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Sophisticated fraudsters are targeting Australian pre-retirees. Learn how you can protect your investments and super from scammers.

The Australian Crime Commission (ACC) is warning people aged 50 and over to protect themselves from the rising number of highly targeted, serious and organised investment frauds. In the five years between 2007 and 2012, Australians lost a reported $113 million to fraud with individual losses ranging from $35,000 to more than $4 million.

“Organised criminal groups are attracted to the high levels of superannuation and retirement savings in Australia. The Australian economy is known to have been less affected by the global financial crisis than other nations, making those approaching retirement an attractive target.”

Australian Crime Commission, September 2015

How the scams work

Serious and organised fraudsters often lure people with promises of high investment returns.

Scams often start with a telephone cold call. The scammers use persuasive phone techniques to uncover private details and adopt high-pressure sales tactics to coerce people into transferring money for overpriced, sham or worthless shares.

Victims are sometimes paid fake ’dividends’, which helps reinforce the lie that the ‘investment’ is growing. In fact, these ‘returns’ are usually part of the original investment or are other victims’ money. The scammers also use fraudulent websites and email addresses that may look legitimate to help support their claims and lull people into a false sense of security.
Pre-retirees: the perfect targets

Law enforcement agencies warn that the typical victim of these investment frauds is often:

  • Australian, middle aged to older people, 50+
  • Has access to savings or can draw on equity in their assets
  • Self-funded retiree
  • Financially literate and well-educated
  • Socially isolated – geographically or otherwise
  • Often male (scams can also fool the victim’s spouse, relatives and friends)

Case Study – Retiree loses life savings to fraudsters

Steve is 65 and retired. He is university educated and previously owned an investment advisory firm. Steve’s wife is deceased.

One day, Steve receives a cold call from a professional sounding man with excellent knowledge of overseas investments. After asking the caller lots of questions, Steve is 100% convinced. Later, a ‘senior adviser’ from the same company calls Steve. The senior adviser encourages Steve to make a small initial investment, and guarantees excellent returns on the investment.

Steve invests $10,000 and, after seeing his money ‘grow’ online, transfers regular amounts until he has spent $200,000 of his savings. Not long after, Steve’s online trading account crashes unexpectedly. Concerned, Steve calls the company’s helpline but no one answers. Steve searches for the company name online and realises that he has been conned, along with 56 other victims.

Steve is so shocked and embarrassed that he doesn’t report the fraud. Some time later, a detective phones him after seeing Steve’s name on a bank transfer list. A solicitor also calls Steve and claims to represent the victims and promises to recover Steve’s money. After the call, Steve contacts the detective who confirms that the solicitor is part of a ‘secondary fraud’ racket.

Today Steve is worried about his financial future. Instead of being a self-funded retiree, he may have to rely entirely on the government pension.

Tips to avoid becoming a victim

The ACC Board has established a multiagency response called Task Force Galilee, which advises Australian investors to:

  1. Visit www.moneysmart.gov.au or call 1300 300 630 for details about scams.
  2. Report suspected fraud to the Australian Securities and Investments Commission via Money Smart or local police. Tell your family and friends.
  3. Hang up on unsolicited callers offering overseas investments.
  4. Check that investment companies have a valid Australian Financial Services Licence.
  5. Seek independent financial advice before making any investment decisions.

And remember…if something sounds too good to be true, it usually is!

How we’re protecting your savings

We look after more than $930 million of our members’ retirement savings and it’s a responsibility we take very seriously. In addition to a range of operational and financial procedures we have in place to safeguard your savings, we also hold a percentage of funds in reserve to cover risk as required by Australian law.

Here are some of the ways that Mercy Super protects our members’ money:

  • We manage the fund’s investments within established prudential guidelines to ensure they are appropriate for the fund and in the best interests of our members.
  • We use professional, accredited investment consultants to research, review and advise on appropriate investments. These consultants also conduct regular site visits of the fund’s investment managers.
  • The fund’s assets are held through a trusted custodian who independently records, reconciles, transacts, monitors and reports on the fund’s assets with extensive risk controls in place.
  • We undertake extensive due diligence on any new investment opportunities before proceeding and also liaise with the superannuation regulator (APRA) on any overseas investments.

Sources: Crime Profile Series – Serious and Organised Investment Fraud, ACC and AIC, 2015

Issued by Mercy Super Pty Ltd ABN 98 056 047 324 AFSL 418976 Trustee of Mercy Super ABN 11 789 425 178. The information provided is of a general nature only and does not take into account your individual financial situation, objectives or needs. Accordingly, before acting on the information, it is important that you consider the appropriate Product Disclosure Statement, available from mercysuper.com.au or by contacting us, having regard to your own particular situation.