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How to spot a financial scam

In the past three years, over 7000 Australians have lost at least $500 million to financial scams.

  • Could you fall victim?
  • Do you know how to spot the clues?

It looks real

Scams that catch people often look realistic and are presented professionally. Scamsters often go to a lot trouble to:

  • print attractive documents and set up a business-like website
  • choose names that sound like reputable companies
  • tell a persuasive story using the right jargon
  • drop the names of people you know to build your trust.

Five clues for spotting scams 

  1. Bigger and faster profits than real investments

    Scams always offer a higher return than genuine investments. Some offer 20% a year, others go for 300% a year or even more. It's too good to be true. By comparison, Australian shares are some of the most successful investments, and their value has grown about 7-9% p.a. over the long term. 

  2. Less risk and less effort than real investments

    Most scams say that financial success is easy and risk isn't a problem. But real wealth demands planning, hard work and guts. Even the best investors make mistakes and have to weather storms like market busts and economic recessions. 

  3. Something special that genuine investments don't offer

    It could be a 'secret' offer, 'inside information' or 'new techniques'. There's always some feature to make you feel like you've got an edge over other people. But chances are it's a fairytale - and it won't have a happy ending. 

  4. More urgent than the real thing

    Every scam gets dressed up as an opportunity, so scamsters often say 'don't miss out' and 'act quickly' to make you hurry 'before it's too late'. They're really just trying to grab your money before you have a chance to check properly. 

  5. Offered by a stranger

    Many scams come from overseas, through unsolicited email or surprise phone calls. Others get sold through 'wealth creation' seminars or on the grapevine. While the people can sound genuine, they rarely have any real credentials, such as an ASIC licence to give advice or sell financial products.

How to protect yourself

Always use Australian businesses that have an ASIC licence to sell financial products or give financial advice.

Lots more information about protecting yourself from scams

This article is not a substitute for independent professional advice. We do not warrant the accuracy, completeness or adequacy of the information or material in this article. All information is subject to change without notice. We and each party providing material displayed in this article disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material. You should make your own enquiries before entering into any transaction on the basis of the information or material in this article. Please ensure you contact us to discuss your particular circumstances and how the information provided applies to your situation.

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