Fake companies and investment offers
A phone call or email 'out of the blue' offering you a
not-to-be-missed investment opportunity could be a turning point in
your life. If you say 'yes' to the deal and the offer is a scam,
you could lose thousands of dollars or end up with enormous
Investment scams are often so professional, slick and believable
that it is hard to tell them apart from genuine investment
opportunities. Our tips break down how investment scams work.
How to identify an
In 2015, losses from investment scams reported to
ScamWatch doubled from the previous year.
Investment scams can come to you via a phone call or email. It
may even be an offer from someone you trust. There are three main types of investment scams:
- The investment offer is totally fictitious and does not exist
Beware of scams offering you access to exotic or unusual
'investments'. If you've never heard of a type of investment
opportunity before there's a good chance it is a scam.
- The investment offer exists but the money you give the scammer
is not going towards that investment
- The scammer says they are representing a well-known investment
company but they are lying
In all cases the money you 'invest' goes straight into the
scammer's bank account and not towards any real investment.
The scammer will offer you:
- High, quick returns and sometimes tax-free benefits
- Share, mortgage or real estate investments, 'high return'
schemes, option trading or foreign currency trading
- No risk or low risk investment, as you can sell anytime, get a
refund for non-performance, have insured or 'guaranteed'
transactions or swap one investment for another
- Inside information, the opportunity to invest before a public
float or discounts for early bird investors
The investment offer may be a scam if the person:
- Does not have an Australian Financial Services licence or says
they do not need one
- Rings you many times and tries to keep you on the phone
- Says you need to make a quick decision or you will miss out on
- Claims they are a professional broker or portfolio manager and
sounds professional but is actually following a script
- Uses a name or claims to be associated with a reputable
organisation to gain credibility e.g. NASDAQ, Bloomberg
- Offers you glossy prospectuses, brochures, share certificates
or receipts or directs you to a slick website
Remember that a glossy brochure is not evidence that an offer is
a good investment or even a real deal.
If the investment offer has some of these signs hang up the
phone. If you manage to record some of the caller's details please
report the offer to
And find out about other types of investment scams:
Peter Kell talks about investment scams
ASIC Deputy Chair Peter Kell explains how
investment scams work and how best to identify and avoid them on
the ASIC View podcast.
Subscribe to ASIC View podcast via iTunes or PodBean.
True stories of investment
Read these true stories of people caught up in
How investment scams
No legitimate company would use harassment to get a person
Many investment scammers operate from overseas or offer overseas
investments as their activities are illegal in Australia. Overseas
scammers target Australians as ASIC does not have international
jurisdiction to prosecute them.
Many scammers use the internet to make their
investment appear legitimate. They use highly sophisticated
websites and issue online press releases that make false claims of
outstanding corporate performance. They even provide some victims
with logins to view fake investment balances and growing
Passing your call along the line
Investment scammers use a team of less experienced staff to make
the initial call. The junior staff follow a tight script to check
your interest. If you take the bait they hand you onto a more
senior person. This can happen two or three times.
The more senior people are called 'closers'. They are extremely
skilful sales agents and their job is to make you feel compelled to
close the deal and send your money.
Long or persistent phone calls
Most victims tell of investment scammers calling them endlessly
or keeping them on the phone for a long time with promises of
wealth or opportunities lost if they do not take up the offer.
Investment scammers will not take no for an answer and ask you
about your worries to reassure you. As long as they can keep you
talking, you have not really said no.
There are government industry standards that detail when and how
telemarketers can contact you. A telemarketer or research caller
must not call or attempt to call you at the following times:
||Before 9am or after 8pm
||Before 9am or after 8.30pm
||Before 9am or after 5pm
||Before 9am or after 5pm
||Before 9am or after 5pm
|National public holidays
Tactics to stop you pulling out of the deal
Scammers may try to swap your current investment for another one
if you try to change your mind about the deal. They may also try to
convince you that your investment will increase in value soon. Even
though they know you will never get your money back, they still
want to try and get more money from you.
Scammers can also threaten baseless legal action to keep you
from pulling out of the deal. This is usually just a threat and
they don't carry it through.
Questions to ask
Ask the person offering the investment these questions to check
- What is your name and what company do you represent?
- Who owns your company?
- Does your company have an Australian Financial Services licence
and what is the licence number?
- What is your address?
If they try to avoid answering these questions, it is probably a
scam. Hang up the phone, do not respond to the email or stop
dealing with the person.
If they answer these questions, you can check if their company
name is on our list of unlicensed
overseas companies. You can also check their licence number on
ASIC Connect's Professional Registers.
Find out what an Australian
Financial Services Licence means.
Research the company
Do your own research on the company and take the time to seek
independent professional or legal advice. Don't rely only on their
information to make your decision and do not be pressured to make a
quick decision you could regret later.
Remember that investing with overseas companies can be risky.
They are outside Australian jurisdiction so you won't be able to
get help if something goes wrong.
There are plenty of legitimate overseas investments that you can
make through mainstream companies based in Australia. Don't part
with your hard-earned money unless you understand the risks
More information on avoiding scams.
What to do to protect
- Check if the company is licensed using ASIC Connect's Professional Registers.
- Check the list of companies you should not
deal with to see if they are on the list
- Report the scam to ASIC or
your local police (the company name, location and contact details,
if you have them)
- Stop sending money to the company (if you have sent any)
- Warn your family and friends
- Get independent financial advice before you
Do not call register
Another thing you can do is put your name on the Do
not call register. This will remove your name from telemarketer
phone lists and should reduce the number of calls you receive.
Investment scammers are skilled at convincing
people that the investment is real, the returns are high and the
risks to your money are low or non-existent. Be suspicious of
anyone offering you easy money. There is almost always a catch.
Last updated: 17 May 2016