Greed, desire, wishful thinking and naivety are lucrative markets for scammers – and their age-old hustle is increasingly supplemented by digital deception.
In 2021, Australians lost an estimated $2 billion to fraudsters, more than double that of 2020, according to the Australian Competition and Consumer Commission.
Some scams are perennials. At the top of Scamwatch’s list are investment scams, dating and romance scams, remote scams (convincing you to allow access to your computer or phone), and threats or blackmail.
This article takes a look at the five types of scams that have grown the most in value as of 2020.
These aren’t necessarily the scams that everyone (including you) is likely to fall for. But they provide a useful snapshot of how scams that rely on human nature are increasingly being run through technology.
1. Ransomware and malware
This type of scam is on the decline with the use of anti-malware protection. But in 2021, it roared back with a 1.482% increase in reported 2020 losses.
This was mainly due to the fact that the 2020 numbers were much lower than in 2019, but the reported cost per incident (about $21,704) is still disturbing given how easily such scams can be spread.
Usually it involves installing malicious software on your computer or phone to make files inaccessible or lock the device. This is done by sending a fake email, SMS or voicemail containing a tempting message that redirects you to a link that automatically installs the malicious software when you open it. The scammer then demands a payment to “unlock” the system.
Contributing to the ransomware resurgence was the Flubot scam, in which tens of thousands of Australians with Android phones received scam text messages about missed calls or deliveries. The malware can collect banking information and use contact lists to spread to other devices.
2. Pyramid schemes
The pyramid scheme promises you wealth by recruiting others for the scheme. While such recruiting is also a hallmark of multi-level marketing (also known as referral sales programs), the financial return in an illegal pyramid scheme depends wholly or largely on convincing other people to join.
In 2021, reported losses from pyramid schemes were 368% higher than in 2020. This, as with malware, was due to abnormally low losses in 2020. But while the total number of reported cases was quite low (less than 500), the percentage of those reports where people lost money was one of the highest (44%), with an average loss of $6,239.
This suggests that pyramid schemes remain quite attractive to some people.
3. Identity Theft
Identity theft – using your personal information to steal money from you or someone else – is one of the most challenging types of scams to deal with. It could involve stealing money from your own account or using your identity for credit purchases, which you then have to untangle.
This is a real growth area. In 2021 there were 22,354 identity theft reports, compared to 20,939 in 2020. While only 951 of these cases (about 4%) reported losses, the average losses more than doubled to about $10,683. Total losses ($10,159,930) were 230% higher than in 2020.
4. Investment Scams
Investment scams lure victims with promises of big profits from stock deals and cryptocurrency opportunities. In 2021, 4,068 Australians reported losing more than $177 million to such scams – an average loss of about $45,350.
While investment scams come in many varieties, the Scamwatch report distinguishes three main types. Cryptocurrency scam accounted for $99 million in reported losses. The sale of fake high-yield corporate or government bonds accounted for $16 million. Ponzi schemes, which create the sham of investment success by paying out dividends from new victims’ money, accounted for $8 million.
Ponzi schemes are named after Charles Ponzi, who in the 1920s promised to double people’s money in 45 days. One of those plans circulating in 2021 was the hope business app, which promised windfalls simply by depositing money into an account.
Interestingly, the consumer watchdog report says men were nearly twice as likely to fall victim to investment scams and reported twice as many losses as female victims.
Closely linked to identity theft, phishing was the most reported scam in 2021 – with 71,308 cases, compared to 44,079 in 2020 and 25,168 in 2019.
These scams usually try to obtain our login details (passwords) for various services, including email, online banking and government services such as MyGov.
That only 861 cases reported a direct financial loss suggests that this is one of the most recognized scams. We’ve all had emails or text messages asking us to confirm our details or click a link to listen to a voicemail or receive a package.
Still, a total of $4.3 million was lost to phishing attacks in 2021 — 156% more than in 2020. The average loss was just over $5,000.
How do you avoid being scammed?
If something seems too good to be true, it probably is. If you have a suspicion that you may be being scammed, the best advice is to stop and think.
If you are asked to transfer money, make an unexpected payment, or send personal information to someone, stop.
If you are asked to provide information or take action, please contact the concerned organization at a number you already have (bank statement, credit card, etc.) or find the number yourself.