Reduce the risk of 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.

How investment scams work

There are three main types of investment scams:

  • The investment offer is completely fake.
  • The investment exists, but the money you give the scammer doesn’t go towards that investment.
  • The scammer says they represent a well-known company – 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 very hard to spot and can feel legitimate in the moment. Scammers can use professional-looking websites and apps, and impersonate legitimate companies.


Beware of scammers offering investments or asking for payment using crypto-assets. Crypto-assets (for example, cryptocurrency) are largely unregulated in some countries and are high-risk, volatile investments. Payments using crypto are very difficult to trace and recover.

How scammers get you to invest

1. The set up

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 fund manager, financial adviser, bank, 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 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 endorsements – slick websites with fake investing information and performance figures. They may claim to have been endorsed by displaying the logos of reputable institutions.
  • Dating apps – using romance to form a relationship with you, then offering you an investment opportunity.
  • 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, impersonating other news outlets and linking to their scam websites.

2. The offer

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’
  • options trading or foreign currency trading
  • 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

3. The hook

Scammers will look at the latest 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-asset (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, often using losses resulting from the COVID-19 pandemic as bait

How to spot an investment scam

  • Promise of low risks with high returns: Always remember, if something seems too good to be true it probably is. If you are promised ‘guaranteed returns’ this is a warning sign.
  • You are contacted out of the blue: You receive a call, email or message on social media from someone offering unsolicited advice on investments.
  • High-pressure tactics: You are contacted repeatedly and are told that you need to act quickly and invest or you will miss out.
  • Remember you have less protections with cryptocurrency investments and scammers know this.
  • Someone you haven’t met in person offers you investment advice: Never take investment advice from someone you meet on social media or a dating app.
  • Use of celebrity endorsements or images: These are usually fake. Celebrities rarely discuss their investments or financial decisions in public.
  • Someone has convincing promotional materials or websites: If they do not have valid registered documents, it is likely part of a scam.
  • You are asked to deposit funds into different accounts for each transaction: Scammers may claim this is for security reasons, or because they are an international company.
  • 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 out of victims.
Read also:  How to Recognize and Prevent Online Auction Scams

Common types of investment scams

Cryptocurrencies are digital currencies. Bitcoin is the most well-known form of digital currency. In some countries, cryptocurrency is not treated as ‘money’ or a ‘financial product’ and you have less protection if you invest and it turns out be a scam or you lose a lot of money.

It is very difficult to identify legitimate cryptocurrency investments from scams. Scammers take advantage of the hype and the less regulated environment to ‘invest’ in Bitcoin or another cryptocurrency on your behalf.

Before you invest you should ask yourself if you are willing to lose some or all of the money you have invested and know that if you go ahead you are investing with little or no protections behind you.

Cryptocurrency investment scammers are convincing. They may advertise or post on social media offering great returns from cryptocurrency trading. If you click on the advertisement or post, the scammer will contact you or you will be directed to a fake website. The scammer will offer to make an investment on your behalf, or provide details of an app or website through which you can invest.

Cryptocurrency scammers also commonly use platforms such as Discord and Telegram to contact people.

The scammers will encourage you to buy cryptocurrency through an exchange or request you send money to a company for them to do so on your behalf. They will then claim to either trade on your behalf, or coach you through making trades yourself. You will be able to see the profits you have made on a webpage, app or custom MetaTrader platform.

The data you can see will be fake and will show you profiting (or losing as a way to get you to invest more money). Eventually you will be unable to withdraw any money.

The scammers will make excuses for delays in withdrawals, you are banned from the platform or the trading platform is closed. When you try and find out what has happened, the scammers cannot be contacted and your money is gone.

Unsolicited contacts about investing

A scammer claiming to be a stock broker or portfolio manager calls, emails or contacts you on social media and offers financial or investments advice. They may even claim to be from an investment firm or company you have heard of, as scammers sometimes impersonate these businesses to seem legitimate.

Read also:  Charity scams: 9 tips to help avoid fakes

The scammer will claim what they are offering is low-risk and will provide you with quick and high returns, or encourage you to invest in overseas companies.

The scammer’s offer will sound legitimate and they may have professional looking websites and resources to back up their claims. They will be persistent, and may continue to contact you until you agree to invest.

The scammer may claim that they do not need an Financial Services licence, or that that they are approved by a real government regulator or affiliated with a genuine company.

The investments offered in these type of cold calls are usually share, mortgage, or real estate high-return schemes, options trading or foreign currency trading. The scammer is usually operating from overseas, and will not have an Financial Services licence.

Romance baiting

There is a kind of online romantic scam in which a cybercriminal creates a fake online identity to attract the victim. This method is also commonly referred to as catfishing.

The scammer sets up a fake dating profile and will connect with you on a dating website, dating app or social media.

The scammer will ask to continue chatting to you off the dating website or app, typically on a free but encrypted chat site such as WhatsApp, Google Hangouts or WeChat. They may say they want to do this as these chat sites are ‘more private’.

