Australians Lose Over $100 Million to Investment Scams in 2021; Q3 Hits a Record High

Australians Lose Over $100 Million to Investment Scams in 2021; Q3 Hits a Record High

By Australian National Review

With investment opportunities opening to many people in the past year, the number of malicious players targeting to defraud unsuspecting victims has also risen. In this line, Australians have lost a significant amount of money to investment scams.

According to data acquired by Finbold, in the first three quarters of 2021, Australians cumulatively lost AUD 115.46 million to investment scams. 2021 Q3 recorded the highest losses at AUD 44.52 million, while the second quarter recorded AUD 40.85 million in losses.

Between January 2021 and September 2021, investment scams losses used phones accounted for AUD 43.5 million, with the internet ranking second at AUD 20.16 million. Social networking platforms emerged third at AUD 17.68 million. Mail ranked as the least delivery channel accounting for AUD 0.41 million. The data on Australia’s investment scams are based on the reports submitted to the Australian Competition and Consumer Commission (ACCC).

Scammers take advantage of pandemic

Alarmingly, the investment scams in Australia on a year-to-date basis already surpass the previous Finbold analyst’s projection for the whole of 2021. In 2020, Australians lost AUD 65 million in investment scams, while our previous estimates indicate that the figure should have hit over AUD 100 million by the end of 2021. This highlights that scammers continue to become more sophisticated in their means of defrauding people.

The scams emerged amid the coronavirus pandemic when most people were confined to their homes. Therefore, it can be assumed that the scammers have continued to exploit victims considering that the economy is opening up with increased vaccination.

Amid the pandemic, most people shifted to digital solutions in managing their finances. Notably, this consumer behavior change has spilled over in 2021, highlighting that scammers are increasingly leveraging the shift. During the same period, there has been an influx of digital investment platforms offering scammers an opportunity to defraud victims.

Phone, internet, and social media scams took center stage in this line as the three platforms are most commonly used in day-to-day life. Despite efforts to educate the public on spotting potential investment scams, fraudsters used people’s fears to pitch factors like Covid-19 cures or investments that supposedly would help people cash in on ventures connected to the coronavirus, such as a shortage of masks or hand sanitizer.

Notably, by using the popularity of platforms such as Facebook, scammers attempted to legitimize their schemes in return, establishing trust and credibility.

The pandemic also brought out a sense of loneliness resulting in the scams emanating from romance baiting through dating apps and websites. Scammers established a relationship with the victim and convinced them to invest through them losing money in the process.

Different forms of investment scamming

Furthermore, Australian regulators note that the scams took different shapes, citing cryptocurrencies as the most prevalent option. Most of the scammers pretended to have highly profitable trading systems based on individual expertise and algorithms they developed. Over the same period, cryptocurrencies have surged in value, attracting an influx of retail investors.

The fraudsters managed to fake celebrity endorsements to win the trust of unsuspecting victims. Some of the scams even made returns at initial stages, mainly comprising small profits from other victims’ deposits. Later on, the scammers cited problems with withdrawals and later cutting off communication.

The scammers are also attempting to bypass the laid down guidelines to help people detect possible schemes to lose money. For instance, they deploy companies’ legitimate documentation, link to the actual websites with correct registration details. However, they manage to stay on top by altering information like contact information and bank details.

With the investment scams increasing quarterly, there is a need to educate the public on detecting potential schemes. The focus needs to be on keeping up to date with the cropping up sophistication.

Original Source: https://www.australiannationalreview.com/state-of-affairs/australians-lose-over-100-million-to-investment-scams-in-2021-q3-hits-a-record-high/

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