• Shaun O'Keefe I Financial Adviser

5 tips to protect yourself from being scammed

Updated: Oct 20, 2021

Financial scams are on the rise and thousands of families are falling victim every year. This article discusses some of the scams to be aware of and what to do if you think you have become a victim.


In 2020, 7,000 Aussies reported investment scams to Scamwatch. Thanks to COVID lockdowns, this is well up on the 5,000 reported in 2019. Scamwatch recorded investment scam losses of $65.8 million, but when you add in notifications made to other government agencies and the major banks and reported losses across 2020 soared to $328 million. Due to embarrassment, many losses go unreported so we may never know the full extent of the damage.


ACCC Deputy Chair Delia Rickard said:

“Unfortunately scammers continue to become more sophisticated and last year used the COVID-19 pandemic to scam and take advantage of people from all walks of life during this crisis.”

Most of us will likely be targeted by scammers at some stage. So how can we identify scams and help protect ourselves and our families from these devastating losses?


1. Ignore unsolicited offers

Most investment scams start with a phone call. The latest round seem to be pre-recorded messages that attempt to motivate you to action. I get them all the time. No matter how compelling the story told by the caller, if you haven’t done anything to invite contact from an investment’s promoter, it is likely to be a scam. The simple solution? Hang up - it's not rude - it's just safe. If the approach is made by e-mail, social media, or text message don’t click on any links and delete the message.


2. Beware of promises of large and guaranteed returns

As the age-old saying goes: if it seems too good to be true, it probably is. In times of low interest rates, it’s hard to find a good return on lower-risk investments such as term deposits. The promise of high returns, perhaps with some form of built-in guarantee may look compelling, and some investors are willing to put such promises to the test by making a small investment. When professional-looking statements show that the promised performance is being delivered, the investor makes a much larger deposit. Not long after that, the promoter vanishes. And so does your investment.


3. Research the promoter through independent and official channels

Australia has a very strong licensing framework with harsh penalties for those that don't comply. If the promoter is Australian, are they (and their investment prospectus) registered with ASIC? Do they have an Australian Financial Services Licence? Do they appear on the list of companies you should not deal with (available at moneysmart.gov.au)? Is their street address genuine and do they have a physical office? How long have they been in business? All these are sensible places to start your research. What if they are they based overseas? This is straight-up dangerous and should be a big red flag to you.


4. Educate yourself

These scammers are slippery. The scams they operate are evolving all the time and the tricks they play are expert. Government websites such as moneysmart.gov.au and scamwatch.gov.au provide information on a wide range of scams and are updated as new scams appear. They also provide advice on how you can protect yourself.


5. Get independent advice before investing

You really like the investment that's being promoted and want to get serious? Even with a legitimate investment, an independent assessment is a good idea. With a questionable investment, it might just save you from being scammed and the heartache that goes with it. We don't know what we don't know, so seeking advice upfront will be an added safety net for your family's money.

What can you do if you’re the victim of a scam?

You can make a report via the Scamwatch website, to ASIC, and to your local police. Stop sending money to the scammer, and beware of the double sting where scammers offer to supposedly help you recover your losses, for a fee, of course.


While ASIC and ACCC don't provide direct assistance to victims of scam, the information you provide can help with investigation and law enforcement, and also provide intelligence on scam activity. Police may also be limited in their ability to identify and prosecute scammers, particularly if they are located overseas. The sad fact is that most victims of scams never see their money again.

Practical help is available from IDCARE. This is a free support service that can assist businesses and individuals with a range of cyber issues including identity theft, romance scams, and investment scams.

Shaun O'Keefe thinks that families are important. He's found that he can help more people, more effectively when he helps families. As a fee-based financial planner, he works with families just like yours to bring personal values and financial resources in line so that you can keep focussed on the priorities in your life.


The information contained in this article is general in nature only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision concerning a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

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