How to Avoid Financial Scams Online: A Guide to Protecting Your Hard-Earned Money
The internet is a wonderful tool for staying connected, shopping, and even managing our finances. However, it’s also a breeding ground for scammers who prey on unsuspecting individuals, particularly those over 55, who are statistically more likely to fall victim to financial fraud. Whether it’s an investment scam, a romance scam, or a phishing attempt, these fraudsters are constantly evolving their tactics to deceive and steal. The good news? You can protect yourself by staying informed and taking proactive steps. Here’s how.
Recognising Romance Scams: The Cost of Trust
Romance scams are among the most emotionally and financially devastating frauds. Scammers often use fake online profiles to build trust and manipulate victims into sending them money. Tracy Hall, a victim of one of Australia’s most notorious conmen, shared her story of being deceived over 18 months, losing hundreds of thousands of dollars to a man she believed she loved.
If you’re using online dating or social media to meet new people, keep these red flags in mind:
The person moves the relationship along very quickly and professes love early on.
They avoid video calls or in-person meetings.
They ask for money, often citing emergencies or business troubles.
Their stories don’t add up, and they become defensive when questioned.
Always meet in person as soon as possible, verify their identity through multiple sources, and never send money to someone you’ve only interacted with online. Simple background checks, like reverse image searches, can help identify stolen photos used in fake profiles.
Phishing Scams: When Fraudsters Pose as Trusted Entities
Phishing scams occur when scammers send fake emails, text messages, or phone calls pretending to be from reputable companies, such as banks, government agencies, or utility providers. Their goal is to steal your personal information, financial details, or passwords.
For example, many Australians have received fraudulent emails or texts claiming to be from toll road operators, requesting payment for an unpaid toll. Others have been targeted with fake emails from banks, urging them to update their details immediately.
To avoid falling victim to phishing scams:
Never click on links in unsolicited emails or text messages.
Always verify requests by contacting the company directly using their official contact details.
Enable two-factor authentication (2FA) on all financial accounts for added security.
If in doubt, Google the content of the message to see if others have reported it as a scam.
Investment Scams: Too Good to Be True
Investment scams promise high returns with little to no risk. Many victims are approached through social media, email, or even by phone calls from fraudsters posing as legitimate financial professionals. These scams often involve fake stock investments, cryptocurrency schemes, or fraudulent self-managed super funds.
Key warning signs of an investment scam include:
Unsolicited investment opportunities that claim to be exclusive or urgent.
High-pressure tactics to make you act quickly.
A lack of verifiable information about the company or individual offering the investment.
Requests to transfer funds to an offshore or unknown bank account.
Always verify the legitimacy of any investment by checking ASIC’s financial adviser register, speaking with a trusted financial professional, and researching reviews from independent sources.
Online Marketplaces and Payment Fraud
Buying and selling on platforms like Facebook Marketplace, Gumtree, or eBay can be convenient, but they’re also hotbeds for scammers. Fraudulent buyers might send fake payment confirmation emails, while fraudulent sellers might take your money without delivering the product.
To protect yourself:
Never send money before seeing an item in person.
Use cash or secure payment methods like PayPal’s ‘Goods and Services’ option.
Be wary of buyers insisting on using direct bank transfers or PayID before collecting an item.
If selling, verify payments by checking your bank account directly rather than trusting emails or text notifications.
Staying Safe: General Rules for Avoiding Scams
Regardless of the type of scam, the best way to protect yourself is to be sceptical, take your time, and verify everything. Here are some golden rules to follow:
Slow Down: Scammers rely on urgency. Take time to assess any financial request or offer.
Verify Independently: If you receive a call from a bank, a financial institution, or even the police, hang up and call them back using the official number from their website.
Use Strong Passwords & 2FA: Secure your online accounts with strong, unique passwords and enable two-factor authentication.
Stay Informed: Regularly check Scamwatch (scamwatch.gov.au) for updates on the latest scams.
Talk to Trusted Friends & Family: If something feels off, run it by someone you trust before taking any action.
Scammers are getting smarter, but by staying vigilant and informed, you can protect your finances, your identity, and your peace of mind. If you believe you’ve been scammed, report it to Scamwatch and contact your bank immediately. Together, we can make the internet a safer place for everyone.
Disclaimer
The information provided in this article is general in nature and has been prepared without considering your personal objectives, financial situation, or needs. It does not constitute financial advice. Before making any decisions, you should assess its appropriateness and seek professional financial advice tailored to your circumstances. Additionally, ensure you review the relevant Product Disclosure Statement (PDS) before deciding on any financial product.