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Protecting Yourself From Investment Scams In Australia

Protecting Yourself from Investment Scams in Australia

Investing your money in a promising deal is tempting for any investor, but as this guide will show you, investment scams in Australia are easy to fall for and hard to avoid.

Investment scams have been around since the dawn of time. They have emerged throughout the ages and will continue to do so. For this reason, we need to be aware of how to protect ourselves against the most common types of scams and individuals looking to take advantage of our hard-earned money.

With that in mind, how can you ensure you’re making well-informed decisions with your future investments?

Common Investment Scams in Australia You Need to Watch Out For

1. Advance Free Scheme

This is a common scam used to lure investors into fake ‘business’ deals, either by offering some shares in a company or a high return on investments. In most cases, this will mean asking for money upfront. This is most common with investments that offer a share of the earnings and profits of the company. Victims usually pay an upfront fee, regardless of the investment, but in the majority of cases, they get nothing in return.

2. Boiler Room Scam

When scammers set up a makeshift workspace and invite you for a meet-up to talk about a fake deal, then this is known as a boiler room scam. These are fraudsters who hide passes of their made-up company as legitimate, making it easier for them to fool aspiring investors.

Boiler rooms are a high-pressure, aggressive form of investment that claim to offer a high rate of return but will also require investors to pay a fee. In most cases, the company will come under suspicion from the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulatory Authority (APRA) and subsequently dissolve, only to re-appear under a different name.

The fraudster will try to get investors to commit as soon as possible, so they can’t back out of the deal.

3. Offshore Investing Scam

Offshore investing scams often require investors to send money via wire transfer to an overseas bank account. It can be done for various reasons, with many of them being linked to the anonymous nature of these accounts. Investigations have also revealed that offshore bank accounts are often used to launder money.

4. Pension Scam

This type of scam is often found in Australia, where the pension industry is highly regulated. In some cases, pensioners are approached by fraudsters who claim to have control over the way their pensions are invested and will promise a higher level of return in return for an upfront payment. This is known as a pension liberation scam.

The Bottom Line: The Importance of Spotting Investment Scams

It’s important to remember that investment fraud will only happen if you fall for it. While this may seem obvious, it’s a common mistake and something you should avoid in the future. Here are some common traits of investment scams in Australia to look out for:

  • They may try to persuade you to quickly invest before you have time to think about it;
  • They may promise to give you a high rate of return for the amount you invest;
  • They may use high-pressure tactics to persuade you to send money;
  • They may request an advance fee from you;

Never invest money you can’t afford to lose with that in mind. Always invest wisely and when you’re confident that the investment is genuine, and that it has a history of credibility.

Are You Looking for the Best Wealth Management Services on the Central Coast?

Most hardworking people like you dream of creating a financially secure future, but taking the right steps to build your wealth is a trial-and-error process that can feel too daunting on your own. Our financial consultants in at Central Coast Financial Planning Group can help get rid of the guesswork with our financial planning services, where we strive to help everyone achieve their retirement goals.

We’ve got you covered, from investment advice to superannuation advice to aged care planning. Call us or book online to secure a meeting with us today!


DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.
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