Four ways to stop a scammer in their tracks

Scammers prey on our sense of belief, our legitimate concerns, our insecurities and our curiosity. The key to resisting is to stop and think about the validity of an offer or solicitation. 

For example, if substantial and low-risk returns were possible, then why wouldn’t a reputable financial institution offer them? 

Scams have evolved over the years, but the keys to protecting yourself remain the same: be sceptical, deal only with people you know you can trust, conduct multi-layered due diligence and educate yourself about your investments and options. Here are our top four tips for protecting yourself.

1. If it seems too good to be true, it probably is 

Investment opportunities that offer fast results and returns well above market rates can be at high risk of being a scam. Often, scammers capitalise on the popularity of a trend or asset class – such as cryptocurrency – to make their offer seem appealing and genuine. 

The bad news is that once your money is gone, it can be a major challenge to recover your funds. Some people may be tempted to take a high-risk approach, believing their bank can recover their money if an opportunity turns out to be a scam.  

However, if you’ve been scammed – if you’ve handed over money or given strangers access to your accounts – then your chances of getting your money back are limited. 

2. Invest with professionals you know, not strangers

If you have funds to invest, consider using a licensed financial adviser and always engage with people or institutions you know and trust. Don’t play into a scammer’s hands - these individuals are incentivised to be charming and knowledgeable, to show understanding and empathy. 

Ask yourself: if someone you’d never met knocked on your front door and asked for a substantial deposit, on the promise they would return it 10 days later, plus interest – would you contemplate it? It should be immediately clear that this offer is suspicious and dangerous. 

When you respond to an unsolicited offer and hand over money or access to your financial and personal details, you’re engaging with that stranger at your door, and putting yourself at high risk of financial loss. 

3. Do independent research and due diligence

When an opportunity comes along that you’re interested in, make sure the research you do on the offer is independent and from reputable and trusted sources. 

For example, government websites including the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investment Commission (ASIC) often have information on current scams in circulation. 

Using credible and publicly available information is also one way to cross check the validity of the person and business contacting you. Be wary that scammers can go to great lengths to appear legitimate, including using the name and job title of someone who works at a known institution. 

The critical part of this is ensuring you source these details independently. For example, if you receive a cold call, take a name and then obtain the business phone number from an independent source to complete your research. Don’t rely on the number provided by the individual you are speaking with on the phone. 

In short, don’t assume the information you’re given is legitimate. Cross-check from sources unconnected to the offer. Better still, check with your financial adviser. 

4. Don’t rely on someone else to protect you 

Banks and financial institutions have sophisticated software systems, designed to protect against fraud and other types of unwanted interference with your bank accounts. 

But you should never assume that technology will protect you and keep you safe at all times. Scammers know the easiest way into an account is through the person who holds it. That puts the onus back on customers to treat any offers with a healthy amount of scepticism.  

The good news is that there are many resources you can use, and many steps you can take, to protect yourself. Respect your funds and the effort it’s taken to accumulate them. Be cautious, do your homework, call on the experts and never respond to time pressures or threats. 

After all, it’s your money – and you want to keep it that way. 

Key take aways

• Your chances of recovering your money after a scam are low and limited. Prevention is better than cure, and being informed about how to protect yourself and your money is key to avoiding being scammed. 

• Don’t assume your device or its software will protect you. Scammers know that individuals are the easiest target to persuade in a scam operation, it’s much harder for them to unpick sophisticated protections banks and other institutions use. 

• When it comes to your finances, only deal with the professionals, institutions and businesses you can verify and trust. Taking a risk on a stranger can cost you far greater than the return you’re being promised.