Investment scams posing ‘real risk’ to SMSF sector

SMSF Association chief executive John Maroney noted that there has already been $267 million in investment scam losses reported as at 31 August this year.

"As these investment scams continue to grow and become more sophisticated, they present a very real risk to our sector,” warned Mr Maroney.

“Not only are SMSF trustees and self-directed investors often impacted by these scams, but major investments can be irreversibly damaged by scams and cyber-attacks. We've seen that with Medibank and Optus in recent months.”

Mr Maroney said there needs to be more focused conversation about the many types of scams in circulation and what people can do to protect themselves from the scammers.

“Our role is to raise awareness, encourage conversations and promote vigilance to safeguard SMSFs from this activity,” he stated.

"This is why last year we launched our Scams Awareness website to help people identify common scams, explain how to report scams and to offer tips on how people can protect themselves from scammers.”

SMSF specialist advisers, he said, need to take a lead role in understanding the warning signs and educating trustees and self-directed investors on scams, and to proactively reach out to clients and encourage them to report scams they may have heard about or experienced.

Mr Maroney noted that 70 per cent of the total losses reported to Scamwatch this year were investment scams with losses involving cryptocurrency investments reported as one of the highest of all types of investment scams.

"The Association has an important role to play in protecting our community. We will endeavour to continue educating SMSF professionals, trustees, and self-directed investors on how best to protect their retirement savings,” said Mr Maroney.

ASIC has also issued a warning this week on investment scams, warning consumers about some of the common signs of a crypto scam.

ASIC Deputy Chair Sarah Court noted that ‘Australians had lost more than $701 million to investment scams in 2021, up 135 per cent from the previous.

“The main driver of the increase was cryptocurrency investment scams, where losses increased by 270 per cent. The ACCC have advised that losses to crypto scams have increased further in 2022,’ said Ms Court.

ASIC said that crypto scams typically fall into three broad categories:

• Scams where you think you’re investing in a genuine asset but it’s a fake crypto exchange, website or app;
• Fake crypto tokens (used to steal your crypto assets), and jobs trading crypto that look legitimate at first glance (but are really money laundering using crypto); or
• Scams that use crypto-assets to make a payment.

According to ASIC’s investigators, the top–10 signs of a likely crypto scam are:

1. You receive an offer out of the blue
2. You see a celebrity advertisement that is actually a fake
3. A romantic partner you only know on-line asks for money in crypto
4. You get pressured into transferring crypto from your current exchange to another website
5. You’re asked to pay for a financial service with crypto
6. The app you’re using or directed to isn’t listed on the Google Play Store or Apple Store
7. You need to pay more to access your money
8. You are ‘guaranteed’ returns, or free money
9. Strange tokens appear in your digital wallet
10. The provider withholds investment earnings ‘for tax purposes’

If someone thinks they’ve been the victim of a crypto scam, Ms Court said its important to act quickly.

“Draw a line under it. Don't send any more money. Block all contact from the scammer,” said Ms Court.

‘Do not delay. Contact your bank or financial institution immediately to report the scam. Ask them to stop any transactions. Also, warn your family and friends so they can watch out for potential follow-up scams.