What is an investment scam?

There are a myriad of investment scams floating around, but what they have in common is that there is a promise of high returns, usually with little to no involvement from the investor other than to send funds.

Scammers offer investments in unregistered securities, such as stocks, bonds, or promissory notes, or offshore accounts and funds. They offer them without having the necessary licences or authorisation, and the investment may be entirely fraudulent or involve exaggerated claims about potential returns.

Investment scams are marketed using very convincing websites, endorsements and collateral, making them difficult to identify.

Crypto scams involve the promise of high returns, anonymity, and guaranteed profits. They leverage the ‘unknown’ of cryptocurrency to deceive investors into investing money, only for the funds to disappear or provide little to no return.

How to detect an investment scam

Detecting an investment scam requires a healthy dose of scepticism. Here are some red flags to watch out for:

• Unrealistic promises: Be wary of investments that promise guaranteed high returns with little or no risk. If it sounds too good to be true, it probably is.  
• Unsolicited contact: Be cautious of unsolicited investment offers, especially those that come through email, social media, or phone calls. Legitimate investment firms typically don't solicit business this way.
• High-pressure tactics: Scammers often use high-pressure tactics to rush you into deciding to invest. This gives the victim little or no time to investigate the legitimacy of the offer.
• Lack of transparency: If the person offering the investment is unwilling or unable to provide evidence that the investment or company is real, then it likely isn’t.
• Unregistered or unlicensed operators: Check if the person or company offering the investment is registered or licensed with the relevant Australian financial authorities, such as the Australian Securities and Investments Commission (ASIC). ASIC’s MoneySmart has an investor alert list which can help you find out which entities are not to be trusted.
• Difficulty withdrawing funds: If you have difficulty withdrawing funds from an investment, it could be a sign of a scam. Legitimate investments should allow you to access your money when you need it.

What to do you if spot an investment scam

Don’t transfer money and report \the scam to National Anti-Scam Centre (NASC) - Scamwatch. By sharing your story, you contribute to protecting others and stopping these criminals.

If you have lost money as part of the investment fraud, immediately report the transaction(s) to us and complete a report through ReportCyber.