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How to identify an investment scam?
True stories of investment scams?
How to check an investment is real?
What to do to protect yourself from investment scams?

-Reclaws International (
Mar 07

Reclaws International: Fake companies and investment frauds

Investment scams are often so professional, slick and believable that it is hard to tell them apart from genuine investment opportunities. Our tips break down how investment scams work.

How to identify an investment scam

Investment scams can come to you via a phone call, email or social media. They may even be an offer from someone you trust.

There are three main types of investment scams:

  • The investment offer is totally fictitious and does not exist.
  • The investment offer exists but the money you give the scammer is not going towards that investment.
  • The scammer says they are representing a well-known investment company but they are lying.

In all cases the money you 'invest' goes straight into the scammer's bank account and not towards any real investment. 


Investment scams are growing

In 2016, the number of investment scams reported to Scamwatch increased by 40% from the previous year, according to the ACCC's Targeting Scams report


What a scammer will say to get you to invest

The scammer will offer you: 

  • High, quick returns and sometimes tax-free benefits
  • Share, mortgage or real estate investments, 'high return' schemes, option trading or foreign currency trading
  • No risk or low risk investment, as you can sell anytime, get a refund for non-performance, have insured or 'guaranteed' transactions or swap one investment for another
  • Inside information, the opportunity to invest before a public float or discounts for early bird investors

Smart tip

Remember that a glossy brochure or website is not evidence that an offer is a good investment or even a real deal.

Warning signs of investment scams

The investment offer may be a scam if the person:

  • Does not have an Australian Financial Services licence or says they do not need one
  • Rings you many times and tries to keep you on the phone or emails you a lot to keep you engaged
  • Says you need to make a quick decision or you will miss out on the deal
  • Claims they are a professional broker or portfolio manager and sounds professional but is actually following a script
  • Uses a name or claims to be associated with a reputable organisation to gain credibility e.g. NASDAQ, Bloomberg
  • Offers you glossy prospectuses, brochures, share certificates or receipts or directs you to a slick website

If the investment offer has some of these signs hang up the phone. If you manage to record some of the caller's details please report the offer to ASIC.

Tactics used by investment scammers

Scammers will use a range of tactics to get you to invest in their company. Here are some of the common strategies. 

Overseas operators

Many investment scammers operate from overseas or offer foreign investments as their activities are illegal in Australia. Overseas scammers target Australians as ASIC does not have international jurisdiction to prosecute them.

Fake websites

Many scammers use the internet to make their investment appear legitimate. They use highly sophisticated websites and issue online press releases that make false claims of outstanding corporate performance. They even provide some victims with logins to view fake investment balances and growing returns. See protecting yourself from online scams to help reduce your cyber risk.

Fake social media profiles

Some scammers contact you through social media messaging, advertisements displayed on your social media feed, or by requesting to be your 'friend' first. They may pose as someone you know or have a connection to, in order to gain access to your profile information and to send you offers to invest and make quick money.

They may also use your information to impersonate you and create a fake social media account to approach people in your friends list. See identity fraud for more details.

Passing your call along the line

Investment scammers use a team of less experienced staff to make the initial call. The junior staff follow a tight script to check your interest. If you take the bait they hand you onto a more senior person. This can happen two or three times.

The more senior people are called 'closers'. They are extremely skilful sales agents and their job is to make you feel compelled to close the deal and send your money.

Long or persistent phone calls or emails 

Investment scammers will call you endlessly or keep you on the phone for a long time with promises of wealth or opportunities lost if you do not take up the offer. They will not take no for an answer and ask you about your worries to reassure you. As long as they can keep you talking or emailing, you have not really said no.

Remember that there are Government standards that outline when and how telemarketers can contact you but investment scammers will contact you within and outside these times. Telemarketers are not allowed to call you before 9am or after 8pm weekdays (or after 5pm Saturdays), and never on a Sunday or public holiday. See the Do not call register for more details.

Stop you pulling out of the deal

Scammers may try to swap your current investment for another one if you try to change your mind about the deal. They may also try to convince you that your investment will increase in value soon. Even though they know you will never get your money back, they still want to try and get more money from you.

Scammers can also threaten baseless legal action to keep you from pulling out of the deal. This is usually just a threat and they don't carry it through.

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