Safeguarding against scams, frauds and identity theft

Recently, news and media reports have covered unhappy stories of people—including many older Australians—who have fallen victim to a scam or a fraud. The victims have lost large amounts of money, or their personal information has been accessed and used by other people without their permission. In some cases, the criminals have appropriated their identity and incurred debts in their name.

Scams and frauds can cause stress, worry and anxiety as well as financial loss and increased vulnerability. To avoid becoming a victim, it will help if you understand what scams and frauds are, what to look out for and how to protect yourself.

Understanding scams, frauds and identity theft

These are types of criminal activity designed to trick people out of money or personal information, often by gaining access to their funds and bank accounts. The techniques that scammers and fraudsters use are often very sophisticated and clever and make the deception hard to spot.

While anyone can become their victims, scammers or fraudsters frequently target older people. This is because they believe older people may be less familiar with technology, more easily intimidated by authority (such as a bank or the tax office), and more readily confused in conversations about rules and processes.

What is the difference between a scam and a fraud?

• A scam happens when somebody gains your confidence in order to steal your money or personal information. Scammers often use sophisticated lies to trick you. They approach potential victims in many ways—most commonly via text messages, phone calls and emails—and they can sound very convincing. It can be easy to be tricked.

• Account fraud usually happens when somebody accesses your funds without your knowledge or authority. You might not even be aware of the fraud until you notice it on your statement or receive a call from your bank. Bank account card fraud is one of the most common forms.

• Identity theft is another type of fraud and happens when someone’s personal information is accessed illegally and another person appropriates their identity. The identity thief may take out a loan, set up a fake website or social media account, or even undertake criminal activity under the victim’s name, leaving them with a big debt or reputational damage.

How widespread are scams and frauds?

The full extent of scamming and fraud isn’t clear, because not all incidents are reported. As many as 30% of victims don’t tell their friends and families or report it to authorities because they feel ashamed or embarrassed that it happened to them. Some people never even know that they have been scammed or defrauded, because the deception was so sophisticated.

We do know, however, that the real impact of frauds and scams is greater than most people imagine:

• The Australian Bureau of Statistics (ABS) reported that 65% of Australians aged 15 and over were exposed to a scam in the 2020–21 financial year (‘13.2 million Australians exposed to scams’, media release, 22 February 2023).

• 1.7 million Australians experienced card fraud in the 2020–21 financial year (ABS, ‘Personal fraud’, statistics for 2020–21, 22 February 2023).

• The Australian Competition and Consumer Commission (ACCC) estimated that Australians lost a total of more than $2 billion to scams in 2021 (‘Targeting scams: report of the ACCC on scams activity 2021’, published report, 4 July 2022, p 1).

• The number of scams reported increased by 33% from 2020 to 2021, while 30% of victims do not report the scam to anyone (ACCC, ‘Targeting scams: report of the ACCC on scams activity 2021’ (PDF, 1.56 MB), published report, 4 July 2022, p 1).

Why are fraudsters and scammers so effective?

• They play on emotions such as fear, loneliness, desire and compassion to trick you into making decisions that you wouldn’t otherwise make.

• They identify and prey on vulnerabilities such as isolation, age, financial hardship, language barriers and low computer skills to take advantage of your situation.

• They are experts at manipulating your trust and imitating honest people or organisations.

• They employ fear to manipulative you—e.g. they may threaten you with a fine, late fees, the disconnection of services such as electricity, phone or internet, arrest or even deportation.

Types of scams and frauds

While new scams and frauds emerge all the time, there are some common ones that pop up regularly—you may have seen some of these yourself. Being aware of these can help you to be vigilant and critical of unexpected emails, text messages and phone calls you might receive.

Common scams

• IT support. The scammer contacts you by phone or email, pretending to be technical support staff from a telecommunications or computer company. They sometimes request remote access to your computer and often try to convince you to transfer money or to buy a prepaid gift card to fix a fake technical issue. (See Susy’s story, below.)

• Romance and dating scams. The scammer forms a relationship with you to extract money or gifts. They may try to convince you to transfer assets into their name, lend or give them money, or make them a beneficiary of your will. Often they will ask you for money to fix a non-existent health, travel or family problem. (See Eddie’s story, below.)

• Investment scams. The scammer claims to be a stockbroker or portfolio manager offering you financial or investment advice. They will try to convince you to hand over money for an investment opportunity.

• Job opportunities. The scammer offers you a quick and guaranteed way of making money with little effort. So-called ‘pyramid schemes’ often masquerade as multi-level marketing businesses by using payments from new recruits as ‘profit’ for earlier investors.

• Unexpected money. The scammer offers you the false promise of an inheritance or a share of a large sum of money in return for paying them a smaller up-front fee. This scam type includes the well-known ‘Nigerian’ scams (where the scammer claims to need help transferring a large sum of money out of their country, often Nigeria) and lottery scams (where the scammer asks for a fee in order for you to claim winnings from a fictitious competition).

