Investment scams: How to spot them and protect yourself

Estimated reading time
 4 min

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• What are investment scams?
• How to spot an investment scam
• Ways to protect yourself against investment scams
• What to do if you think you’ve been scammed
• Who can you contact if you’ve been scammed?

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Imagine receiving a call from a persuasive financial adviser offering a once-in-a-lifetime opportunity to grow your wealth and retire early. It sounds irresistible - but beware: if it sounds too good to be true, it probably is.

Investment scams are big business. Ruth Talalla, ANZ’s Scams Portfolio Lead, explains that “Australians lose over a billion a year to investment scams. Investment scams are big business for scammers because they enable the scammer to steal large amounts very quickly – often a victim’s life savings or retirement funds.”

According to the Australian Competition and Consumer Commission (ACCC), investment scams cost Australians the most money in 2024, with losses reaching $945 million. This is why it’s so important to be able to spot investment scam red flags before you fall for one. Here, we’ll explore the different kinds of investment scams, how to spot them, and ultimately empower you with the knowledge you need to keep your investments secure.
 

What are investment scams?

In an investment scam, criminals try to convince you to move your money into a fake or non-existent investment opportunity. They’ll usually tempt you with promises of big returns and little to no risk, making it sound like a deal too good to pass up.

According to the National Anti-Scam Centre’s Scamwatch, most investment scams take place via phone and social media, however, scammers will also make use of email and even SMS.

Once in touch, the scammer will often inform you of a fantastic opportunity to grow your wealth. It will likely require a sizable investment from you (in some cases, your entire nest egg), but the returns they promise will be far higher than any other typical investment can offer. And the risks? “Ah don’t you worry about it,” they’ll say, “this is as close to risk-free as it gets”. In reality, the investment opportunity does not exist, and the scammer is angling to make off with your hard-earned savings.
 

How to spot an investment scam

Investment scams are becoming increasingly convincing, especially with the use of Artificial Intelligence (AI) tools. Scammers often go to great lengths to make their offers look legitimate - using professional-looking websites, brochures, fake account statements, and even call centres. That’s why it’s crucial to stay alert for the red flags.

What are common investment scam red flags?

• Being contacted out of the blue by a “financial expert” offering to take your savings and grow them exponentially.
  
  
• High-pressure tactics, such as constant follow-ups or urging you to act quickly before you “miss out.” Ruth explains that "Scammers are experts at using emotional triggers to manipulate people into sending money – for example creating a sense of urgency, excitement or fear to impair the victim’s rational thinking.” A legitimate advisor will also allow you to take your time to make a decision, rather than adopt high pressure sales tactics to rush you into making one.”
  
  
• Promises of unusually high returns, especially those that exceed typical interest rates on term deposits or bonds.
  
  
• Promises or guarantees that the investment is extremely ‘low risk’ or ‘no risk’.
  
  
• Avoidance of official channels, including statements that the investment doesn’t need to be registered.
  
  
• Lack of credentials, such as failure to provide an Australian Financial Services (AFS) licence or registration with the Australian Securities and Investments Commission (ASIC). A legitimate financial adviser will be registered with ASIC, have an Australian Financial Services Licence or Australian Business Number,” Ruth explains.
  
  
• Refusal to meet in person, insisting on communicating only via phone or online. 
  
  
• Celebrity endorsements – these can easily be faked using artificial intelligence. 
  
  
• Newly registered companies or websites, which may indicate a lack of credibility or history.
   

6 ways to protect yourself against investment scams

1. “Always check any investment opportunity to make sure it's real, especially if approached through social media,” Ruth says. Confirm the advisor’s credentials – You can look up their registration with the Australian Securities and Investments Commission (ASIC) via their website.
   
   
2. Do not take unsolicited financial advice from sources on social media – this could be a private message or a stranger tagging you in a post.
   
   
3. Keep across all activity in your bank accounts so you can spot any red flags early on.
   
   
4. Don’t click on web links sent by unknown sources. Instead, look up the organisation on its official website to see if the offer is legitimate.
   
   
5. Stop and think - Scammers will often apply time pressure by threatening that you will lose the chance if you don’t act immediately.
   
   
6. Ruth explains that you should ‘do your research before giving your details to an unsolicited caller or replying to emails offering financial advice or urgent investment opportunities.’ Take your time researching the opportunity, do a web search to see if the company or individual has been involved in a scam, speak to others involved, and seek financial advice from a registered professional. 
    

What to do if you think you’ve been scammed

If you have been caught up in an investment scam, know that this is not your fault, according to Scamwatch, these scams claim the most money from Australians each year. Below are some immediate actions you can take to protect yourself from further financial harm.

• If you think your super has been impacted, then contact your fund straight away to explain what has happened.
  
  
• If you have shared financial information or believe you have transferred money to a scammer, notify your bank immediately.  If you’re an ANZ customer, please contact us immediately.
  
  
• If you shared credit card details, block or cancel those cards immediately.  If your cards are with ANZ, you can do this through the app. Learn more.
   

Who can you contact if you’ve been scammed?

• Report the scam to the Police through the Australian Signals Directorate’s ReportCyber portal. This resource is there for reports of scams where money or personal information has been lost.
  
  
• Help others by reporting to Scamwatch to help them prevent future losses, monitor trends and educate the population about emerging threats. 
  
  
• You can also contact IDCare, a not-for-profit organisation providing support to those experiencing identity and cyber security issues.