Consumer fraud types
Cold calling
Cold calling is simply an unexpected phone call - out of the blue - or even an email, offering you some kind of opportunity. Typical cold calling directed to Australian consumers and businesses has related primarily to supposed outstanding investment opportunities or to placement of the name of a company in an upcoming catalogue or flyer, or to offer a great or free deal of some kind of product often accompanied with a tale about the seller or his company being in dire straights or a friend of the senior manager. The investments don't exist, the advertising catalogue or flyer is never produced, and the free offer is usually billed at a very high price.
Some cold calling is also an invitation to "renew" your domain name and is designed to look like an invoice; these usually arrive by mail, but can be emailed, and the domain name is not actually correct - businesses and consumers are usually paying for something they don't really want.
Other examples have involved the cold caller telling consumers that they have won a prize such as a "free holiday" but in it turns out that the only way for them to collect their winnings was to attend a seminar where they were pressured to invest in time share or other property.
Cold calling frauds have cost Australians well over $400 million just in the past seven years.
These frauds are carried out by well-organised criminal gangs, operating in various countries round the world. They go to a lot of trouble to make things seem above board. Their telephone staff sound professional and well-informed. They speak the language of investments and finance. Their organisation will often have a well-presented website, telephone numbers, addresses and bank accounts and glossy brochures. Some of them even indicate they have references from people with Australian telephone numbers or from overseas regulatory bodies.
Don't be taken in. This is all window-dressing. The staff are extremely experienced confidence tricksters, who know all the right psychological buttons to push. The respectable addresses are usually just serviced offices. The telephone numbers (even Australian ones) are simply transferred, without your knowledge, back to the country where the fraudsters are based. The overseas regulators are just made-up names.
You can protect yourself
Always ask questions!
For example, if it’s an investment offer ask: 'Do you hold an Australian financial services licence? What's your licence number?' Usually the line will go dead when you ask, sometimes they claim they don't need a licence, and now and again they'll say they've got one. It's completely illegal for anyone to offer you financial advice or a financial product, such as shares, without an Australian licence. You can check licence details for free on the Australian Securities and Investments Commission's consumer website FIDO or call on 1300 300 630.
ASIC also keeps a list of known cold calling organisations. Many people have checked this list, and saved themselves a lot of money.
But do be careful, names change all the time, so a licence check is your best bet.
Please let ASIC know if you've been cold-called offering an investment. Please let the ACCC or Fair Trading agencies know if you’ve been cold called by other scams. Even if the people or company cannot be prosecuted, warnings about these scams are very useful for other people.
Phishing
‘Phishing’ refers to fraudulent messages usually sent via email used to gain illicit access to personal and banking information. These messages appear to come from legitimate businesses, most commonly financial institutions. They are designed to lure recipients into disclosing personal da ta such as bank account numbers, passwords and credit card numbers which are then used to commit fraud.
Phishing messages and emails often look authentic. They pretend to come from a financial institution or other company and have a believable email address. They often copy that institution's logo and message format. It is common for phishing messages to contain links to a website that is a convincing replica of the company's home page.
How to identify a “phish”
• Never provide personal details, including customer ID or passwords or your credit card number or 4-digit credit card code, in response to any email or call. Financial institutions including banks and credit card companies will never initiate a call or email asking you for your personal details.
• Only access your bank’s Internet banking logon page by typing the address into your browser. Never click on a link or attachment in an email which looks authentic and sends you to what may look like a bank’s website.
• Be wary of any email from someone you do not know or trust. Delete without opening.
• Most ‘phishing’ emails do not address you by your proper name as they are sent out as bulk to thousands of recipients. They sometimes contain typing errors and grammatical mistakes. However, they sometimes include the banks’ registered logos and can look very professional. BEWARE!
What to do if a consumer has responded to something “phishy”
• If a consumer has responded to a phishing email, they should contact their financial institution as soon as possible.
Lotteries
Lottery scams have been increasing at an alarming rate in recent years and currently lotteries are the most common form of scam targeting Australian consumers. Many Australian consumers have lost thousands and thousands of dollars to these scams. All these scams have two things in common – there is no lottery draw and there is no prize. Like all scams, the sender is trying to con you out of your cash.
Q. What is a lottery scam?
A. You will typically receive notification from the overseas scammer by email or letter advising that you have won a significant sum of money in a lottery you have not entered.
The scammers will then require you to provide often extensive personal details in order to “prove” that you are the correct winner. Also in order to release your winnings you will be required to pay a series of invented fees. These fees may be given names such as insurance costs, government taxes, bank fees or courier charges. Any money paid to these scammers is invariably lost.
