profile information. They can also send you offers to invest and make quick money.

Scammers may use your information to impersonate you. They may create a fake social media account to approach people in your friends list. See identity theft for more information.

Artificially inflating the share price

Scammers buy shares in a small company at a low price. They then send out false tips about the company having great prospects. As more people invest, the share price rises. The scammers sell their shares at the peak of the price rise, then the share price falls and the shareholders are left holding them at the reduced value.

Passing your call along the line

Investment scammers use a team of less experienced staff to make the initial call. The junior staff follow a tight script to check your interest. If you take the bait, they hand you over to a more senior person, called a 'closer'. Closers are extremely skilful sales agents and their job is to make you feel compelled to close the deal and send your money.

Calling or emailing you persistently

Investment scammers may call or email you persistenly. They may keep you on a phone call for a long time, insisting you'll miss out if you don't take up their offer right away. They will not take no for an answer and will ask you about your worries to reassure you. As long as they can keep you talking or emailing, you haven't really said no.

Operating from overseas

Many investment scammers operate from overseas or offer foreign investments, because their activities are illegal in Australia. Overseas scammers target Australians because ASIC does not have international jurisdiction to prosecute them.

How to check an investment is real

Simple research to make sure an investment is legitimate could save you from losing money to a scam.

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. Don't be pressured to make a quick decision you could regret later.

Take these steps to do your own research — check:

If you invest through overseas companies and something goes wrong, you won't be able to get help. A lower risk option is to invest overseas through licensed companies based in Australia.

Protect yourself from investment scams

Make sure you don't fall victim to an investment scam:

If you think you have been the victim of an investment scam, you should: