This article focuses on two common financial scams – investment scams and the promise of early access to super. Find out who they target and how they do it. Avoid becoming a scam victim!
A Scammers Delight: Do you fit the bill?
Don’t think you are at risk of being scammed? If you are aged over 50, male, highly educated, financially literate and manage your own super, beware. You are the perfect prey for organised investment fraud.
Men in their 50s are thought to have more money and accumulated wealth than younger people, making them an attractive target for a scammer. Controlling higher levels of wealth, perhaps as the trustee of a self-managed super fund (SMSF); you’re in control of making financial decisions and you’re actively looking for attractive investment opportunities. What scammer wouldn’t want to target you?
Even with so much growing public awareness, investment scams are on the rise increasing by 33% in 2017 over the previous year! More than $31 million dollars were lost via inventive investment scams, with males accounting for $22.8 million of that staggering figure.
Scams take many forms; dating and romance, inheritance, unexpected prize and lottery, but when it comes to superannuation, two stand out:
- fraudulent investment schemes, and
- schemes offering early access to superannuation.
Either way, the result can be a major financial loss and dreams destroyed.
One clear warning of a scam is an unsolicited approach. You receive a call, or repeated calls, from someone offering an investment that is ‘both risk free and delivering high returns’. They come across as professional and confident and have resources to back up their claims; they recite your personal details; and draw you in further with a deceptively authentic website. Enticed by the attractive returns and smooth sales talk, you make an initial investment. At the beginning all seems well. You receive statements showing your investment is growing steadily, encouraging you to invest more. Then out of the blue, things go silent. You try to call, you try to email, the website is down and so is the balance of your account. Your stomach lurches. A cold sweat saturates you. You’ve been scammed.
Wonderful as modern technology is, it makes transferring money and appearing legitimate an effortless task for fraudsters. They close down one operation and set up another in an instant. It doesn’t help that we give away much of our personal information, and what isn’t available for free can often be purchased by criminals.
The other major scam that entices many who need money quickly is the promise of early access to superannuation. This is how it works:
Simon’s facing some financial problems and needs a quick and easy solution. His superannuation is just sitting there, if only he could access it.
He searches the internet for options and an advertisement promising early access to super pops up. This puts Simon in touch with a ‘specialist’ who helps him set up a SMSF, telling him that as the fund trustee he will be able to get hold of his super money. Simon signs the paperwork to set up the fund and rollover his super, but the money doesn’t turn up where it should. Eventually Simon discovers that his retirement savings were transferred to a bank account controlled by the scammer then moved overseas.
Not only has he lost the lot, Simon now faces a big tax bill for accessing his super prematurely. Simon was not aware that early access to super would have consequences if accessed for reasons other than;
- in cases of incapacity,
- to pay for medical treatment if seriously ill,
- if in severe financial hardship and can’t meet immediate living expenses, or
- if terminally ill.
Protection is the best cure
A few simple precautions can help protect your super (and other savings) from scammers.
- Do not give your details to an unsolicited caller and delete suspicious emails.
- Do not be pressured into decisions involving money or investments – always get independent legal or financial advice first. Our financial planners here at Carbon are happy to help.
- Visit scamwatch.gov.au for updates on current scams.
- If you suspect a scam report it to Scamwatch, even if you haven’t been affected.
- Seek advice from a licensed adviser. Legitimate advisers and investment managers appear on ASIC’s list of Australian Financial Service Licence holders.
- And beware of dating and romance schemes. They are more common than fraudulent investment schemes, result in bigger financial losses, and are targeted at the same demographic!
Before making any decisions on investments, talk about them with a financial planner. Not only will they be aware of common scams, they’ll be able to advise you on what investments suit your lifestyle.
Chat to our financial planners today!
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