Beware the promise of fantastic investment returns

Nowhere is this statement more accurate than in the field of investment scams.

"Bond investment scams typically impersonate well known Australian organisations and financial institutions and target individuals. In many cases the impersonation of trusted financial institutions or other companies is incredibly sophisticated.”

Australians lost a record $3.1 billion to scams last year, according to the Australian Competition and Consumer Commission’s ScamWatch. This was an 80 per cent increase on total losses recorded in 2021.

Of all the money lost to scams, the ACCC data showed investment scams were the highest loss category at about $1.5 billion – or roughly half of the overall total. The next biggest losses were to remote access scams ($229 million) and payment redirection scams ($224 million).

The sums lost in a single year to scams are alarming. ScamWatch received 239,237 scam reports last year, a 16.5 per cent drop on the number of reports received in 2021.

However the total financial losses reported last year soared by 76 per cent compared to losses reported in 2021. So the number of scams reported fell, but the amount lost per victim jumped by more than 50 per cent to an average of $20,000.

These larger amounts are partly a function of the way investment scams operate. They effectively dupe victims into transferring large amounts of money with the promise of impressive investment returns down the track.

Increasingly sophisticated

At ANZ we must continually review and adapt to keep customers safe as new scams emerge and scammers change how they operate. Investment scams, and more specifically bond investment scams, are a perfect example.

Our customer protection teams have seen an increasing number of incredibly sophisticated bond investment schemes as well a rise in so-called Business Email Compromise (BEC) attacks.

Customers must remain vigilant to scams and fraud when completing any transaction online and we are boosting investment in new technologies to fight scammers and protect our customers and the wider community.

In the last fortnight alone, ANZ has prevented and recovered more than $3.2 million from being transferred to online criminals from personal or business accounts in these types of scams. And in the last twelve months, our systems have stopped more than $60 million going to criminals.

Bond investment scams typically impersonate well known Australian organisations and financial institutions and target individuals. In many cases the impersonation of trusted financial institutions or other companies is incredibly sophisticated.

They can include slick-looking websites, detailed financial presentations and in-depth telephone conversations with people who sound very much like legitimate financial advisers or company representatives.

And in many cases the sums involved are relatively large, given the intention is to invest these amounts to make a significant financial return over time. Generally, victims will be convinced to invest in fake bond offerings which promise a fantastic return on investment.

Link to cryptocurrencies

Once the scammers receive the funds, they are often filtered through trading platforms and from there into cryptocurrency. Once this has taken place – and by the time the victims realise it’s not a genuine investment scheme – it is often very difficult to recover any of the funds.

By contrast BEC scams target businesses and involves a significant degree of planning and premeditation. In these scams online criminals pose as a trusted supplier or vendor and collecting payment for goods or services received.

Often a business will receive an invoice from a supplier whose email address has been compromised. The scammers have gained access to the internal systems of the business and begins to send emails purporting to be from the company.

In these emails or invoices they advise their bank details have changed and request future payments be paid into a different, fraudulent bank account. Again by the time the victim realises the supplier has not received payment, the funds are long gone.

In other variations of the BEC scam, online criminals will send an email to a company’s accounts team via a compromised email account, pretending to be a senior executive, requesting the urgent transfer of funds. Criminals can also request recurring salary or rental payments be directed to a new account.

Australians are normally a pretty savvy bunch but when it comes to financial investments, they often rely on the counsel of external advisers.

The best advice is to only deal with people you know and trust and always be very cautious if you are presented with any unexpected investment opportunity or requests to make payments to a different bank accounts. Customers should always double check out of the ordinary transactions or requests for funds leaving their accounts.

Difficult to spot

Remember the adage about anything that seems too good to be true. We’ve seen first-hand evidence of how sophisticated these investment scams are. In fairness to some of the victims, they are so believable it would be difficult for even a financially literate person to spot.

Often when we speak to customers who have been caught up in BEC or bond investment scams, they genuinely believe the person or vendor they have been communicating with is legitimate.

As a result these situations often require a deeper conversation with the customer and a more detailed level of education from our end to enable them to understand the sophistication and tactics of these criminals.

We’ve also been investing in new technology and systems to monitor and block scams as well as hiring or training experienced staff to handle these more complex situations.

As the scams become more sophisticated, both companies and individuals need to be more aware of what to look out to prevent further funds flowing fraudsters and scammers.