• Travel scams. The scammer tricks you into claiming a free or discounted holiday (that doesn’t really exist). To secure your ‘booking’, you may be asked to give the scammer your personal information and credit card numbers.

• Fake charities. The scammer takes advantage of your generosity and compassion by posing as a charity or claiming to need money to help a child who is ill.

• Buying or selling products. The scammer tricks you into paying for fake invoices, shopping at fake websites, or purchasing products at discount prices – products that you don’t receive or don’t work as described.

Eddie’s story: a ‘romance’ scam*

Eddie, a successful 52-year-old business executive, was devastated when his wife of 26 years passed away. After a year of terrible loneliness, he struck up a friendship with Kali, a beautiful 40-year-old woman of African descent, on an internet dating site. Eddie says he was drawn to Kali’s exotic background and felt flattered by her attention and care.

Kali said she had recently moved from Australia to the United States after her father’s sudden death to support her frail mother, who faced rising medical costs as her health was declining. Since Kali was unable to work while caring for her mother, Eddie offered to give her $933 to help pay for some tests.

Soon afterwards, a devastated Kali told Eddie that her mother had cancer and needed a $54,000 operation immediately. As her parents’ joint account was frozen while her father’s estate was in probate, she asked if Eddie could help her out, reminding him that she wanted to meet him once her family problems were over. Eddie took out a personal loan to help Kali and her mother.

However, Kali then reported that her mother needed further treatment as not all the cancer had been removed. The total costs of chemotherapy, radiation therapy and other services—$492,000—had to be paid up-front, and teary Kali declared she still didn’t have the funds from her father’s estate. She implored Eddie to lend her more money for just a short period of time.

Eddie wasn’t comfortable about lending Kali more money, but she said that her father’s accident included a $1 million insurance payout. Eventually Eddie arranged to take out a second, temporary mortgage on his house for the full amount that Kali needed to borrow.

After this last transfer was made Eddie expected to hear an update, but Kali didn’t call. When he phoned her a week later, he was shocked to find the number was disconnected. In a horrifying moment, it finally dawned on Eddie that he had been scammed. He had given away a total of $546,933.

Shocked and embarrassed, Eddie approached his bank to see if anything could be done. The bank immediately froze his account and blacklisted the recipients. Unfortunately, the bank was unable to recover the funds because too much time had passed.

Susy’s story: an ‘IT support’ scam*

Susy, 62, received an urgent call from Tim, who said he was from the security department of her telephone company. Tim said he had detected a hacker who was sending her random advertising emails with malware (a malicious computer program) that could be used to access all of Susy’s personal details.

Susy was understandably scared about theft of her personal details as well as the possibility that the hacker could access a large inheritance in one of her accounts. Tim explained that if they acted quickly, they could find and remove the malware to prevent, or at least minimise, any theft. Susy agreed to receive Tim’s help, and she downloaded and installed a computer program that gave Tim access to her computer.

Soon after Tim began his check, he told Susy he had detected a sophisticated malware program that had accessed all her bank accounts. He said he removed the malware but advised Susy to purchase an anti-malware program for future protection. At $9,700, this seemed quite expensive to Susy, but she knew she had more to lose if she didn’t act quickly.

A week later, Tim called Susy to check that the anti-malware program was working well. He told her that new malware was being developed constantly and recommended insurance to protect her from any future hacking of her accounts. Generously, he suggested she could use his ‘family and friends’ discount; for only $8,000, Susy would have 10 years of protection though an offshore insurance company. Given her earlier experience, Susy thought this was a good idea.

Tim then told Susy that he had become a shareholder in this insurance company about a year ago. In the last six months, he boasted, he had received dividends equal to five times his original investment. He explained that the greater the investment, the bigger the payback.

Thinking of the round-the-world trip she had always wanted to take, Susy asked if she could make an initial small investment and then regular payments to build up her shares. Tim offered to help her set up an online bank account to make regular transfers of $2,000. When the security code for accessing her account came through to Susy’s phone, she gave it to Tim, as he explained he needed it to help her set up the account.

The change in Susy’s banking and the large international transfer alerted her bank and triggered a lock on Susy’s account. When she received a call from John, a bank employee, Susy told him that she had organised this transfer to a new online account. John went through the warning signs of scams with Susy, but she assured John that this was not a scam.

A week after Tim’s internet ‘help’, the agreed amount of $2,000 was transferred out of Susy’s account. Once more the bank contacted Susy, who again assured them that she had approved the transfer. Over the next two months, automatic transfers continued.

However, Susy did not realise that the transfers ranged from $2,000 to $20,000 until, during a visit to the bank, she discovered her account was almost empty. She admitted to the teller that she had given her bank details and security code to Tim, allowing him to set up an online account that gave him access to all her money.

