Recently, a Queensland man suffered a "sophisticated and elaborate" investment scam and lost A$500,000 in retirement savings. It was a vulnerable moment for him as he was still grieving the loss of his wife and "soulmate," who died after a long battle with cancer.
Ben (pseudonym), 66, entered an investment company on Facebook that he thought was legitimate, and began to deal with scammers who claimed to be account managers, starting the road to "investment." Starting in April, Ben transferred a total of AU$500,000 until his bank and fraud prevention agency Revolut intervened at the end of July. The investment website has now been removed from Google searches.
"It's almost like being hypnotized"
Many scams mimic existing legitimate companies by setting up similar operating systems, with account managers instructing potential victims on how to "invest" their money. Seemingly reputable investment institutions invite people to open investment trading accounts, and scammers can manipulate chat records and transaction data through a fake real platform to create the illusion of capital growth.
For example, someone might deposit $100 and three days later the account shows it has grown to $120
Well-spoken scammers pose as account managers to stay in touch with their victims and reassure them of their fears.
When victims ask for their funds, the scammers tell them that if they want to withdraw money, they must pay a fee to cover their "credit" or "contract," but they are never able to withdraw money.
It was almost like hypnosis...like being brainwashed," Ben said. "It wasn't until my bank stepped in and said wait a minute, wait a minute, you've been scammed...that's when I snapped out of it, but at that point everything was too late. "
Ben admitted he should have done more research and called his mistake "stupid", but said the scammers were "clever and clever". "Once you get into it, you hit a point where you either stop and count your losses, or you keep throwing money at it and making it work. That's when I found myself in financial difficulty."
"I'm okay, to some extent, I'll survive, but I feel guilty that I've lost everything I had when my wife died and now can't help my kids..." Ben He said he fell into a "deep depression" when he realized what he had done. He has yet to tell his adult children about the scam because he said he was embarrassed.
"It's like being hypnotized" - Queensland elderly man was defrauded of AU$500,000 in investment and dared not tell his children
Investment fraud is common, be careful to prevent fraud
Ben hopes his story will help others avoid making the same mistakes he did. He advises people not to trust any financial investment plan they find on Facebook, to check Google reviews before investing, and to talk to a professional (such as an accountant) before making any investment.
In Australia, $568 million was lost to fraud in 2022, with $379 million (67%) coming from investment fraud, according to Scamwatch. The trend has continued this year, with losses from investment scams reaching $241 million in 2023.
Nelson Yiannakou, head of Revolut's financial crime unit, believes many people fail to report their losses to fraudsters, so the actual amount lost could be three times higher. "In my opinion, we can never escape scammers, but we will always try to use wisdom to defeat them," Yiannakou said.
Yiannakou said victims were often misled by scammers and ignored warnings. Scammers tell victims this is a "special type of investment" that is likely to trigger a scam warning because it is so "unique." "So the bottom line is that financial services institutions step in and intervene with customers. Unfortunately, a lot of these customers are computer-literate, financial-literate, technology-literate."
Social media and telecommunications companies also need to be held accountable, he said, as the source of the scam is likely to come from social media, phone calls or emails. "They need to take greater responsibility for the review and quality of the advertising and information they put out... because there is a group of consumers who are unable to police themselves."
He also believes law enforcement needs to place a greater emphasis on supporting victims of fraud. "If someone comes and robs your house of $600, the police are going to come and take fingerprints... But if someone comes and robs your account of $600,000, they have nowhere to go."
