Increasingly criminals are inventing financial investments and then stealing money by aggressively cold calling or emailing investors about their “investment product”.

Believe it or not, often those duped by scammers and criminals are level-headed and well educated investors. Many victims are men over fifty who have invested well in the past.

These issues are becoming massive problems because our lives are increasingly online and we often perform financial transactions in exposed environments.

It often takes an experienced criminal only quarter to half an hour to steal many thousands of dollars from either your bank accounts or credit cards.

Now this isn’t only a problem for you personally. It’s also an issue for your super fund monies.

Earlier this year, the Australian Crime Commission released research which revealed their insights and concerns into the super industry and the incidence of theft, fraud and other crimes.

The ACC said SMSFs are particularly vulnerable to criminals: Key findings included:

• SMSFs using a trusted professional such as a financial planner who is collaborating in a fraud; as advisers know their way around the complex web of financial services laws, products and providers they’re in danger of being coerced or exploited into being party to illegal activities;
• Intentionally using complex, multi-layered and opaque investment arrangements which are based overseas;
• Often using technology and cybercrime – this involves phishing, key-logging scams and stealing sensitive data (see below for a fascinating case I recently heard about); and
• Operate in gangs that remain one step ahead of the authorities

Criminals can pretend to be you to your professional advisers

I have heard stories of criminals pretending to be clients of advisers and requesting the transfer of money from SMSF bank accounts to other bank accounts. This appears to be done in a number of ways but sometimes this can occur by gaining access to online email accounts and learning from those accounts not only how you express yourself, but also what is going on in your life and using that to demand a quick transfer of cash.

How can you protect yourself?

The first point is to remain vigilant.

Earlier this year, APRA issued a lengthy practise statement to the large super funds it regulates advising them on how they might avoid fraud. They provided a long list of issues including the following:

• Claiming that an investment is exclusive to you and not available to anyone else;
• An investment manager who has no track record;
• The investment or its manager is located offshore;
• The investment is unlisted;
• The investment is complex and difficult to understand; and
• The investment isn’t a standalone investment

While those rules apply to larger funds, Liam Shorte, a Sydney based financial adviser provided the following six-point plan to help SMSFs avoid investing in dud investments:

• It’s really easy to make websites look professional so don’t invest solely on what these say or how they look;
• If the investment is based in Australia, then check that the product has been offered by the holder of a valid Australian Financial Service Licence;
• Before investing, ask for and thoroughly review the full Product Disclosure Statement then ask your advisers to check out this document for you;
• Search for the owners and directors online. If their “Neville nobodies” then the offer is probably suspicious and speculative;
• Physically check their nominated business address as this might be a broom cupboard; and
• Review the ACCC’s website www.scamwatch.gov.au and the super scam page of ASIC’s consumer website Money Smart www.moneysmart.gov.au. However not being listed on these websites doesn’t mean the product offering is genuine.

My Own Experience

Thankfully to the best of my knowledge, my identity hasn’t been stolen and I don’t believe we have had thieves swindle our bank accounts.

Like most of you I’ve received the silly emails and phone text messages that tell me I’ve won the lottery or am eligible for a tax refund and so on. I’ve been lucky enough not to be caught by any of these attempts.

However, recently I have received unsolicited phone calls from people pushing various different investment options. One was an opportunity to invest into an initial public offering for a Chinese business. The main selling point was that they had listed Alibaba! I asked them to send me information via email so I could forward it to ASIC and the ACC but it never arrived.

Another was an opportunity to invest in options. I have nothing against options and futures but I personally avoid them because of my lack of knowledge. The cold-caller arranged for a return phone call with his “expert” but that call has never turned up.

Have you or your super fund been targeted by criminals?

If yes, please write to me (tony.negline@ftsolutions.com.au) and tell me what happened. I think this is one topic that we have to learn from each other so we can all keep our personal and super life savings safe with your details kept confidential if that is your preference.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.