The bank locked Susy’s bank account, blacklisted the recipient and tried to recover the lost funds. Unfortunately, of the $90,000 Susy had lost, the bank was only able to retrieve the initial transfer of $9,700 that had been made to another financial institution. All of the money ‘Tim’ had transferred from Susy’s account had disappeared.

* Eddie and Susy’s stories are based on real-life Commonwealth Bank case studies.

Common account frauds

• Phishing. The fraudster poses as someone you would normally trust, such as staff from your bank or the tax office, and tricks you into giving them your username, password or credit card details, usually over the phone or via a link to a fake website.

• Malware. The fraudster sends you an email or text that looks legitimate but contains a link that, when you click on it, installs software on your computer, phone or tablet and gives them online access to your bank accounts.

• Skimming. The fraudster installs a device on an ATM or EFTPOS machine that reads and stores information from your credit or debit card, which they then use to withdraw money or make purchases.

• Card fraud. The fraudster obtains your credit card details, either through card skimming or by convincing you to give out the information under false pretences, then uses your card without your authorisation.

• Missed call. The fraudster calls you but then hangs up quickly, prompting you to call them back on a premium number with high call charges.

• Identity fraud. The fraudster uses your identity or personal information to commit a crime. This can involve ‘identity theft’ or the production of false identities and financial documents.

• Cheque fraud. The fraudster attempts to use fake, forged or altered cheques that draw on your account to pay for goods and services.

Beware! Signs to watch for

Even though scams and frauds can be very clever and deceptive, they often show similar characteristics. Here are some of the common features to look out for:

• Incredible offers to make easy money. If it sounds too good to be true, it almost certainly is!

• Contact from someone you don’t know. Be wary of unexpected phone calls, text messages and emails that you aren’t expecting or come from people or organisations you don’t know.

• Requests for remote access to your computer. Never allow anyone to access your computer remotely, as they can gain access to your personal information or financial accounts while ‘helping you with a problem’.

• Feeling bullied or rushed. Be sceptical of anyone claiming to be from a big and legitimate organisation (bank, telephone company, utilities company, government) who tries to rush you into anything.

• Unknown transactions. Watch your bank accounts for unusual transactions or ones you don’t recognise, whether small or large—particularly for $1 or other insignificant amounts (fraudsters often use small amounts to test whether your account is active before taking out larger sums of money).

Top tips for safeguarding against scams and fraud

• Hang up on suspicious phone calls, even if they say they are from big companies. Call the organisation back using a number you obtain for yourself from a trusted source, such as the company’s website or a letter you’ve received from that company.

• Never share passwords and personal information. Anyone who asks you for your password is probably scamming you.

• Be sceptical about email attachments, links and unexpected texts. If you’re in doubt, delete the message and don’t click on any links it contains.

• Use up-to-date anti-virus software to protect your computer. You can find more information about this at the ACCC’s Scamwatch website.

• Don’t send money or personal information to people from unusual locations.

• If you shop online, always use secure websites. Make sure the web address (URL) starts with ‘https’ and/or has a padlock symbol at the front

  

• Avoid swiping your card when making purchases. Inserting or tapping your card is often more secure.

• Choose to use a PIN rather than sign for purchases. Signatures can be copied or forged.

• Always keep your personal and account information safe and don’t write down or tell anybody your PINs or passwords. If you have forgotten your password or PIN, contact your bank for help.

• Change your passwords and PINs regularly as a preventative measure.

• Check your bank account and statement regularly and watch for any unfamiliar transactions.

• Tell your bank if you are travelling, especially if you’re going overseas. The bank’s systems can raise an alert if your cards are used at home when you’re somewhere else.

• Talk to someone you trust if you receive a phone call, email or text message that could be a scam or fraud. Show the communication to them and ask if they think it’s real or not.

What to do if you’re a victim of a scam or fraud

• Contact your bank immediately. They may be able to stop the money transfer or close your account if you believe the scammer has your details.

• Change your passwords and PINs straight away if you suspect your security has been compromised.

• Report a scam, or attempted scam, to a government agency such as the ACCC’s Scamwatch to help them identify the scammer and prevent the scam from spreading.

• Report a fraud, or attempted fraud, to the police on 131 444.

• Contact IDCARE on 1300 432 273 or via their website. IDCARE is a free, Government-funded service that provides support to victims of identity crime to help them plan a response when they have had their personal information taken.

• Talk to family or friends about your experience. Even if you don’t respond to the scam or fraud approach, just knowing you’ve been targeted can be upsetting and distressing. There’s nothing to be ashamed or embarrassed about—scammers and fraudsters are clever and manipulative, and they’ve caught many other innocent people.

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Acknowledgement

This article is from the Safe & Savvy guide, a publication that was developed by the Commonwealth Bank of Australia (CommBank) Customer Advocate, together with a large range of community and academic experts.