Scam Awareness

Unfortunately scams and scammers exist in the cryptocurrency and blockchain sector.

They prey on people’s insecurities, lack of knowledge and are opportunistic. The best defence to these fake opportunities is to be aware of the tactics used to deceive.

Scams take a wide variety of forms, including Ponzi schemes, fraudulent initial coin offerings (ICOs), pseudo exchange hacks, pump and dumps, identity theft, giveaways and exit scams.

Things to look out for –

• High returns over short periods of time
• Fake testimonials from Government Departments or celebrities.
• Unsolicited contact through social media channels.

The Golden Rule

A reputable exchange, or any private/public organisation for that matter, will never solicit you to send cryptocurrency through an email, phone call, web advertisement or otherwise.

How can I spot an investment scam?

Taking simple steps can help you protect yourself.

Scams can often feel legitimate. That’s deliberate. It’s why vigilance is key in identifying fake investment opportunities.

Different tactics can be used but outcomes are often the same. Some investments are completely fake, some divert funds to different uses and others pretend to represent real world businesses.

The adage that “if it sounds too good to be true, it probably is”, remains very relevant in the digital age. Fast returns, promised by strangers, should be considered highly suspicious.

Some tell tale signs?

• Assurances of “no risk” or “low risk” despite a high investment return being promised.
• The ability to change your mind at any time and receive all your money back.
• Inside or special information being shared with you that others are not aware of.

Always get independent financial advice before you invest.

Why is it difficult to shut these scams down?

The nature of scams is that they are fast moving and meant to deceive. For that reason it’s often difficult for regulators to provide absolute protection and for industries to protect consumers in all instances.

In a digital world identifying an entity’s incorporated location and what laws apply to it can be difficult.

Many scams are instigated overseas, delivered online and targeted online payment into offshore accounts. Some utilise cryptocurrency as the lure or as a payment channel.

Foreign Investments

A common tactic used by scammers is to promise returns not generally available to local investors.

Many investment scams originate overseas to avoid the consequences of their illegal behaviour. Making it more difficult for local enforcement agencies to prosecute them.

Pump and dump

Attempts to manipulate prices are a common scam strategy. There are a variety of ways that scammers achieve this. Sometimes they create fake tips, news or positive stories to drive interest. They buy low and get people to invest, then dump their investments.

Activity is often driven through FOMO, the fear of missing out. Don’t be fooled.

What can you do to avoid an investment scam?

DYOR.

Do. Your. Own. Research.

It’s important to ask questions and to gather as much independent information as possible. Some basics for you to question or consider –

• Who owns and runs the company?
• What is the name of the representative? Can you contact them easily?
• Are their details easily found on search engines like Google?
• Is there a history of the business?
• Reviews of their service?
• Do they have an Australian office address?
• Are they licensed? Can they provide you licence number details?
• Are answers being provided willingly?
• Can you verify these answers independently of the company representatives?

Even if they can answer ALL these questions, remain wary. Your investment dollars are important to you and you should be protective in all instances.

Social media is not always social

Many scammers utilise social media channels to contact victims. They do so because it’s easy. They can pretend to be your friend, they may first gather information about you in order to create a sense of familiarity. They may impersonate others.

Report fake accounts and block requests that don’t look real. Be careful and make sure your privacy settings are up to date on your social media accounts.

Fooling people requires effort and sometimes scammers will develop very professional looking websites to do so. They can include press releases, fake investment balances, or even Government department endorsements.

You should always double check that a website’s address is correctly entered in your browser’s search bar before interacting with the website.

Examples of fake websites using unusual characters:

• http://cryptöpia.com
• http://cryptopiã.com
• cryptoþía.com 

You should be extra careful interacting with website links shared by third parties (including over email or other messaging apps).

High pressure tactics are common

Are you emailed or called often? Are the messages you’re receiving warning you about time running out?

Don’t miss out…

A once in a lifetime opportunity…

This offer won’t last…

You need to decide now, because others are waiting to take the opportunity…

The signs are usually there, if you look. Hang up, delete and block scammers.

Threats if you try to leave

Threats are common once you’ve invested in a scam. The aim is to keep you quiet, or to give them more time to scam other investors. If you try to pull out of the deal, scammers may try to delay you by –

• Offering to swap investments to better performing options.
• Tell you that your timing is wrong and that returns are just around the corner.
• Scare you with threats of legal action, fines or withdrawal fees.

You’ve been scammed. What next?

If you believe you’ve been the victim of an investment scam than you should act quickly to –

• Report the scam to your state of territory police service
• Report the scam to the relevant Australian government body (refer to information on reporting above)

Do not send more money in hopes you get your initial investment back.

If you see a scam, report it

It’s important to report scams that you identify to an appropriate government body to protect others from making mistakes.

Depending on its nature, a scam can be reported to the Australian Securities and Investments Commission (ASIC),  Australian Competition and Consumer Commission (ACCC), Australian Taxation Office (ATO), Australian Signals Directorate (ASD) or Services Australia. 

You should report the scam according to the following principles:

1. If the scam relates to financial services (including banking and credit, superannuation, crypto-assets, managed funds, financial advice, financial products and insurance), report it to ASIC.
2. If the scam relates to ATO impersonation, report it to ATO.
3. If the scam relates to cybercrime or a cyber incident or vulnerability, report it to ASD.
4. If the scam relates to myGov or Services Australia, including Centrelink, Medicare or Child Support, report it to Services Australia.
5. If the scam relates to anything else, report it to ACCC, via Scamwatch.