Chartered Accountants

How to Spot a Financial Scam

* Could you fall victim?
* do you know how to spot the clues?

It Looks Real

Scams that catch people often look realistic and are presented professionally. Scamsters often go to a lot of trouble to:

* Print attractive documents and set up a business-like website
* Choose names that sound like reputable companies
* Tell a persuasive story using the right jargon
* Drop the names of people you know to build your trust

Five Clues For Spotting Scams

1. Bigger and faster profits than real investments
Scams always offer a higher return than genuine investments. Some offer 20% a year, others go for 300% a year or even more. It's too good to be true.

2. Less risk and less effort than real investments
Most scams say that financial success is easy and risk isn't a problem. But real wealth demands planning, hard work and guts. Even the best investors make mistakes and have to weather storms like market busts and economic recessions.

3. Something special that genuine investments don't offer
It could be a "secret" offer, "inside information" or "new techniques". There's always some feature to make you feel like you've got an edge over other people. But chances are it's a fairytale - and it won't have a happy ending.

4. More urgent than the real thing
Every scam gets dressed up on an opportunity, so scamsters often say "don't miss out" and "act quickly" to make you hurry "before it's too late". They're really just trying to grab your money before you have a chance to check properly.

5. Offered by a stranger
Many scams come from overseas, through unsolicited email or surprise phone calls. Others get sold through "wealth creation" seminars or on the grapevine. While the people can sound genuine, they rarely have any real credentials.

(Australian Securities & Investment Commission reproduced with permission)

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