Protecting your wealth from scams

In 2016, the Australian Competition and Consumer Commission’s (ACCC) Scamwatch website experienced a 47 per cent increase in reports of scams over the previous year, according to the ACCC Targeting Scams Report. This alarming increase should prompt all of us to be well informed about how scams work, and to take steps to protect our savings and investments. These tips will help you do just that.

Beware of banking scams
Bank and credit card scams are all too common, and many are caught out by the deceptive ways that criminals can obtain your account details.

One of their most common methods is known as phishing and involves the scammer duping the unsuspecting victim into handing over personal account information. A typical example is receiving an email, text message, or phone call from someone claiming to be from your bank. They seek to lower your defences by saying there is a problem with your account and ask you to give them your account details or click on a link to remedy the situation. This information is then used to steal money from your account.

Computer hacking is another common method. The scammer gains access to your computer by exploiting security weaknesses. Malware or ransomware can then be installed on your machine, giving them access to your files or allowing them to spy on your computer activity.

Staying on guard
To protect yourself against such attacks, always be wary of any direct phone call or email from someone claiming to be from your financial institution, or a government agency such as the tax office. You should make your own call to the institution to check on the bona fides of the contact.

In relation to electronic security, ensure your privacy settings are up-to-date on your social media accounts, keep your computer security system up-to-date, choose passwords that are hard to work out, and avoid using the same password for multiple logins. It is also wise never to accept a message or friend request on social media from someone you do not know.

Credit card skimming
This involves your credit card being read by an electronic device, which can be handheld or covertly installed on an ATM. The skimmer reads the magnetic strip on your card and electronically captures information, which can then be used to access your account.

To avoid being skimmed, always keep your card in sight when paying at a shop or restaurant, never share your PIN, and be watchful for signs of tampering at an ATM. It’s also wise to check your credit card statements regularly to identify any unauthorised transactions.

Investment scams
Investment scams often come in the form of a phone call, an email, or through social media. While they can be very slick, seeming legitimate and substantial in their promotional material, the “investment” they are offering is either totally fictitious, or if it does exist, your money is not going towards that investment. Those who are drawn into these investment schemes end up having their money going straight into the scammer's bank account.

Know the warning signs
Telltale signs include the lure of high, quick returns, or tax-free benefits. They may also claim to have no risk with the option to sell at any time, get a refund, or swap one investment for another.

There may be promises of “inside information” or an early bird offer before the investment goes public, designed to grab your attention and add a sense of urgency. The scammer will often call you persistently, and can be highly persuasive.

If it sounds too good to be true
It probably is, so do your research and ask questions to gain some verifiable information. Find out the name of the company, the address, who owns it, and what their Australian Financial Services Licence (AFSL) number is. If they try to avoid answering these questions, it is probably a scam.

If you have any inkling of suspicion, do not engage with the person any further. Hang up the phone, ignore emails, and block them on social media. You can also report any suspicious activity on the ACCC Scamwatch website.

Take the trustworthy route
It is always wise to obtain independent financial advice before investing in anything. This is one of the advantages of using a licensed financial adviser, who is subject to stringent regulations on how their professional standards are maintained, how they assess your needs, and how they present their research and recommendations on financial solutions to fit your goals and circumstances.

Have you had any experiences with scamming? Share your knowledge below.

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