How to spot a financial scam and avoid it

29 Feb 2024

According to the Australian Competition and Consumer Commission (ACCC), Australians lost more than $476 million to scammers last year. Almost $300 million of this was through investment scams and the overwhelming majority was via phone and online delivery methods. Those aged 55 and over accounted for near 50 per cent of all victims.

As perpetrators become increasingly sophisticated in their methods, it is crucial that we remain vigilant and informed about the types of scams that prevail.

Various types of financial scams targeting seniors include investment fraud, romance scams, and identity theft.

Investment fraud schemes often promise high returns with little to no risk, enticing retirees to invest their hard-earned savings in fraudulent ventures. Romance scams exploit emotional vulnerability, with perpetrators posing as potential romantic partners to deceive victims into sending money. Identity theft involves stealing personal information to access bank accounts, credit cards, and other financial assets.

Recognising financial scams requires careful scrutiny of suspicious communications and offers. Be wary of unsolicited emails, phone calls, or messages requesting personal or financial information. Additionally, promises of guaranteed returns or pressure to act quickly should raise red flags. It’s essential to verify the legitimacy of any investment opportunity or financial service provider through independent research and seeking advice from trusted financial professionals.

To avoid falling victim to financial scams, always exercise caution when sharing personal information online or over the phone. You should also refrain from making hasty financial decisions without conducting thorough due diligence. Utilising secure payment methods and regularly monitoring bank accounts for unusual activity can help mitigate the risk of fraud.

If you suspect you have encountered a financial scam, refrain from engaging further with the perpetrator and report the incident immediately. Contact your bank or financial institution to freeze your accounts and prevent unauthorised transactions. Reporting scams to relevant authorities, such as the ACCC or Scamwatch, helps raise awareness and prevent others from falling victim to similar schemes.

In 2023, the ACCC received funding to launch the National Anti-Scam Centre, which will expand on the existing work being undertaken by Scamwatch.

The new centre will bring together experts from the government, the private sector, law enforcement and consumer groups to make Australia a harder target for scammers.

“The centre will tackle harmful scams and work with others to find new ways to stop scammers from reaching Australians and taking their money or personal information,” an ACCC spokesperson said.

The National Anti-Scam Centre will achieve this goal of better protecting Australians by:

• Continuing helping people spot and avoid scams through its Scamwatch services, where up-to-date information on scams is released along with ways consumers can protect themselves;
• Improving intelligence and information-sharing across the government and private sector to disrupt scammers and make it easier for both the public and businesses to report scams; and
• Bringing together government and industry expertise in short term and action-focused working groups to coordinate efforts to combat specific scams.

For more information on the National Anti-Scam Centre, visit www.accc.gov.au/national-anti-scam-centre