How to spot an investment scam

Australians lose more money to investment scams than any other type of scam. In 2022, investment scam losses totalled $1.5 billion – 66% of total losses reported to ScamWatch. 

Learn how to protect your life savings, recognise an investment scam and stop get-rich-quick schemes in their tracks with our top tips.

What are investment scams?

Investment or financial scams are when someone promises you a quick and easy money-making opportunity. These scams can be related to business ventures, superannuation schemes, managed funds, cryptocurrency, shares or property. 

Investment scammers convince you the investment is real, that you’ll get high returns with little or no risk and without putting in much skill, time or effort.

It sounds like a dream! And it’s because it is. It’s all a ruse designed to steal your money from you. 

What scammers promise

Always be suspicious of anyone promising you a quick and easy money-making opportunity. Investment scammers will offer:

• “Not-to-be-missed”, “high return”, “risk-free” or “guaranteed” opportunities.
• Quick and easy investment returns, possibly with tax-free benefits
• Opportunities to invest in shares, cryptocurrency, property or business ventures, all with high returns.
• Inside information about public company floats or discounts for early bird investors.
• No risk or low risk returns as you can sell anytime, get a refurnd if the investment doesn’t perform, or be able to swap investments.

These scammers will:

• Have professional brochures and websites that look like the real deal. 
• Call or email out of the blue.
• Pressure you to make a decision quickly or you will miss out.

Check if the investment is real

Don’t let anyone pressure you into making decisions about your money. Protect yourself by taking the time to do some research to see if the investment opportunity is real or fake. 

• Search online for any information about the investment, individual or company. 
• If you do want to double-check any details, be sure to source your own phone number, email or web address online. The ones they provide won’t be legitimate, so don’t click on any links within the email or use the contact details they offer you.
• Check to see if they have an Australian Financial Services Licence. If they don’t, they shouldn’t be selling you anything! (Be wary of some scammers provided fake licence numbers.)
• Search the ASIC’s Offer Notice Board to see if their investment prospectus or fundraising disclosure documents are registered with ASIC.
• Make sure they are not named on Moneysmart’s list of unlicensed companies or on the International Organization of Securities Commissions investor alerts.
• Look up the company’s website registration details. A new website for an existing company is a red flag.
• Get independent financial advice. If you have a financial adviser that you trust, seek their advice, contact your bank and ask to speak with one of their advisers or find a financial adviser who’s registered with ASIC.
• Often scammers will pretend to be financial advisors with well-known financial planning companies. Follow up to see if the person actually works with that company. Use contact details you have sourced yourself on their official website or secure app. Look closely at their email address – it will be slightly different from the one the real company uses. 

What to do if they threaten you

Sometimes these scammers will use threats to try and frighten you into handing over your money. After all, they’re desperate to scam you. They may:

• Threaten to arrest you or charge you with a huge fine if you don’t pay them.
• Pressure you to pay immediately or within a 24-hour window.
• If you’ve newly arrived in the country as a migrant, they may threaten you with deportation. 
• Pose as a government authority or trusted company. Stop, think, and double-check! A government agency will never ask for payments in unusual ways (like Bitcoin or gift cards). 

Receiving threats or pressure over an investment opportunity is an immediate red flag that it’s a scam. Don’t be rushed or pressured into a making a bad financial decision. 

Hang up or close the email and stop all communication immediately. Block their number and/or email and report them to ScamWatch.