What to do if you think you're being scammed

What to do if you think you're being scammed

I was prompted to write this blog after a conversation I had with a Rivkin member last week. He sought my counsel regarding a recent approach he had had from an investment firm in the US. He had invested in some US company many years ago, and this ‘investment firm’ claimed to have a bundle of his cash and all they needed were his bank details. He was immediately sceptical, but others have not been so fortunate. Investment scams, in one form or another, have been plaguing Australians for some time now.

When I was 18 years old, a friend of mine received a letter in the post from Nigeria. I can’t recall the exact details, but it went something like this: Some state-owned corporation in Nigeria (I think, or it may have been some wealthy individual... does it matter?!) needed to transfer some enormous sum of money (many millions) out of the country and required assistance in getting those funds out. The money had allegedly been budgeted for some project but was never spent. And in exchange for my friend’s assistance, a roughly 30% commission would be paid to him. All my friend had to do was send some relatively small sum of money to get the process started (I can’t recall how much, maybe a few hundred dollars) and many millions would be deposited into their account in return for their assistance. Sound familiar?

Naturally there were various bells and whistles incorporated within the letter to lend it ‘credibility’ and attest to its ‘authenticity’; be it official government stamps and seals (like any of us would know a legitimate one if we saw it!), letterhead etc. And to an 18-year old fresh out of high school, the story did admittedly have an iota of plausibility... or at least we wanted it to be plausible. It was a lovely fantasy, but a fantasy nonetheless, and so we resisted any temptation to part with our money. Thankfully our scepticism, well placed as it was, won the day.

Such approaches represented the incipience of what has come to be known as the Nigerian scam, perhaps the most infamous of all investment scams. This was a time prior to the internet, when con artists and fraudsters had to rely on the good old postal service. Enter the internet shortly thereafter, and investment scams boomed. According to an Australian Crime Commission (ACC) report released last week, the internet has been like steroids for investment scams.

The ACC report estimates that more than 2500 Australians fell victim to investment scams in the past five years, losing more than $113m! And no doubt that figure is higher, with many failing to report their losses on account of sheer embarrassment at having been duped.

The ACC has completed profiling of victims of investment scams, and in what may come as a surprise, victims are usually male, over 50, well educated and have some investment experience. This clearly demonstrates the sophistication of today’s fraudsters. They are no longer simple con artists sending letters abroad. They are now transnational organised crime syndicates, establishing professional websites and ‘boiler room’ call centres, presenting themselves as the local authorities  wherever they are, and even manipulating search engine data to further ‘legitimise’ their online presence. Now that’s fraud on steroids!

And get this. Some people are scammed more than once. They succumb to the original scam, and the perpetrators of the fraud then on-sell the names of those defrauded to other syndicates, who subsequently present themselves to the victims as the authorities/regulators/police, and offer to hunt down lost money for a fee. Ruthless!

Please be vigilant in protecting yourself from such scams. The ACC advises people to simply hang up on unsolicited calls selling overseas investments. Furthermore, be sure to always seek independent financial advice, talk to ASIC, visit www.moneysmart.gov.au... whatever it takes to avoid falling victim. And remember, authorities/regulators/police will never require a fee to recover stolen monies.

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