It must be noted any lottery conducted outside of Australia cannot legally operate in Australia without the authority of domestic government lottery bodies who issue permit numbers that must be displayed.
Q. Why does the overseas lottery scam work?
A. The scammer is relying on your becoming excited by the possibility that perhaps you really have won the “big one”! They are hoping that even if you are a little suspicious perhaps you feel it is worth risking a small sum of money on the possibility you have won all that money.
The scammer will require you to respond within a short time frame otherwise your winnings will be forfeited. They do this to prevent you from taking the time to think the decision through clearly and recognise the scam for what it is.
The scammer will also urge you to keep your winning notification private or confidential and therefore dissuade you from seeking an outside second opinion. Generally this is done with the pretence of maintaining security and preventing others from claiming your rightful prize.
Often scammers will use the names of legitimate overseas lotteries in order to gain credibility for the scam. Many such scammers use the names of legitimate Spanish lotteries such as “Loteria Primitiva” and “El Gordo” but in order to win these lotteries you must have purchased a ticket from an authorised distributor in Spain.&nbs p; Common names also include the International Lotto Commission and the Princess Diana Lottery.
Q. What can happen if I respond?
A. Providing personal details such as bank details will open you up to having your identity stolen. You may have your bank account cleaned out or credit taken out in your name. Responding to emails through internet links may compromise your computer thus threatening your online banking security through secret downloads of spy-ware.
By responding you are verifying your name and address and it is likely that you will be placed on a list of consumers who are potentially vulnerable to such scams. You will then be bombarded with many more similar emails or letters.
Q: How do I recognise a scam lottery?
A: • You have won a prize in a lottery or sweepstake that you don’t have a ticket for or have not entered.
• A full address is not disclosed. A PO Box number, e-mail address or mobile phone number are given as contact points.
• The sender has identified you as a winner by using e-mail. Official lottery offices do not use e-mail to advise players that a prize has been won.
The sender claims the offer is legal.
• The sender claims the offer has Government Approval.
Advance Fee Fraud
Q: How does Advance Fee Fraud work?
Everyone has seen advance fee frauds, such as the ‘Nigerian con’. These scammers contact you, usually by email, offering a share in a large sum of money that they wish to transfer out of their homeland. They may tell you about money trapped in central banks during civil wars or coups (often in countries currently in the news), or massive inheritances that are difficult to access because of government policy in an African or South American country. It seems such a huge windfall that some people are prepared to risk getting involved.
Scammers ask you to provide money or your bank account details to facilitate this process. The victim is then asked to pay fees, charges or taxes to help release or transfer the money out of the country via the victim’s bank. These may start out as small amounts, and gradually get larger as the victim becomes entangled in the scam. As the victim gets deeper into the scam, they become more desperate to get the “large sum” having spent much of their savings on the fees and charges.
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Q: How common is advance fee fraud?
Advance Fee Fraud is the second most common scam reported to Consumer Affairs Victoria – Government gets dozens of calls and complaints about these scams once received every month. They are very cheap to send out, especially by e-mail, and it only needs a few people to respond for it to be worth the scammer’s effort.
Q: What are the losses to advance fee fraud?
While most consumers are calling consumer agencies to report a scam, or to check whether the letter or e-mail is a scam, a small number of people fall for these scams and actually send money overseas. On occasion, the losses to an individual are in the many thousands or hundreds of thousands of dollars. Losses worldwide to these schemes have been estimated in the billions of dollars.
Q: What advice do you give to consumers?
“Scammers ask you to provide money or your bank account details. Don’t even think about handing over this sort of information to someone you don’t know or trust!”
Sniff test:
- It arrives unexpectedly out of nowhere
- It sounds like an easy way to make a large amount of money
- You're told there's no risk
- You're asked to provide personal details
- It sounds too good to be true
“Don’t rush into decisions.”
“Be extremely wary of sending money overseas as it is very hard for law enforcement agencies to track money once it has left the country.”
“Do some research on the Net, and see what people are saying about the names in this e-mail or letter.”
Q: What are you doing to stop these scams?
The most effective way to stop these scams being sent is for consumers to n ot respond to them. If no-one responds they would soon die out. That’s why we are continually educating our consumers about these scams and encouraging them to bin or delete them without responding.
Of course, we would investigate any advance fee fraud that is traced to our jurisdiction. At the same time, we work with similar agencies overseas to share information about scams so that they can take enforcement action against scammers targeting Australians from overseas.