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Investment scam losses reported to ACCC set to double in 2021

2020 was the costliest year on record for scams, with investment scams behind most losses. But 2021 is already worse.

senior person on smartphone with credit card
Last updated: 05 October 2021
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Need to know

  • Investment scams come in many forms, but cryptocurrency scams are the most common
  • People aged 65 and older were the group that had lost the most to investment scams as of August this year 
  • People aged 18 to 24 had reported $1.7 million in losses to the ACCC as of August – a 259% jump on all of 2020

Australians lost more than $851 million to scams in 2020 – the worst year on record – and it looks like 2021 will be another banner year for scammers. 

Topping the list both this year and last are investment scams. 

In 2020, Australians lost $328 million to investment scams as reported to the ACCC and other government agencies, banks and payment platforms. In the first half of this year there's been $70 million in losses to investment scams reported to the ACCC's scamwatch platform alone, and this figure is expected to double. 

Once figures are compiled from other government agencies, banks and payment platforms at the end of the year, it's likely that investment scam losses will set a new record.

The most common mode of contact for investment scammers was the phone, followed by mobile apps and social networking sites

As of August 2021, people aged 65 and older had lost the most money to investment scams ($18.8 million) reported to the ACCC so far this year. But losses of $1.7 million among people aged 18 to 24 is a 259% jump on all of 2020. 

Indigenous consumers reported losses of $945,270 as of August, a threefold increase on the $336,796 in losses reported to the ACCC last year. 

The most common mode of contact for investment scammers was the phone, followed by mobile apps and social networking sites. 

senior person checking their bank statement

In 2020, Australians lost $328 million to investment scams.

Cryptocurrency leads the way

"More than half of the $70 million in losses [reported to the ACCC this year] were to cryptocurrency, especially through bitcoin, and cryptocurrency scams were also the most commonly reported type of investment scam, with 2240 reports," says ACCC deputy chair Delia Rickard. 

A typical cryptocurrency scam starts off as a pyramid scheme, with victims lured in by internet scammers claiming to have developed highly profitable trading systems based on special algorithms. Many scammers also throw in fake celebrity endorsements. 

More than half of the $70 million in losses were to cryptocurrency, especially through bitcoin, and cryptocurrency scams were also the most commonly reported type of investment scam

ACCC deputy chair Delia Rickard

In the beginning, victims will receive small returns on their investments that come from the initial deposits of other victims. But then the scammers will say they're having problems with the system, cut off contact and keep the money. 

As of late August, losses to investment scams involving bitcoin alone had reached $25.7 million as reported to Scamwatch, compared with $17.8 million in all of 2020. 

Imposter bond scams

Older Australians looking to park their savings in bonds lost about $6.8 million to corporate bond scams in the first half of 2021, according to reports to the ACCC.

In these types of operations, the scammers pose as legitimate companies. 

Scammers use the companies' legitimate prospectuses which are registered with ASIC, link to the actual websites, and have the correct ABN/ACN details

ACCC deputy chair Delia Rickard

"These scams are particularly hard to detect because scammers use the companies' legitimate prospectuses which are registered with ASIC [Australian Securities and Investments Commission], link to the actual websites, and have the correct ABN/ACN details," Rickard says. 

"However, the scammers change key details such as contact information and bank details." 

Almost half the losses involved fake bond sales for well-known and respected companies. The ACCC's advice? Find the company's contact information yourself and check to see if the bond sale is legitimate. 

Ponzi schemes 

The age-old Ponzi scheme (where existing investors are paid with the funds collected from new investors) is still a popular tactic among scammers, who generally use social media these days as the preferred tool for luring in victims. 

Two Ponzi schemes in particular, the Hope Business and Wonderful World scams, were responsible for more than $1 million in losses as of 24 August this year, and were the subject of more than 400 reports to the ACCC's Scamwatch reporting service. 

Victims were invited to invest their money via apps and could at first make small withdrawals ... then the scammers cut off all contact

Victims were invited to invest their money via apps and could at first make small withdrawals that came from other people's deposits. Then the scammers cut off all contact.

After the ACCC intervened, the Hope Business app and the main Wonderful World app were removed from the Google and Apple apps stores. 

This Ponzi scheme disproportionately affected members of culturally and linguistically diverse (CALD) communities, including recent migrants from Burma and Sri Lanka. 

(Overall, about 13% of losses, $9.6 million, to investment scams were from people whose first language isn't English.)

Investment romance scams

Romance scams originating through dating apps and websites can turn into yet another type of investment scam. 

In this case, the scammer will cultivate an online relationship with the victim and eventually say they know a great investment opportunity, usually involving cryptocurrency or bonds. But of course it's all a ruse to separate you from your money and then cut off contact. 

It's all a ruse to separate you from your money and then cut off contact

"These scams predominantly impact younger people, who might be seeing these 'investment opportunities' through social media, recommendations from friends, or by registering their interest in cryptocurrency on questionable websites," Rickard says. 

The way to avoid romance scams is never to take investment advice, send money, give credit card details, online account details or personal information to anyone you don't know or trust – which generally should include anyone you've only met online or over the phone. 

What to do if you think you've been scammed 

  • Contact your bank or financial institution immediately and change your banking details if they've fallen into the wrong hands.
  • Contact IDCARE on 1800 595 160 or at idcare.org if you suspect you're a victim of identity theft. (IDCARE is a free, government-funded service.) 
  • Report scams to the ACCC's Scamwatch

Have you been scammed? We're interested in hearing your story. Please get in touch at akollmorgen@choice.com.au

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