Investment scams

Be suspicious of anyone offering you easy money. Scammers are skilled at convincing you that the investment is real, the returns are high and the risks are low. There’s always a catch.

If you think you’ve been targeted by scammers, act quickly. For steps to take and where to report a scam, see what to do if you’ve been scammed.

How investment scams work

There are many ways investment scams may appear. Three main examples are:

• The investment offer is completely fake.
• The scammer is pretending to offer a legitimate investment, but keeps any money given to them.
• The scammer says they work for a well-known company that is offering a legitimate investment – but they’re lying.

In any case, the money you ‘invest’ goes straight into the scammer’s bank account and not towards any real investment. It is extremely hard to recover your money if it goes to a scammer based overseas.

Anyone can be scammed, and every scam is different. Scams are often hard to spot and can feel legitimate in the moment. Scammers can use professional-looking websites, advertisements and apps, and impersonate legitimate companies.

Important

Scammers are using deepfake technology to create fake celebrity videos promoting Quantum AI.

Quantum AI is a fake online investment program. It claims to use artificial intelligence (AI) technology and quantum computing to generate high returns for investors. Fake trading results are displayed on a website manipulated by scammers.

If you see a celebrity spruiking an investment, search online to see if the person has posted warnings about being impersonated.

Spot the signs of a deepfake video:

• The person speaks with unusual pauses, odd pitches or different accents.
• Mouth movements aren’t in time with their speech.
• Facial expressions and movements don’t match the speaking tone.
• The video is low resolution.

Do not click on any links promoting Quantum AI, or similar scams such as Immediate Edge and Quantum Trade Wave. Learn more about this scam.

How scammers contact you

Scammers can come from anywhere. The most common approaches are:

• Unexpected contact – they may contact you by phone, social media, email or text message. They might pretend to be someone you know, such as your bank, financial adviser, fund manager, or even a friend. They’ll offer guaranteed or unrealistic high returns on an investment.
• Fake investment trading – they use real investment trading platforms to set up fake accounts. Then they will help you trade via an account manager or offer to trade on your behalf. Once you deposit your money it’s gone for good.
• Fake investment comparison websites – scammers will get you to enter your personal information into their fake website, then contact you to sell their scam investment.
• Websites with fake ASIC endorsements – slick websites with fake investing information and performance figures. They may claim to be endorsed or approved by ASIC, and may show the ASIC logo.
• Dating apps – using romance to form a relationship with you, then offering you an ‘investment opportunity’. (This is also known as ‘romance baiting’.)
• Paid advertising – scammers often pay big money for advertisements, to appear high in online search results. They also advertise through social media. Advertising a scam is illegal.
• Fake news articles – scammers will promote fake articles on social media or news websites, linking to their scam websites.
• Deepfake celebrity endorsement videos – scammers use a deepfake celebrity video to promote fake investments.

What scammers may offer you

A scammer may tell you they’re offering:

• guaranteed, quick and easy investment returns and sometimes tax-free benefits
• investments in shares, cryptocurrency, mortgage, real estate or virtual investments, all with ‘high returns’
• a (fake) trading platform to trade foreign currency, gold, options or futures
• commissions for building their client base and getting others to invest
• an opportunity with no risk or low risk, because you will:
  • be able to sell anytime
  • get a refund for non-performance
  • have insured or ‘guaranteed’ transactions
  • be able to swap one investment for another
• inside information on initial public offerings or discounts for early bird investors, often falsely impersonating real companies to pitch their offer

How scammers convince you

Scammers will look at the latest market and investment trends for opportunities. They often use well-known company names, platforms, and terms (such as ‘crypto’) to lure investors in and appear credible.

This may include fake:

• crypto (virtual currency) investments
• trading companies, getting you to invest with them through real apps and trading platforms
• offers of inside information on public company floats, often naming ones that have been hyped in the media or on social media
• offers to get your money back from a sharemarket fall or previous scam
• references to well-known Australian companies or regulators, often using the Australian Coat of Arms or Government logos
• offers to keep your money safe in well-known Australian banks

Important

Beware of scammers offering investments or asking for payment using crypto. A legitimate financial services firm is unlikely to ask you for payment in crypto. Crypto-assets (for example, cryptocurrency) are largely unregulated in Australia and are high-risk, volatile investments.

Payments made using crypto are very difficult to trace and recover. To find out more, see cryptocurrencies.

Other tactics used by investment scammers

Operate from overseas

Investing in overseas companies or through brokers based outside Australia can be risky. If you invest and something goes wrong, you may not have access to important consumer rights and protections under Australian laws.

Convincing you not to pull out of the investment

They may try to swap your current investment for another one, convincing you the value will increase, or threaten you with legal action or fees.

A common tactic is to ask for ‘insurance’ or ‘taxes’ before funds invested can be released. This is just another method to extract more money from you.

‘Pump and dump’ scams

Scammers use social media and online forums to create fake news and excitement in listed stocks to increase (or ‘pump’) the share price.

Then they sell (or ‘dump’) their shares and take a profit, leaving the share price to fall. Any other investors are left with low value shares and will lose money. This may be market manipulation which is illegal.

Protect yourself from investment scams

Investment scams can look very convincing. It may be hard to tell if they’re genuine investments or not.

Always use a licensed Australian financial services provider when you invest. Check they are listed on AFCA’s financial firm directory.

Before you invest your money, check basic facts about what you are investing in and who with. Follow the tips on check before you invest.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/financial-scams/investment-scams
Important note: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. Past performance is not a reliable guide to future returns.
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