The Australian Competition and Consumer Commission (AAAC) notes that in 2021, businesses have recorded over $14 million in payment redirection scam losses. The figure is at least five times high compared to a similar period last year. Based on this growth rate, it might be replicated in investment scams hence the $100 million projection by the Finbold analysts. The already high losses in the first two months of 2021 point to continued growth in the coming months. The ongoing coronavirus pandemic, the consistent year-over-year growth alongside new sophisticated scam tactics, will likely lead to further losses. The value of losses has been rising steadily, increasing by 69.4% between 2018 and 2020. The data is provided by the Australian Competition and Consumer Commission.
Elsewhere, the analysis shows the distribution of the top ten scams in Australia that accounted for cumulative losses of $175.66 million in 2020. Investment scams occupy the largest share at 39%, followed by dating and romance at 23%. False billing losses occupy the third-largest share at 11%, or $19.32 million.
Pandemic fuels investment scams in Australia
The rise in investment scams last year can be attributed to the coronavirus pandemic that resulted in lockdowns. Most people shifted to online platforms to manage finances as well as socialize. There was also a surge in online investment platforms, with scammers taking advantage to lure victims. Furthermore, the booming cryptocurrency market has presented an opportunity for scammers to steal money. In 2021, when the traditional market was struggling, the crypto sector led by bitcoin remained resilient, and scammers potentially exploited avenues on how to benefit. The analysis shows that romance accounted for the second form of scams, and it can also be tied to the pandemic. At the onset of the health crisis, lockdowns meant that movement was restricted, and scammers eyed lonely people confined to their homes. For some people, most of their interaction was through online platforms, becoming vulnerable to scammers. Notably, victims who expose their emotional vulnerability are the primary targets. The large-scale penetration of smartphones potentially contributes to the surge in scams. Phones are now the cammers’ delivery method of choice. In recent years, phones have transformed to support normal banking operations. Therefore, most people can access their money at a click of a button; this makes it easier for scammers since the chances of a victim sending money are high.
Why Australia’s investment scams are likely to increase
The different forms of scam losses are likely to keep surging as fraudsters exploit new avenues to mint money from victims. With the pandemic not yet fully contained, more people will still turn to digital platforms for managing finances. Furthermore, with advancements in technology, scammers continue to deploy sophisticated hacking, like new phishing techniques that include spoofing. Scammers are also increasingly leveraging social engineering and impersonating individuals and organizations to steal credentials and money. Already, 2021 has recorded significant investment scam losses accounting for almost 30% of last year’s value in just two months. The huge loss signals that investment fraud might keep surging, corresponding with the year-over-year growth trend. To reduce the losses made from investment scams, the focus is on educating consumers on detecting potential scenarios where they can lose their money. However, scams continue to take different forms and become more complex, especially with advancements in technology.
