Scams cost Australians hundreds of millions of dollars every year, according to the Australian Competition and Consumer Commission (ACCC).
To help Australians protect themselves, the ACCC has produced The little black book of scams. In this article we explore the most common scams to look out for, and how to protect yourself.
The top scams to avoid
Scammers are getting smarter, using increasingly sophisticated techniques, and creating convincing stories that persuade their victims to hand over their money or personal details. While many scams are cyber-enabled, others use more traditional communication techniques.
Below we explore some of the most common scams as outlined by the ACCC.
Dating and romance scams
How the scam works
Scammers create fake profiles on dating websites or social media platforms using photos and identities often stolen from other people. They use these profiles to establish a relationship with you, then asking for money to help with a problem they are facing. The scammer usually claims to be overseas and may even send you small gifts to establish trust.
How to protect yourself
- Never give your money or personal details to someone you have never met in person.
- Be weary if someone asks you to communicate outside the dating website or social media platform after only a few contacts.
- Do an image search to determine if the person is really who they say they are.
- Be cautious when sharing intimate pictures or videos online – scammers could use them as blackmail.
Investment scams
How the scam works
Investment scams come in many forms including cryptocurrency purchase, binary options trading, business ventures, superannuation schemes, managed funds and the sale or purchase of shares or property. Typically, the offer is too good to be true, and scammers use professional looking websites and brochures to create a sense of legitimacy.
How to protect yourself
- Don’t let anyone pressure you into making decisions about your money or investments.
- Check moneysmart.gov.au to see if they have an Australian Financial Services Licence.
Threat and penalty scams
How the scam works
The scammer will impersonate a reputable organisation such as the ATO, your bank or other service providers, and claim that you owe money. They will claim that if the amount is not paid, you will be arrested or receive a fine.
How to protect yourself
- Stop to think about whether the story the scammer has provided is true.
- Be suspicious if unusual payment methods such as gift cards or Bitcoin are requested.
- Verify the identity of the person by calling the relevant organisation directly. Find contact details through an independent source – do not use contact details given to you by the person.
Unexpected money scams
How the scam works
Scammers will tell you out of the blue that you are entitled to money or valuables, but you need to make upfront payments to get them. You will never receive what was promised and if you pay the fees, you will lose your money.
How to protect yourself
- Remember that if it sounds too good to be true, it probably is.
- Delete unsolicited emails if they look suspicious.
- Check the identity of the contact independently.
- Conduct a search online using the exact wording of the offer – many scams can be identified this way.
Prize and lottery scams
How the scam works
These scams try to trick you into giving money upfront or your personal details to receive a prize from a lottery or competition that you never entered. Scammers claim that you need to pay fees or taxes before your “winnings” or prize can be released.
How to protect yourself
Remember that you can’t win money in a lottery or competition that you never entered, and that you will never legitimately be required to pay a fee to collect winnings.
Online shopping, classifieds and auction scams
How the scam works
Scammers may:
- Create fake retailer websites,
- Ask you to pay outside of an auction site’s secure payment facility, or
- Post fake ads on legitimate classifieds websites.
If you purchase something from a scammer who has utilised one of these methods, your money will be lost and you won’t receive the item.
How to protect yourself
- Research the reputation and policies of the seller.
- Only pay via the website’s secure payment method and avoid non-traditional payment methods such as Bitcoin.
Scams targeting computers and mobile devices
How the scam works
There are various iterations of these scams including remote access scams, malware, keystroke loggers and spyware, and ransomware. These methods can allow scammers to gain access to your computer and your personal and financial information. In ransomware attacks, perpetrators demand a ransom in order to unlock the victim’s device and provide access to their data.
How to protect yourself
- Be wary of free downloads.
- Follow best practices to keep your office networks, computers, and mobile devices secure.
- Don’t open attachments or click on links in unsolicited messages.
Identity theft
How the scam works
Identity theft is a threat in every scam because scammers can use your obtained personal details to commit fraud.
How to protect yourself
- Be careful sharing information about yourself online, including social media, blogs and other online forums.
- Beware of any request for your personal information and independently check the organisation’s contact details.
Job and employment scams
How the scam works
Job and employment scams offer a lucrative job or “business opportunity” following initial upfront payments to cover costs such as training. Any money paid by the victim is typically lost and they do not receive anything, or what they expected.
How to protect yourself
- Beware of offers that promise income after an initial upfront payment.
- Do not provide your tax file number, driver’s licence or passport when applying for a job. You may need to provide this information but only after you have started work.
Charity and medical scams
How the scam works
Scammers take advantage of people seeking to donate to a good cause or find an answer to a health problem. Methods include charity scams, offering “miracle cures”, weight loss scams, and fake online pharmacies.
How to protect yourself
- If you are approached by a charity street collector, ask to see their identification.
- Check the Australian Charities Not for Profit Association’s list of registered charities.
- Consult your healthcare professional if you are considering a “miracle cure”.
Business scams
How the scam works
Scammers take advantage of the busy nature of many businesses to scam them. Methods include:
- False billing scams – you receive fake bills for unwanted or unauthorised listings, advertisements, products or services.
- Domain name scams – you are deceived into signing up for an unsolicited internet domain registration very similar to your own.
- Office supply scams – you receive and are charged for office products you didn’t order.
- Payment redirection scams – scammers pose as a regular supplier using hacked information, tell you they have changed banks, and ask that all future payments are made to a different account controlled by the scammers.
- Ransomware – devices and data are encrypted and a ransom is demanded to regain access.
How to protect yourself
- Be careful about who you provide your business’s banking, financial and accounting details to.
- Implement effective accounts management procedures.
- Train your staff to recognise scams.
- Back up your business data offsite and offline.
- Beware of emails requesting changes to payment details.
Key takeaways
There is a wide range of scams which pose a significant threat to Australians. Scammers use various communication channels to target potential victims including email, phone, face-to-face, social networks, dating sites, and online shopping sites. If you give scammers a chance to talk to you, they will start using tricks to convince you to part with your money.
It is important to be aware of the different scams that exist, how they work, and steps you can take to protect yourself.
