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All That Glitters is Not Gold

Staying safe from scams of the 21st Century

by Thao Pham

The economy’s everyday mantra is, ‘money makes the world go round.’ Technology gives way to increasingly complex means of income, investing and monetary transfers. However, exponential advances mean a lack of proper regulation and security, making many financial inventions susceptible to scams.

Let me ask you: how smart are you handling and managing money? You may think yourself savvy, but the reality is that millennials are more prone to losing money in financial scams than any other age group, as reported by The Federal Trade Commission of America. There are more reports of fraudulent activity from those under 34 than any other age group in Australia. With increasingly intricate schemes developing , it is increasingly critical to be cautious with your money management.

One of the most prevalent schemes encountered are known as ’Phishing’ scams. In simple terms, ’Phishing’ is a deceptive attempt to obtain sensitive information, including passwords and credit card details. You’ve likely seen comedians trolling scammers making claims to ‘need iTunes gift cards’. You might think, ‘I would never be foolish enough to fall for that,’ but phishing scams have evolved from the days of Nigerian princes asking you to finance unbelievable investments. The ACCC 2018 report on scams indicated over 24,000 phishing scams with losses of almost a million AUD. So, how have they become so effective?

These schemes work by preying on fear while disguising themselves as legitimate organisations. Scammers often pose as banks and government institutions, and create a sense of urgency by claiming that there has been a breach in your account or that your service will be discontinued if you do not act immediately. They ask for personal information and account details as confirmation of your identity in order to help fix the ‘issue’. Ironically, these callers are the criminals they are warning you against, conning you out of both your money and information. Almost 50% of all scammers connect with victims through phone calls and around 20% through emails, suggesting that phone conversation can further emphasise the sense of urgency. Current alerts to be aware of include NAB bank impersonation and NBN service disconnection schemes.

If you are sceptical about an alarming call or email, do not be afraid to call the organisation in question, using only critical contact details, like their main website, to confirm whether the alarm is real. Tips that ScamWatch recommend include making sure that email addresses and links are legitimate by hovering your mouse over them to see the hyperlinked URL, and searching websites yourself before clicking a link. A way to stop most unsolicited phone calls is to join the Do Not Call Register, which is a government database that removes your number from receiving unsolicited calls from telemarketers. This option is not foolproof however; stay on alert as scammers will find strategies to unlawfully gain your contact details.

In the world of money of money management, financial gurus will give one key piece of advice: invest early. As tech-savvy adults, a booming option is cryptocurrency. But in the wake of The Australian Securities and Investment Commission (ASIC) crackdown on cryptocurrency, this unregulated world can be a gamble. It is important to extensively research the platform of your choice before investing any money into cryptocurrency. Fake Bitcoin exchanges and cryptocurrency can be identified through Bitcoin forums, opening an account with a professional broker, or using more mainstream platforms such as Coinbase. Additionally, it is important to note that initial coin offerings are the most risky and many turn out to be illegal schemes. They may seem legitimate and impressive with sophisticated platforms, but if a deal is too good to be true it usually is.

Regardless, many people are still falling for the oldest swindle out there: Ponzi Schemes. Essentially, they are fraudulent investments that rely on new investors to generate profit for the old. Repackaged with a modern look, investors are, of course, initially sceptical of these ‘low risk, high returns’ cryptocurrency investments – but when money appears to be pouring into their accounts, victims lower their guard and begin to invest higher and higher amounts. Behind the scenes, criminals are simply depositing the money of new investors to earlier investors as ‘dividends’ and stashing the rest in private bank accounts until they are unable to find any more investors – at which point the scheme collapses. The ACCC reports that Australians lost over $38 million to investment scams in 2018, including $6 million in cryptocurrency scams. The world of cryptocurrency is alluring but be careful of being blinded by false bling.

Something that I am certainly guilty of is binge-shopping online, where you can find anything from bubble tea lip balm to doggy sunscreen. We are in love with low prices and well-designed websites. But online shopping scams are one of the most effective ways for criminals to get their hands on your money, making up 57% of all reported online scams reporting monetary losses. The ACCC totalled a loss of $3 million in 2018 for online shopping scams. Via fake ads on eBay and Google, scammers promote their sites to draw in victims, accepting payment without providing the product, and use your payment and shipping details for identity theft, further scamming you or selling your details on. Norton Security tips include having up-to-date cyber security software and browsers, making sure that the site uses encryptions that protect personal data, using shopping sites with ‘HTTPS’ rather than ‘HTTP’ URLs, and using a Virtual Privacy Network (VPN) on public Wi-Fi to avoid hacking.

If I’m not going to be buying into scams, I’ll need another form of income to feed my online shopping addiction. In this economy, it’s a free for all. Become an Uber driver, tutor kids, house-sit, but whatever you do, do not fall for the ‘get rich quick’ schemes. ‘Be your own boss! Earn thousands a month from home!’ Sound familiar? You’ll hear those phrases often in Multi-Level Marketing (MLM) schemes. MLM are a legal form of business, but most are pyramid schemes in disguise. Pyramid schemes thrive on recruitment, enticing people to join by promising riches and a lifestyle of luxury. They tend to target the most financially vulnerable, very often stay-at-home parents and students, and rely on members leveraging their close relationships to recruit. Pyramid schemes do not offer any real product or service on their own but when disguised as an MLM, products sold range from health and fitness vitamins to make-up and skincare, which are overpriced and of poor quality, making them difficult to sell. Be critical of suspiciously enticing job adverts, even if you are desperate for income.

If there is one thing I hope you take out of this article: always be mindful of where your money is going, especially as students with what little extra cash we have. Always have at the back of your mind a level of scepticism in your money management. It may be funny watching scammers get trolled but it’s not so fun when the scammer trolls you out of your own money.

Thao is a 1st year commerce student feeling constantly overwhelmed, even when it’s the holidays. She will talk your ears off about Sherlock and/or her Dachshund, Rosie. You can find her on campus by following high-pitched screaming.