Schemes & Scams Newsletter

30/05/2012 Level One

It is unfortunate that we live in a world where we have to write an article about this – but it is better to be safe than sorry.

In light of the impending 2012 end of financial year, we want to remind our valued clients about the schemes and scams that could affect you, and to be extra diligent when receiving promotional material regarding ways you can save tax, unlock your superannuation or get rich quick.

Scammers know how to press your buttons and have gobsmacking finesse when it comes to extorting your hard earned dollars. Even the savviest individual can fall victim to a scam.

The Australian Competition and Consumer Commission (ACCC) is a good resource for the many and varied schemes and scams that you could be targeted for. In March 2012, the ACCC released their “Little Black Book of Scams”. This details information on common schemes and scams including:

  • Advance fee fraud;
  • Lottery, sweepstakes and competition scams;
  • Dating and romance scams;
  • Computer hacking;
  • Online shopping, classifieds and auction scams;
  • Banking, credit card and online account scams;
  • Small business scams;
  • Job and employment scams;
  • Golden opportunity and gambling scams;
  • Charity and medical scams.

If you would like a copy of the ACCC “Little Black Book of Scams” we have these available at our office to collect. Alternatively you can contact our office and we will post a copy to you.

At this pertinent time, we have put together a summary of the more common scams that target small businesses and individuals in regards to investing, tax and super.

Small Business Scams

False Billing

Scammers mostly target small businesses by sending false invoices for advertising, directory listings, domain names and office supplies. The scammers either send you invoices for goods you didn’t order and trick you into signing up for ongoing supplies or send you invoices looking very much like invoices you may already receive for advertising i.e. Yellow Pages.

Fax Back Schemes

Fax back schemes have also become increasingly popular for scammers. These schemes can offer anyone with a fax machine anything from diet pills to budget holidays to cheap stationery – all you have to do is fax the document back to the scheme operator, usually to a premium rate number (starting with 190). Premium rate faxes can be charged at more than $6.00 per minute. The scheme operators ensure that your fax will take several minutes; resulting in hefty, unnecessary phone bills (a simple fax could cost you $20 or $30).

Superannuation Fund Scams

Unlock Your Super Early

Superannuation scams are schemes which offer you early access to your preserved superannuation benefits, often via a self-managed superannuation fund and for a fee. The scammers tell you that you can ‘unlock’ your super to pay off debts or use the money for something you really want. People struggling with debt, unemployed people and non-English people are most vulnerable here.

As you all well know, you cannot gain access to your preserved superannuation before you attain your preservation age and satisfied a condition of release. If you do access your superannuation early for an illegal reason, you may be subject to legal action and hefty penalties (including tax).

These offers usually come from someone posing as a financial adviser and they promise that they can release your superannuation quick and easy.

The scammers make their money by deceiving your superannuation fund into paying out your superannuation benefits to the “adviser” in cash or by rolling your superannuation benefit into a self-managed superannuation fund they operate whereby you can then withdraw your monies.

However, once the scammer has your money, they disappear and leave you with nothing, or take very large fees before forwarding the remainder of your super monies.

Get Rich Quick Scams

Investment Scams

These scams can come to you via a phone call or email – it may even be an offer from someone you trust. The scammer will generally promise you high, quick returns with low or no risk.

The three main types of investment scams are:

  • The investment offer is totally fictitious and does not exist;
  • The investment offer exists but the money you give the scammer is not going towards the investment;
  • The scammer says they are representing a well known company but they are lying.

In all cases the money you ‘invest’ goes straight into the scammer’s bank account and not towards any real investment.

Ponzi Schemes

Another type of investment scam to be aware of is a ponzi scheme. This type of scheme is targeted at groups of people such as churches, charities and clubs and usually will be introduced to you by someone you know.

The promoter convinces people to invest with their scheme. They then use the money deposited by early investors to pay the first ‘dividend’ until investors feel comfortable and decide to invest more. Some investors then encourage their family and friends to join. Eventually the scheme falls apart because the promoter starts to spend the money too quickly or the pool of investors dries up. In most cases, personal relationships are destroyed where you have encouraged others to join the scheme.

Agricultural Schemes

These schemes, although in most cases they are legitimate investments, have been remarkably unsuccessful in the past. Failed schemes include:

  • Great Southern
  • Timbercorp
  • Willmott Forests
  • Palandri Wines

Research into these schemes has reported that 20-40% of you invested capital is used for marketing/promotion of the scheme. This amount far exceeds any normal business model.

Think of this: you purchase a parcel of shares for $100,000 and you are charged $40,000 brokerage on the transaction. Your shares would have to perform remarkably well to recover this outlay of costs.

Householder & Individual Scams

Carbon Tax Compensation Payment Scams

These scams involve a scammer calling you out of the blue, claiming to be from the Australian Government or a Government department. They will offer you a compensation payment as part of the Australian Government’s Carbon Tax initiative.

You will be asked to provide your bank account details so that the scammer can make payment to you. However, once the scammer has your bank account details they gain access to your account and take your money and potentially your identity by accessing the personal details linked to your bank account.

The Australian Government will never call you to ask for your bank account of offer you carbon tax compensation. Never give your bank account or personal details to anyone you don’t know, especially a cold caller such as this.

Negative Marketing & Scare Tactics

Many publications will produce dramatic articles, filled with doom and gloom about financial markets and trends. These are designed to scare the bejesus out of you and get you hooked on their ‘news’ so that you continue to subscribe.

You should only source news from a reputable source and avoid subscribing to publications that use scare tactics and negative marketing.

In addition, financial advisers may well employ scare tactics to “win you over” by exaggerating risks or problems with your investment portfolio. Long term investing, which generally outperforms short term trading, does not mean you react and adjust portfolio settings based on sensationalised media commentary and front page headlines.

Avoiding Scams

Here are some simple tips for avoiding scams:

  • First and foremost – trust your gut and use the ‘smell test’. If you feel you are being scammed or feel that the offer being presented to you is too good to be true it usually is.
  • Check ASIC’s “Companies you should not deal with” list before investing money – any company found to be operating a scam or has had their licence revoked is on this list. You can search the list by going to:
  • Never use the contact details provided to you by the person who contacted you via phone or email – look up the details of the company offering you the investment or service yourself. If the details don’t match or you simply can’t find them it is probably a scam. No reputable business or investment company will not be listed or not have a webpage.
  • Never give your personal or financial details out over the phone unless you have made the phone call – even if you are contacted by a well known company, if they ask for your details tell them that you will call them back. Banks and service providers will understand your cautiousness here and will probably encourage it. Get the person’s name and a reference number then look up the contact details and call the company yourself. Never use the numbers provided by the caller as these may be fake.
  • Check your invoices thoroughly and know your suppliers – small businesses have to be most diligent here. Limit the number of people in the business that are authorised to place advertisements and to pay accounts. Make sure you are only paying for services and products you have actually ordered from reputable suppliers. Not doing so could be a costly mistake and be a time consuming process to rectify.

If you have been a victim of a scam, you can report this to the ACCC on 1300 795 995.

For more information about the scams and schemes that could affect you go to or

How we can help

If you have been presented with an investment or strategy from a friend, colleague, company, or another professional adviser that you are unsure about, contact us for a second opinion. We can review the investment or strategy and provide you with further advice.

Having spent decades in the financial industry, our advisers know what to look for in assessing the value, profitability, structure and overall soundness of the investment or strategy you have been presented with.

It may be the most informative and productive hour of your life!


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