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How to protect your savings from fraudsters

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You might have received a letter in the mail from the Australian Crime Commission (ACC) and Australia Post warning you about organised investment fraud.

I hope you took the time to read the letter and did not throw it straight into the recycling bin because it is serious stuff.

More than 2600 Australians have lost in excess of $113 million to serious and organised investment fraud, but it is believed there is high level of under-reporting and the extent is far greater, says the ACC. In some cases victims have lost all of their retirement funds. Individual loss ranges from $35,000 to more than $4 million.

So what is “serious and organised investment fraud”?

According to the ACC, it “uses sophisticated techniques to solicit investment in non-existent or essentially worthless shares and other securities” and is often referred to as “boiler room fraud”.

Often it starts with a cold call offering some fantastic investment opportunity. This has extended beyond company shares to include things like green energy investments, loans to fund new investments, options trading and mortgage or real estate investments.

“The telephone contact is often backed up with sophisticated looking but fake websites and publications to trick consumers into thinking the investment offer is legitimate and financially rewarding, says the ACC.

What is particularly alarming is that even experienced investors have fallen for this type of scam. The targets tend to be people nearing the end of their careers or in retirement.

The most likely victims are the middle-aged and older (often over 35 but usually over 50), men, small business owners, self-funded retirees, individuals who have previously made investments in other companies and were considered “financially literate”, those on shareholder registers and socially isolated individuals (geographically or otherwise).

To protect yourself and prevent investment fraud, the ACC recommends you:

  • Visit moneysmart.gov.au or phone 1300 300 630 for further information.
  • Report suspected fraud to the Australian Securities and Investments Commission, via moneysmart.gov.au or 1300 300 630, or your local police. Any information such as company name, location and contact details will assist with investigations.
  • Alert family and friends to this fraud, especially anyone who may have savings to invest.
  • Hang up on unsolicited phone calls offering overseas investments. Go to moneysmart.gov.au to check that any company you are considering investing with has a valid Australian financial services licence.
  • Always seek independent financial advice before making an investment.

Written by Maria Bekiaris

Maria Bekiaris

Maria Bekiaris is the former deputy editor of Money in 2001. She writes about personal finance and investing, and has contributed to Australian House & Garden, Good Health, and Mother & Baby. Maria edited the book A Real Girl's Guide to Money by Effie Zahos. She holds a Bachelor's degree in business.

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