Bond and term deposit scams on the rise (Scam Awareness Update)

Published on 10 June 2024 by Drew Pflaum
Categories: Insights & Updates

Relevant For:

Individuals and businesses considering investment opportunities, particularly in bonds and term deposits.

Key Points:

• Rise in scams involving fake bonds and term deposits.
• Scammers impersonate legitimate financial services using real business details.
• Scams often involve online ads and social media posts.
• Professional and convincing counterfeit investment materials are used.
• Scammers gain trust by being knowledgeable and personable.
• Victims are asked to transfer funds to seemingly legitimate bank accounts.
• Legitimate financial services hold client money in specific trust accounts.
• Verify bank account details independently.
• Contact banks immediately if victimised, and report to Scamwatch.

Full Article:

ASIC is concerned about the recent increase in sophisticated scams that encourage people to invest in fake bonds and term deposits. These scams are particularly insidious as they involve the impersonation of legitimate financial services businesses, many of which may not have a significant online presence of their own.

According to ASIC, scammers have been meticulously mirroring the details of real businesses, including their addresses, Australian business numbers (ABNs) and Australian financial services (AFS) license numbers. These elements are being used in scam advertisements and communications to lend an air of authenticity to the fraudulent schemes.

The scammers’ strategy involves using online advertisements and social media posts to lure consumers with fake offers to invest in well-known companies. These ads and posts often redirect to an online enquiry form designed to harvest personal information. Consumers who show interest are provided with counterfeit investment materials and disclosure documents that appear professional and convincing.

ASIC has noted that these scammers are particularly cunning, often presenting themselves as knowledgeable and personable without pressuring potential victims into making quick decisions. The returns advertised are also crafted to sound reasonable, avoiding the typical “too good to be true” offers that are easier to spot as fraudulent.

Once they have gained the trust of their targets, scammers request personal identity documents and the completion of application forms. They then direct consumers to transfer funds into bank accounts that, while seemingly legitimate, are actually controlled by the scammers. These accounts are often held by reputable banks that are not associated with the supposed investment opportunity, further complicating the detection of the scam.

It’s important to remember that legitimate financial services businesses are required to hold client money for investments in a trust account, client segregated account or cash management trust that is held in the name of the licensee. ASIC also notes that consumers can confirm bank account details (including whether the bank account details match the name of the financial services business) via the Australian Payments Network or by independently contacting the bank directly using the details on the Australian Financial Complaints Authority (AFCA) website.

People who may have fallen victim to this type of scam are urged to contact their banks immediately and not to send any further money. If you’re concerned your ID may have been compromised, you can contact IDCARE, a free government-funded service which can help develop individualised response plans. ASIC advises that these scams should also be reported to Scamwatch to help stop scammers from entrapping more people, and that you should always be wary of follow-up scams that may promise to “get your money back”.