The Australian Securities and Investments Commission (ASIC) has warned investors of a rise in imposter bond scams where scammers pretend to be associated with well-known domestic and international financial services firms.
The regulator said that in many circumstances, the scam occurred after the investor had completed an online enquiry form expressing interest in receiving investment advice, often via a third party or comparison site.
ASIC listed a number of common tactics which were deployed by scammers and included:
- Sending professional looking fake prospectuses with unrealistically high returns;
- Falsely stating the bonds are issued by prominent financial services firms when this is not true and there is no underlying investment;
- Falsely claiming investor funds will be pooled to invest in government bonds or the bonds of companies with AAA credit ratings;
- Falsely claiming the purchase price of the bonds is protected under the Commonwealth Governments Financial Claims Scheme; and
- Using contact details gathered online through fake investment comparison websites to call people and pressure them to invest or risk ‘missing out’.
Following this, investors interested in the investments in those bonds were often directed to pay funds into a bank account which could be difficult to recover money lost to scams, especially if the scammers were based outside of Australia.
“Investors searching for income-generating investments are at risk of being duped into buying these imposter bonds. Any prospectus offering incredible returns in the today’s economic environment is likely to be just that: incredible. ASIC warns investors to be sceptical and make proper inquiries before investing,” ASIC’s acting chair, Karen Chester, said.
“These bogus bond funds are raising not thousands, but millions of dollars from Australian investors.”
Chester also said that investors were also at risk of identity theft and should be reminded to check that they were actually dealing with the company they thought they were dealing with.