What is an investment scam?

Investment scams are common and dangerous. Scamwatch reports that Australians lose more money to investment scams than any other type of scam, with scammers looking to trick you out of your hard-earned cash, it's important to skill up and become aware of investment scams.

At Optus, we're keeping an eye on scams as they evolve. We want you to stay safe while connected, and that's why we're talking about investment scams today - what they are, what are the key warning signs, and how you can best protect yourself.

What is an investment scam?

Investment scams involve a promise of a financial return, with the ultimate goal of stealing money from you. You may be approached through social media or online dating, with a relationship being built before you are asked and pressured into investing in a fake opportunity (similar to a relationship scam). You may also be presented with a supposedly unmissable opportunity that relies on you acting quickly.

Scammers may impersonate legitimate investment experts or companies and may try to convince you with seemingly impressive data and statistics, or the promise of little to no risk, with the goal of convincing you to invest in their fake investment. High pressure tactics are common with this type of scam, with the hope that you'll act quickly on an opportunity that may be too good to be true.

To keep the scam convincing, or to keep you sending them money, scammers may keep sending you fake data to make you believe your investment is improving. This tactic is used to build trust with the victim, and it may involve you sending small amounts of money over a prolonged period.

Scamwatch warns that scammers may allow small withdrawals, but may withhold your money if you decide to pull it all out – and may give you reasons as to why you're not allowed to completely withdraw. Overall – you run the risk of losing access to your money.

What are the warning signs of an investment scam?

Keep in mind that an investment could be too good to be true. An overblown claim on a quick, easy, or low-risk return on an investment is crucial to tricking you out of your money.

Scamwatch has identified six warning signs that an investment opportunity could be a scam:

• Fake news stories or ads that claim a celebrity recommends this scheme to make big money.
• An online contact (a friend or romantic interest) that you've never met in person starts talking to you about investing.
• Emails, websites or ads with testimonials and over-the-top promises of big returns.
• High pressure tactics designed to rush you to act so you don't 'miss out'.
• The 'adviser' who is helping you claims that they don't need an Australian Financial Services (AFS) license.
• You are asked to promote the scheme to friends and family to earn commission.

One crucial tell that a person may be presenting you with a fake investment opportunity is if they don’t hold an AFS license. The Australian Securities and Investments Commission (ASIC) notes that anybody wanting to run a financial services business in Australia needs an authorised AFS licence. If a supposed adviser contacts you, and doesn't have a licence, it is likely a scam. You can check if an adviser has a licence on the ASIC website.

How can I protect myself against an investment scam?

Pause and think:

• Be suspicious of investment opportunities that sound ‘too good to be true’ by promising unusually high or guaranteed returns.
• Check that any financial adviser or platform is registered with ASIC and appropriately licensed.
• Never invest solely on the basis of online advice from an adviser you haven’t met in person. Don't rush into a mistake.

It's worth keeping the Moneysmart investor alert list in mind. This list includes companies, businesses and websites that are not to be trusted, including ones that may be targeting Australian consumers, don't hold an AFS licence, or are not allowed to offer investments in Australia. Be wary of anybody on this list. If you're unsure about an investment, look the website, email or company name up on the list.

If you're looking into a potential investment and want a professional opinion, Scamwatch recommends getting independent legal advice, or advice from a financial adviser registered with ASIC.

If you're approached by a supposed financial adviser, verify contact details, including their address and contact details and check if the company is in any publicly listed directories. Don’t trust them at face value.

Finally, you can check where the domain name was registered. A newly registered website can be a warning sign. The Internet Corporation for Assigned Names and Numbers (ICANN) has a useful lookup tool for checking website information.

What do I do if I or someone I know is a victim of an investment scam?

If you or someone you know is a victim of an investment scam, contact your bank or your local financial counsellor. They may be able to help. You should also contact your local police station.

Additionally, change the passwords of all your devices and accounts immediately if they're at risk of being compromised. Scamwatch also recommends contacting IDCARE to help make a plan to limit the damage.

Reporting a scam to Scamwatch helps the program take action and stop scammers in their tracks. We recommend doing this so you can help other Australians at risk of falling victim.

Organisations including Optus, financial institutions, charities and government organisations may also have avenues of reporting scams directly to them. For Optus customers, if you believe someone is attempting to phish for your Optus details, you can let us know by contacting us. You can also tell us about SMS scams via ScamWise in My Optus App.

Learn more about scams on the Optus Scam Prevention website.