With people spending more time online since the Covid-19 pandemic began, there has been a rise in the number of people losing money through online scams.
The Australian Competition and Consumer Commission (ACCC) recently released their scam statistics gathered from 2019 until April 2022, which have been analysed and collated in a new study by Social Catfish.
David McCellan is the president of Social Catfish, a US site dedicated to helping users investigate people or businesses that may be trying to swindle them.
He explained how they took the data collected by the ACCC and broke it down into how many people were scammed in each jurisdiction and how the amount lost varied between the age demographics.
The ACT reported the most incidents per 100,000 residents, however it’s at the bottom of the overall list. David attributes this to low population and a lower age average. Here in the capital, the average age worked out to be just 35 due to the large number of students and defence personnel, while the data showed people aged over 45 lost the most money to online scams.
Victims aged over 65 lost an average of $30,000 per incident, while the average amount lost in a scam in the ACT was only $667.
“The more money somebody loses, the older someone is, they feel like they should have known better, or they’re embarrassed they lost so much money and they don’t want family members to know, so they don’t typically report it. Whereas the younger age demographic, they lose five dollars and they’re going to the police,” David said.
The idea for the business came to David when he and his business partner were watching the MTV program, Catfish, eight years ago. The show follows people in online relationships as they investigate the people they have been dating, often finding out it is not who they thought.
“There was really no recourse [for the people involved], there’s nothing out there to protect these people. I could go steal somebody’s pictures, say I have a Ferrari, and start meeting people online.”
Even though the business has been based in the US since its inception, since the beginning of the pandemic they have seen a massive influx of people from Australia and around the world. They decided to it was time to investigate the data from other countries to find what tools are needed to educate and assist people who may be involved in scams.
“Most of these scams happen because most of these people are online, they’re on social media, they’re on dating sites, they’re on apps, and random people are contacting them.”
Worried you might be involved in a scam? David has provided a quick rundown on how to spot the three biggest scams detected in Australia and how to avoid being tricked by them:
1. Investment scams
Basically, in an investment scam, someone will say ‘hey, I have this investment’, often promising high returns with little to no risk. Cryptocurrency is a big part of modern investment scams, one of the main ones circulating at the moment involves investing in crypto mining.
“They’ll actually let you pull some of the money out, so it builds confidence. Then what happens is people see big gains in these crypto funds. Once they’ll pull the money out, they’ll throw a bunch of money in because they’re making big returns and then they [scammers] steal the money.”
To avoid getting caught up in an investment scam, be sure to research the company, see where the money is going and look up reviews. Research the person who approached you; if somebody randomly messages you to invest in something, it probably isn’t legitimate. David also recommends consulting a finance expert before investing.
2. Romance scams
Romance scams are usually where people lose the most money, often happening on social media and not just dating sites. It will start with someone messaging you saying they think you’re attractive or they want to talk, then, over a period, a relationship develops. At some point they will ask you to send them money for an emergency, because they are struggling, or they are getting/doing something for you.
“People who are involved with romance scams typically lose the most amount of money because they’re actually groomed anywhere from a couple of weeks to a couple of years and so these people become attached. When they’re asked for money, they’ll give a couple of hundred dollars here, a thousand dollars there, they’ll be coerced into refinancing their house or selling their cars.”
Some red flags to look out for when dealing with online relationships include: if they won’t video chat or talk to you over the phone, if they are overseas, if they fall in love with you quickly, or ask for money and say they will pay you back. David said the best way to avoid romance scams is to not give money at all.
3. Employment scams
The third biggest scam in Australia is employment scams. This one has taken off a lot more over the pandemic when many people were laid off, often occurring if someone randomly messages you saying they have this job for you, or on job boards. Before beginning any employment, you will be asked to send money for a certification or application with the promise of a high salary. It can also occur when filling out applications for jobs; you will be asked to provide identifying details like driver’s licence or tax file numbers which are then used to steal your identity.
“We saw a lot of money that was put into the local economies and the scammers knew that and went after it. We actually saw more of these identity thefts happen over the pandemic than we’ve ever seen.”
As part of their research, the team at Social Catfish often interview both victims and scammers. One of the most common things they have noticed in their interviews with people who have been scammed is they weren’t aware these kinds of things existed.
“People were asked to trade in bitcoin and didn’t know what cryptocurrency was or they’re asked to apply for a job and they’re so trusting of the internet they go and email this job application with all their personal information on it, not knowing they need to be careful or do due diligence on the company.”
One of the other things that was relevant when they started talking to people using their site was that most of scams followed the same blueprint.
“It’s a million-dollar industry and it’s isolated to a handful of scams, maybe 15 or 20 types of scams, and gets spread around from certain countries and banks and cryptocurrencies,” David said.
He mentioned most of the scams seemed to originate from the same few countries: Nigeria, Russia, and the Philippines. He mentioned that the governments in these countries played a part in willingness to scam, having tracked some of the scammers and informed their governments only to receive no response.
“The governments are so corrupt that a lot of it happens through the government agencies as well. We’ve seen ministers that know these people. We’ve interviewed many of these scammers and they have no fear of getting caught.”
Many of the scams detected via Social Catfish came from social media like Tik Tok, Instagram and Facebook. David knows that as the technology evolves so do the scams.
“We all make fun of the Nigerian prince days, but these kinds of scams are an evolution of the Nigerian prince days; it started off with email, then AOL chat rooms and then technology evolved, and it made it easier to get hold of people.”
Websites like Social Catfish are easy to navigate and can help users quickly identify if the person they are dealing with is legitimate. Running a photo of the person you think you’re talking to, or the business logo will show the user where the original photo came from, particularly if it has been used in multiple scams or where the company logo has been lifted from.
“If you’re talking to somebody online, if you’re going to meet them in person for the first time, or you get that weird number that calls, you can come to our site and see who you’re dealing with to make sure you’re doing things in a safe manner,” David said.
Uncover the truth about your potential scammer at socialcatfish.com or, in Australia, you can check on and report scams via scamwatch.gov.au
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