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Common types of investment scams and the warning signs to watch out for

You should always be suspicious of investment opportunities that seem too good to be true – here’s how to spot a scam and protect your hard-earned money.

Fast and easy financial windfalls rarely come without a catch. If you get offered an unexpected investment opportunity promising high or guaranteed returns for low risk, it’s strongly recommended you proceed with a great deal of caution.

Unfortunately, Australians lose more money to investment scams than any other, often because they’re hard to identify unless you’re paying close attention. In January 2022 alone, Australians lost over $21.1 million to investment scams, according to data based on 804 reports to the Australian Competition & Consumer Commission (ACCC) – 45.5% of which suffered financial losses. Let’s lift the lid on investment scams and the warning signs to watch out for…


Investment scams come in all different shapes and sizes, but here are some of the most common types to be aware of:

Cryptocurrency scams: While digital currencies like Bitcoin are not scams, it can be very difficult to identify legitimate cryptocurrency investments from fake ones promoted by scammers taking advantage of a less regulated environment. Ultimately, whether it’s a scam or otherwise, you have little or no protection when investing in the crypto market.

Unsolicited contacts about investing: A scammer cold calls you claiming to be a stockbroker or portfolio manager offering low-risk investment opportunities with high short-term returns – generally share, mortgage or real estate schemes, options trading or foreign currency trading. These scammers often sound convincing and appear professional, but they will not have an Australian Financial Services (AFS) licence. In all likelihood, they will also be unreasonably persistent. 

Ponzi schemes: Ponzi schemes have been around for a long time, but it’s well worth a reminder of the warning signs – these scams use funds collected from new investors to pay existing investors even though no actual investment exists. Eventually, when the pool of people being recruited dries up, the scheme collapses and the scammer disappears. Be extremely cautious of anyone presenting an offer that seems too good to be true – even if you see an early return on your investment – then persuading you to encourage friends, family and colleagues to get on board as well.

Share promotions and hot tips: A scammer will claim to have an ‘inside tip’ and encourage you to buy shares in a company predicted to increase in value while stressing you must act quickly. In reality, the scammer is simply trying to boost the price of the stock before selling their shares and making a profit – leaving you stranded with low-value or worthless shares.


Investment scams tend to come with key warning signs. To spot an investment scam before it’s too late, look out for any of the following red flags: 

  • Any promise of low risks with high or guaranteed returns.  
  • A person you’ve never met suddenly offers you investment advice.
  • Being contacted by phone, email or social media message out of the blue from a person offering unsolicited advice on investments.
  • High-pressure tactics where you are contacted repeatedly and told you must act quickly or risk missing out.
  • An investment opportunity appears to be endorsed by a celebrity.
  • Otherwise convincing promotional materials or websites can’t be supported by registration with the Australian Securities and Investments Commission (ASIC).
  • Being asked to deposit funds into different accounts for each transaction – regardless of the reasons provided.

The good news is you can take proactive steps to improve your chances of avoiding investment scams. Before investing always seek independent legal or financial advice from a financial advisor who is registered with ASIC. You can check ASIC’s list of unlicensed companies that have either made unsolicited calls and sent emails about financial services or products, or do not hold a current AFS licence or Australian credit licence from ASIC. Keep in mind that a company not on this list could still be a scammer.

For further information about all types of scams, visit