You can avoid phoney investment schemes and financial scams if you know what to look for. ASIC investigators have found some telltale signs that they are keen to share with you.
Sleazy marketing techniques
Financial fraud is as old as finance itself. Have you ever run up against these sleazy marketing techniques?
Promises unrealistic returns. In today's market, ASIC suggests that more than 15% per year should flash warning signs.
Sold by word of mouth through communities or groups, ethnic communities, church groups, retirement homes, etc. Not mass marketed.
Investments dressed up as a loan to avoid the more obvious breaches of the laws affecting managed investments.
Agents sell the scheme. This helps the masterminds of the fraud claim they never misled investors themselves.
Offered as an 'exclusive' investment opportunity, often with confidentiality agreements required. This makes investors feel special, and discourages them from contacting authorities like ASIC.
Funds kept in foreign banks, sometimes claiming this will 'reduce tax'. It's almost impossible to get your money back.
Sloppy dealings
ASIC investigators also noticed that the schemes and scams never get the legal and financial side of things right. Instead they operate in a sloppy fashion to cover their tracks. For example:
The scheme's masterminds hold no ASIC licence.
The scheme issues no prospectus or official product disclosure statement. You might get some paperwork, but it falls far below the standards observed by reputable fund managers.
Returns, if any, paid in cash so that there's nothing in writing.
Schemes and scams
