How to avoid an investment trap

A RACQ Bank member believed his prayers had been answered when he was presented with an investment opportunity promising high returns quickly.

The timing was perfect as the member needed additional money to complete work on a property.

Taleesha Hamilton, RACQ’s head of financial crimes, said he was promised a “risk-free” investment opportunity but needed to act quickly.

“The scammers told our member they guaranteed he would make the money he needed in no time,” Ms Hamilton said.

Despite being warned by the financial crimes team that it was most likely a scam, the member insisted he had done his due diligence.

“Due to scammers’ advanced social engineering skills, people fall victim to investment scams and are sometimes reluctant to admit that they might be involved in a scam, despite warnings and direct conversations with their bank,” Ms. Hamilton said.

Fortunately, the financial crimes team recovered the “invested” funds after it became obvious to the member that it was a scam.

This member’s story is not unusual.

According to the federal government’s National Anti-Scam Center (Scamwatch), investment scams lose more money than any other type of scam.

“Members should remember that true investment success usually takes time and they should be wary of schemes promising quick turnarounds, especially if they seem too good to be true,” Ms Hamilton said .

She said scammers luring investors using fake celebrity endorsements were becoming more common.

“A celebrity investment scam, also known as a ‘deepfake scam,’ typically involves a video of a celebrity in which their face or body has been digitally altered to spread false information,” a said Ms. Hamilton.

“Scammers use fake videos of celebrities and public figures claiming to make big profits from online trading platforms and investments.

“Deepfake is successful because consumers think it comes from someone they perceive to be reputable.”

Ms Hamilton said members should seek advice from a qualified financial adviser before investing in a project.

Warning Signs of Investment Scam

  • Fake news or advertisements claiming that a celebrity is recommending a scheme to make big money.
  • An online contact (a friend or romantic interest) you’ve never met in person starts talking to you about investing.
  • Emails, websites, or advertisements with testimonials and exaggerated promises of significant returns.
  • High-pressure tactics designed to get you to take action so you don’t “miss” anything.
  • The “advisor” helping you claims they do not need an Australian Financial Services (AFS) license.
  • You are asked to promote the program to your friends and family to earn a commission.