Beware high risk, no reward investment scams

Delia Rickard, the Deputy Chair of the ACCC, warns of sophisticated investment scams

Introduction – Beware high risk, no reward investment scams

Ross Greenwood: Welcome back to money news right around Australia. Just a quick question for you, are you a male? Well, apparently according to the stats 60 percent of you listen to this program are male. Are you aged between 45 and 64? Well, the vast majority of people who listen to this program are aged between 45 and 64.

We’re trying to get you a bit younger, I’ve got to say. That’s why we apply some of the groovy music but that’s the truth, 45 to 64, male. Guess what, you are the most likely person in our community to fall victim to an investment scammer. True, because in the first half of this year, Australians lost more than $13 million to investment scams.

Now that’s coming from the AAAC, the scam Watch Website and that’s only the stuff that people have reported. In actual fact, well people have lost, it’s going to be many times that magnitude. So why is it mean in particular, aged 45 to 64, who are most common victims of these scams? Delia Rickard Richard is deputy chair of the A triple C who’s online right now. Delia Rickard, why?

Interview – Delia Rickard, the Deputy Chair of the ACCC

Delia Rickard: Hi Ross, it’s always good to be getting the target demographic. It’s a very good question and it’s been this way for a long time and Mercer did a big bit of research on this in the early ‘2000s and again that was exactly the demographic. I think it’s a few races, a lot of them are also involved in small business and they’re used to getting cold calls all the time, is part of their business, most of which are legitimate.

Also, that’s the age where you’re either thinking about retiring and wanting to make sure you put enough money for a comfortable retirement or you’ve just retired and you want to invest some of that lump sum you might have taken so it will last longer. And when you look at any of the literature around, how families break up their household, obviously not the case in every instance but more often than not, the women take care of the day-weekly budgeting, paying all the bills that sort of thing, and the men do the investing. I think the women are so busy doing everything else in the evening. So often they feel quite a bit of confidence and know what they’re talking about.

Ross Greenwood: [laughs] I mean we’re laughing about it but it’s a very significant and serious issue. I’m in that demographic myself and I sit there and go like, I’m pretty much know enough to sit there and say, if somebody calls out of the blue, I hang up the phone and say, “No, thank you, goodbye” and hang up the phone. If somebody sends an email and it says, “Open this up, this is going to be great”. I go, “No, thank you,” I delete the email. It’s not that hard to work it out, but sometimes somebody you get through must be very good to be able to convince otherwise sceptical people that they should invest or should put money on the plate.

Delia Rickard: They are very good at what they do and it’s not just stealing an email. But one of the worst things we’ve seen more and more is somebody will hack site your Facebook chat if you have one, and they’ll get access to your friends, and then they will send them a message pretending to be you, saying, “Look I’ve got into this terrific investment, I invested x, I’ve already got this back. I want to share it with you so you can do well as well.” And we’ve seen people lose substantial, I mean in the hundreds of thousands amounts of money through being approached that way by someone they think they know, they think they trust. They might think it’s a good investing and off they go.

Ross Greenwood: Can I just say if anybody ever gets a Facebook message from me saying, “I’ve got a great investment for you, put your money there.” Just delete it on the spot because either I’ve gone mad or something very bad has gone wrong with my Facebook account and it has been hacked. But here’s the thing, I mean obvious things, hang up on old cold calls, that’s just a no-brainer.

You’ve got to make certain your own either scam watch or ASIC money smarts sites because at least it’s going to be able to keep up with types of scams that are out there, and if something appears a little too good to be true Delia Rickard, I generally go to scam watch and go and have a look and see whether other people have reported that type of scam and most often, they have.

Delia Rickard: Exactly Ross. Exactly.

Ross Greenwood: So all right. Why again, women, when it comes to it, seemed to be more sceptical but you say maybe they’re not doing as much of the investing as such. Where are they most vulnerable? Not these types of scams, often I hear it’s more dating style scams that they’ll be more vulnerable towards.

Delia Rickard: Men and women are both vulnerable to dating scams but women, you’re right, do tend to be slightly more vulnerable. And again is that 45 to 65 year old age group because most of this scams in dating and romance scams are– There’s a term for it, I can’t think of it right now– But they take a lot of worth by the scammer.

They’re very personalized. You have to mess scams which get low returns which they just spread to everyone and if they get one percent they’re doing well. With investment scams and romance scams, they have to invest a lot of time and effort in it so they tend to target that demographic because it’s an age when you might have a little bit of money accumulated, the kids might start to be off your hand.

In the case romance scams, it’s an age where there’s often– It’s an age where divorce is not uncommon, bereavement is not unheard of and people might be lonely and genuinely looking for a partner.

Ross Greenwood: Its, I tell you what, a sad part of life and it is actually something that people go through during that age and phase of life as well. I’m so pleased that the ACCC Deputy Chair Delia Rickard Richard is pointing this out. You might have your own views as to why this occurs or you might have been subject to this yourself and can help with other people as well. So the number 131-873, I’d love to hear from you, and Delia Rickard as always I appreciate your time.

Delia Rickard: You’re very welcome Ross.

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