Investment scams are making big money from Australians. In 2022, the nation was cheated out of more than $1.5 billion through investment scams, according to the Australian Competition and Consumer Commission (ACCC).1
The amount stolen dwarfs that of other scams. Last year, the next biggest reported scam losses were $229 million for remote access scams – less than a sixth of the damage from investment scams. Businesses that were tricked by investment scams lost a median $50,000 each.2
The ACCC warns that investment scams are becoming increasingly sophisticated and financially devastating. That’s why identifying methods to disrupt investment scams is one of the first projects CommBank is involved with at the new National Anti-Scams Centre (NASC), which launched on 1 July 2023.3
"Investment scams have the most significant financial impact on Australians and cause emotional devastation for victims," says CommBank General Manager of Group Fraud Management Services, James Roberts.
"CommBank data shows 58% of all scams by value initiated on NetBank and the CommBank app between January and June 2023 were investment scams, making it the number one scam type. In the same period, there were 4,505 investment scams targeting CommBank customers," he says.
What is an investment scam?
Investment scams offer fake money-making opportunities. They often lure in people with the promise of guaranteed above-market returns and may look like legitimate investments. The scammer may have contacted you by phone or email, or advertised through social media or online.
Business owners and leaders may be at higher risk of being targeted for investment scams because they’re more likely to have disposable funds to invest and therefore are a desirable target for scammers.
And if a business owner or leader invests company funds and then falls victim to an investment scam, it’s not just the business that could be compromised, but also the jobs of the people who work there. The impact could be immediately multiplied.
One CommBank customer lost almost $550,000 to what he thought was a legitimate investment group, after he saw an ad with a faked endorsement from a popular media personality.
He was told the company would use his deposits to invest in shares and cash, paying returns regularly. It also offered Bitcoin investments.
The customer regularly logged in to a web portal that showed his balance was growing. However that changed after he requested some funds be withdrawn.
Suddenly the portal showed he had a nil balance. The funds were not transferred and he hasn’t been able to make contact with the company since. He’s also concerned about ID theft, as the scammers asked for his ID documents before setting him up.
What can an investment scam look like?
The ACCC noted the following trends in investment scams in its April 2023 report.4
- Impostor bond and initial public offering (IPO) scams that involve scammers impersonating legitimate companies and investment opportunities.
- Romance-baiting scammers who persuade the target to invest in a scheme by talking about their own supposed success.
- Money recovery scams that ’follow up’ people who have already been scammed. These fake businesses charge large amounts of money to "get money back" for victims.
- Cryptocurrency investment scams.
Also be wary if someone asks to be paid only in cryptocurrency. Cryptocurrency is the payment vehicle of choice for scammers because it’s not easy to recover, can be sent overseas with little oversight, and the scammers remain anonymous.5
That’s why CommBank made the difficult decision last year to decline certain cryptocurrency payments in an effort to limit, or at least pause, funds entering scammers’ pockets.
CommBank making inroads in investment scam prevention
CommBank is on the front line of scam detection and prevention technology in Australia. It is using a combination of AI, machine learning and behavioural science to develop algorithms that identify possible scam activity in real time.
And it’s working.
"We saw the first slowing in the growth of investment scams from December 2022, after three or four years of losses that doubled every year," says a member of CommBank’s security team.
CommBank is sharing that expertise as a participant in the first NASC fusion cell against investment scams. The six-month taskforce, led by ACCC and ASIC, includes representatives from banks, the telecommunications industry and digital platforms.6 The taskforce will develop ways to stop scammers reaching potential victims, and also identify and remove investment scam websites.
How to avoid investment scams
Banks do what they can to protect customers, but staying alert yourself is your best defence. If you receive an unsolicited investment offer, even if it looks legitimate, do your due diligence.
- Keep yourself and your employees up to speed with scam prevention best practice (read more at our Business Security Hub).
- Check the ASIC Offer Notice Board to see if a prospectus relates to a recent offer registered. Also check that the people involved have a financial services licence.
- Go to the International Organization of Securities Commission's (IOSCO) investor alerts to make sure the company or website is not named.
- Never take the safety of your funds for granted. Remember to "Stop. Check. Reject."