Scams are becoming increasingly sophisticated. Here’s how to protect yourself and your clients.
More than 600,000 Australians reported a scam in 2023, collectively losing over $2.74 billion. Lured by too-good-to-be-true investment opportunities or under pressure from fake fraud report calls, high net worth advised clients are among the growing numbers of investors being hooked by scammers.
The individual losses can be significant. In one case, a client responded to a social media advertisement that appeared to be from a well-known bank offering a high-interest term deposit. He received a call from a banker, received a rates summary, completed the application, and was emailed a client number and instructions on how to transfer funds.
The entire experience looked legitimate to the investor, so he made two transfers totalling $2.6 million. It was only after the transfer had gone through that he realised he could no longer access the bank portal.
His money was gone, and it could only be partially recovered.
No adviser wants to see their client deal with this kind of scenario. Here’s how you can help your team and your clients identify red flags, and keep your clients’ finances secure.
Warning signs: five ways scammers lure investors
Scammers use advanced technology and social engineering tactics to create completely believable opportunities or threats. Here are five common financial scams.
1. Investment and crypto scams
In 2023, Australians lost $1.3 billion to investment scams. Enticed by a low-risk, high-return offer, they might start with a small investment and keep adding more as they see ‘instant’ returns in their portfolio. It’s only when they try to withdraw funds that they realise the platform is fraudulent – typically around six months later once the investment lifecycle is complete. Crypto scams are a subset of investment scams, and they are harder to trace.
Tell your clients: Don’t respond to an advertisement or cold call. Before deciding on an investment, check with ASIC that the company is licensed to offer investments, and independently verify their contact details before you engage with them.
2. Money recovery scams
Once a client has been a victim of an investment scam – particularly a crypto scam – their details may be sold on the dark web to money recovery scammers. The client may then receive targeted communication promising to recover that lost investment – for a fee. This can lead to threatening behaviour or blackmail, putting already vulnerable clients under further stress.
Tell your clients: Be extra vigilant, especially if they’ve already been scammed. If someone is putting you under pressure to transact, just hang up. Legitimate fund recovery services exist, however, victims should approach them with caution and independently verify their contact details.
3. Payment redirection scams
Weak passwords can make business email accounts easier to compromise, enabling a scammer to amend invoices or payment instructions sent via email and redirect funds into their own account. For example, a client might receive property settlement instructions from their solicitor, or an adviser might receive an email from a client requesting an urgent payment to a new account. It’s important to check first if those emails are legitimate.
Tell your clients: Speak directly to a known contact to verbally verify their instructions if a payment is required urgently or the details are inconsistent with previous transactions. And never use the contact details included on an email, as they might lead to the scammer.
4. Remote access scams
If a client receives a call from a familiar organisation, such as a telco, technology provider, or the Australian Federal Police, they might be convinced to share their screen to ‘fix’ a fake security issue, check system errors or internet connection problems.
The scammer will coerce the client to download remote access software onto their device, and then direct the client log into their internet banking account. From there the scammer will gain control of the device and proceed to action fraudulent transactions.
Tell your clients: Do not give any third party or cold caller remote access to your devices, and never share your login details or authentication rolling codes. It’s the digital equivalent of handing them your passport or the keys to your house.
5. Bank impersonation scams
Some scammers will impersonate a fraud analyst from the client’s bank, and use fear to coerce them into re-setting their online banking passwords and authorising transactions. The client will believe they are simply cancelling a pending fraudulent transaction.
Tell your clients: Macquarie Bank will never ask you to transfer funds to ‘protect you from fraud,’ share secure codes from your Authenticator app, or ask you to download remote access software. Always check what you are authorising before you accept a push notification.
“Scammers are very good at social engineering,” says Ashwin Sinha, who leads Macquarie’s data team as Chief Data Officer, and is responsible for its real-time fraud-detecting systems – which include machine learning and biometric capture.
“The client will genuinely believe their story, and that the payment or request is legitimate. It becomes very hard for their financial adviser or bank fraud team to convince them otherwise and prevent that loss.”
