Finance and investment scams

Financial and investment scams are deceptive practices aimed at defrauding individuals of their money or personal information. These scams can take various forms, but their goal is usually to steal your information and trick you into parting with your hard-earned cash.

Work your way through the red flags below to help determine whether a financial opportunity or communication is legitimate or not. 

Examples of financial and investment scams

Here are some examples:

• Phishing: Malicious actors pretend to be reputable organisations to steal your personal information, such as bank account details or passwords. They'll send you an email or text urging you to click on a link, leading you to a fake website where you inadvertently give away your details.

• Credit card fraud: Scammers don't need your physical card to make unauthorised transactions; they just need your card details. You might unknowingly provide these if you use your card on unsecured websites, through public Wi-Fi, or if your card gets lost or stolen.

• Loan scams: Have you ever received an email or text out of the blue congratulating you on being approved for a loan you never applied for? This is a classic sign of a loan scam, and it's often followed by an online loan enquiry, where scammers exploit your financial needs to extract money or information.

• Investment offers: Scammers might present you with lucrative investment opportunities, such as exclusive term deposits or advice from 'financial advisors.' These offers promise high returns with no risk.

How to identify financial scams

Before committing to any financial opportunity or responding to any request involving money, taking a quick moment to scrutinise the details can save you from potential scams.

Here are key red flags to look out for:

Unsolicited contact

Who reached out first? If someone contacts you first with financial advice or investment opportunities, put up your guard. Legitimate companies usually don't make cold contacts. Whether it's an email, a call, or a message, if you didn't initiate the conversation, question their motives.

Inconsistent bank account details

Pay close attention to BSB and bank account details in any financial transaction. Scammers might provide account details that don't match the supposed entity you're dealing with. Always verify account details independently. If you spot any discrepancies, it's likely a scam. Authentic organisations will have consistent and verifiable financial information.

Incorrect website or email domains

The domain name in the website address or email can tell you a lot about its authenticity. Scammers often use domains that mimic those of legitimate institutions but with subtle differences—such as misspellings or additional characters. Before clicking on any links or responding to emails, check the sender's domain carefully. Look for signs that it might not be official. Genuine companies have domain names that match their business exactly without any odd or out-of-place characters.

Spelling and grammatical errors

One of the first giveaways of a scam is spelling and grammatical errors in emails, messages, or official-looking documents. Reputable organisations take great care to ensure their communication is clear and error-free. If you notice odd mistakes, take it as a sign that the message might not be from the entity it claims to represent.

Keep in mind, however, that as scammers increasingly use artificial intelligence (AI) tools to craft convincing communications, spelling and grammatical mistakes are less common.

Promises of high returns

An offer promising unreasonably high returns with little to no risk is a glaring red flag. The world of investment doesn't guarantee miracles. If the promised returns sound too good to be true, they probably are. Genuine investments come with detailed information about potential risks.

Pressure for quick decisions

Scammers often create a false sense of urgency to pressure you to act quickly. They'll say it's a limited-time offer or that immediate action is required. Remember, genuine opportunities allow you the time to think and consult. If you're being rushed, step back.

Requests for personal information

Any request for your personal details—especially early in the conversation—should trigger alarm bells. Whether it's asking for your ID or banking details or to sign up for something, be wary. Honest entities will ensure privacy and security before such requests are made.

How to protect yourself against financial scams

Here are five actions you can take to lower your risk of falling victim to financial scams:

• Always double-check a source independently. A quick internet search can reveal a lot about whether an opportunity is genuine or too good to be true.

• Keep your personal information secure. Share it only when absolutely necessary and only with trusted entities.

• When making transactions, stick to secure, traceable payment methods. Avoid wire or crypto transfers to people or companies you don't know well. Scammers often prefer untraceable payment methods.

• Be sceptical of unsolicited offers. Unsolicited offers are a common scam tactic, whether through a call, email, or social media.

• Educate yourself about common scams. The more you know, the less likely you'll fall for a trick. Scamwatch regularly publishes news and alerts.

Think you've been scammed?

Take action fast and contact your bank as soon as possible. Report the incident to Australian Cyber Security Centre and Scamwatch to help prevent others from being scammed and for advice on what to do next.

Security scams and advice