Investment scams.
What is an investment scam? It’s the classic ‘get-rich-quick' scheme. Investment scams trick you into handing over your hard-earned cash for fake opportunities that promise to-the-moon returns with zero risk.
Spoiler alert: there’s no such thing as fast, risk-free riches. Remember what your mum told you. If it sounds too good to be true, it usually is.
How do investment scams work?
The scammer-in-question will try to lure you into handing over money for an investment that doesn’t exist or dangle the promise of ‘guaranteed’ returns that never come. They’ll pressure you to act fast, and before you realise it’s all smoke and mirrors, your money’s gone.
Scammers are pros at pulling you in. They'll cold-call, slide into your DMs, or hit you with flashy ads, all promising ‘exclusive’ investment opportunities. They might drop names of celebrities, tout the latest crypto schemes, or claim they’re the Wolf of Wall St.
Don’t fall for it; in these modern-day retellings of The Hare and the Tortoise, the hare doesn’t just lose the race – he loses his life savings too.
What do investment scams look like?
So, how do these scams actually play out? Picture this:
The ‘too good to be true’ stock tip.
A scammer poses as a stockbroker, promising huge returns on a ‘hot’ stock. You invest, but guess what? The stock never existed, and your money vanishes into thin air.
The crypto con.
You’re convinced to set up a crypto wallet with remote access. Once they’ve got control, your funds disappear faster than you can say ‘blockchain.’
The phony investment firm.
Everything looks legit: a professional website, glowing testimonials, and even fake ASIC registration. But when you try to withdraw your ‘profits’, you’re ghosted. Talk about an exit strategy.
Spot the investment scam red flags.
Scammers are getting smarter, but knowing how they move can greatly increase your chances of getting out scot-free. Here's how to spot the red flags before they catch you.
Unsolicited contact.
If they found you, not the other way around. Red flag.
Guaranteed returns.
Real investment always carries risk. If they say otherwise – Red flag.
Unrealistic returns.
Are they promising mouth-watering wealth? Red flag.
Pressure tactics.
‘Act now or miss out forever!’ That’s a scammer’s favourite line. Red flag.
Suspicious payment methods.
Are they asking for gift cards, wire transfers, or crypto deposits? Stick to the traceable stuff. Red flag.
Fake authority.
Slick websites can still be a scam. Look out for red flags like missing contact info, spelling errors, unverifiable credentials, or no SSL certificate (i.e. if their website is http://- rather than https://).
If something feels off, it just might be.
Is the website brand new?
Feel like something is off? Check when the domain name was registered with the ICANN registration data lookup tool.
A brand new site for an existing company? Red flag.
What investment scams are out there?
Real investment takes time, research, and a healthy dose of skepticism. Knowing the different flavours of fraud can help you spot them before they strike. Here's a quick list of investment scams:
Ponzi schemes.
New investors’ money is used to pay off earlier investors – until it all comes crashing down.
Pump-and-dump scams.
Scammers hype up a stock to inflate the price, then sell their shares, leaving you holding the bag.
Romance investment scams.
You get close to someone online, and suddenly they’ve got a ‘golden investment opportunity.’ Yeah, no.
Phantom funds.
Fake companies promise sky-high returns. But when you try to cash out? Poof! Your money’s gone.
Protect yourself from investment fraud.
Okay, now that you know how these scams work, how can you protect yourself from falling for them?
The key is being skeptical and doing your homework:
- If it sounds too good to be true, it is.
- Always double-check investment firms on ASIC’s financial register.
- Don’t share your banking details with anyone you haven’t verified.
- Get independent financial advice before diving into any investment.
At ME, we know how slick and convincing scams can be, and we’re committed to keeping you one step ahead of fraudsters.
We keep you in the loop with up-to-date alerts on the latest scams making the rounds. Check out our latest scam alerts to stay informed.
Knowledge is mightier than the keyboard. Something feeling a bit shady? Visit our Protect yourself page and shine a light on it.
If in doubt, call ME on 13 15 65 before making a payment.
Have you been the target of an investment scam?
It can be scary to realise that you’re being scammed – but don’t panic, you’ve still got options:
Here's what to do.
Cut contact immediately
If you’re still in communication with the scammer, cut ties. Don’t send any more money or share any more personal details.
Report it.
Let the right people know.
ASIC (Australian Securities and Investments Commission) If the scam involved financial services.
Scamwatch To help track and prevent future scams.
Talk to us We may be able to stop or recover transactions.
Secure your accounts.
Change passwords for banking, emails, and any other sensitive accounts. If you gave out personal details, consider identity protection services.
Check for chargebacks.
If you paid via credit card or bank transfer, a reversal may be possible.
Check for chargebacks.
If you paid via credit card or bank transfer, a reversal may be possible.