Scammers will make an effort to build your trust and will often do things like express strong emotions for you in a short period of time and share lots of ‘personal’ things with you.

Once they have gained your trust the scammer will tell you about an investment opportunity. Often, they say they have invested a small amount of and made a lot of money very quickly. They will encourage you to initially transfer a small amount of your own money to show how easy the investment is. You may see a quick return. The scammer then encourages you to invest larger amounts.

The scammer will tell you to top up your accounts to increase your profits. If or when you run out of money to transfer or want to withdraw all your funds, the scammer will cease all communication. You will then be unable to obtain your investments from the platform or be told the investment has gone wrong.

Celebrity Endorsement Scams

Scammers use the image, name and personal characteristics of well-known celebrities without their permission, to entice you into investing. Fake celebrity endorsements are often used to advertise scam cryptocurrency schemes.

The way the celebrities’ image is used can take two forms:

  1. An advert might pop up on social media or even YouTube using a celebrity’s image and claiming they endorse or have made a large amount of money from an investment opportunity.
  2. You may see a fake news story about an investment opportunity which appears to be from a well-known media site such as ABC News, The Project and using a celebrity’s image.

The investment adverts or news stories make claims about investment opportunities with huge returns and will typically link to a scam website, often involving a cryptocurrency investment ‘opportunity’.

Ponzi schemes

Ponzi schemes are scams that use funds collected from new investors to pay existing investors. No real investment exists and eventually these schemes collapse.

Scammers contact people on social media and asking them to download or invest through apps. They promise you will see high returns very quickly and you will think you do, but the scammer uses money other people have invested to pay you some return.

Read also:  How to Avoid Mobile Scams?

Once you have seen a return, the scammer will persuade you to encourage your friends, family and colleagues to invest in the same scheme.

They will pay them ‘returns’ and ask them to recruit people they know into the scheme as well.

Eventually, when the scammer runs out of money or the pool of people being recruited dries up, the scammer will disappear and no one will be able to recover their money.

Share promotions and hot tips

The scammer encourages you to buy shares in a company they predict is about to increase in value. You may be contacted by email, via social media or the message will be posted in a forum. The message looks like an inside tip and will usually stress that you need to act quickly. The scammer is trying to boost the price of stock so they can sell shares they have already bought, and make a huge profit. The share value will then go down dramatically.

If you invest you will be left with large losses or shares that are virtually worthless.

Investment seminars

Investment seminars may be promoted by promising motivational speakers, investment experts, or self-made millionaires who will give you expert advice on investing, with the purpose of convincing you into following high risk investment strategies. These strategies may include borrowing large sums of money to buy property, or investments that involve lending money on a no security basis or other risky terms.

The promoters may charge you an attendance fee, sell overpriced reports or books, and sell investments and property without letting you get independent advice.

If you invest there is a high chance you will lose money.


Superannuation scams offer to give you early access to your super fund, often through a self-managed super fund or for a fee. The offer may come from a scammer posing as a financial adviser. The scammer may ask you to agree to a story to ensure the early release of your money and then, acting as your financial adviser, they will deceive your superannuation company into paying out your super benefits directly to them. Once they have your money, the scammer may take large ‘fees’ out of the released fund or leave you with nothing at all.

You cannot legally access the preserved part of your super until you are between 55 and 60, depending what year you were born. There are certain exceptions such as severe financial hardship or compassionate grounds – but anyone who otherwise offers early access to your super is acting illegally.

  • If you are under 55, watch out for offers promoting easy access to your preserved superannuation benefits. If you illegally access your super early, you may face penalties under taxation law.

Reduce the risk of investment scams

Protect yourself

  • Do your own checks on any investment opportunity to make sure it’s real.
  • Take simple steps to protect yourself from identity theft
  • Make sure your privacy settings are up to date on your social media accounts.

Be cautious

  • Be wary of unexpected contact, particularly if you have replied to something on a website or social media platform.
  • Don’t trust any offer to invest if approached through social media. You don’t know who you are dealing with.
  • Always get independent financial advice before you invest.

If you think you’ve been scammed

  • Stop sending money to the company.
  • Report it to your bank or financial institution.
  • Be wary of falling for a follow-up scam or offers to recover your money.
  • Report it to your report it to your local police.

Article Source:

Website Fraud Risk Assessment

In the digital era, securing your finances against online fraud is paramount. Before making any financial transactions on a website or platform, it's important to verify its credibility and legitimacy.
To begin, you can check if the website you're considering appears on our public database of known scam sites by clicking "View Scam Sites" below. This database is regularly updated and maintained by our team.
Alternatively, you can click "Submit a Request" below to complete a form and request an evaluation from our team of experts. We will conduct a comprehensive assessment to determine if the website is legitimate, checking for any scams, fraud, or illegal activities.
Don't take any unnecessary risks with your finances - take action today and submit a request or view our list of scam sites.

Submit a Request View Scam Sites