OCBA - Types of scams

There are some amazing offers that may come your way. You may be approached by someone pretending to be an investment adviser. But always investigate any money-making scheme very carefully before deciding whether or not to invest your hard earned money. If you have any concerns about a scheme seek legal advice and if you are stll unsure have nothng to do with it. If it looks too good to be true it usually is!

Chain letters
Some chain letters promise easy money to anyone who participates, but for the majority there is a very small or no return at all. The chain letter invites you to send a sum of money to the name at the top of a list, delete that name and then add your own name to the bottom of the list before sending the letter to a number of people.

Chain letters that involve sending money in the hope of making money are pyramid selling schemes, and these are illegal in Australla.

Investment scams
Former stockbroker, David Tweed, has been permanently banned by ASIC from providing financial services. He has been described as unfit to provide financial services as a result of engaging in misleading and deceptive conduct concerning the making of offers to purchase shares. Action has been taken against Tweed in the Federal Court of Australia, but it is important for investors to understand that this does not prohibit him from making unsolicited offers to investors. If you get an offer, unsolicited, from a company offering to buy shares on your behalf -- beware.

Read more about David Tweed's activites on the ASIC website.

Pyramid schemes
There are three elements that may indicate a pyramid scheme:

a participant pays money to the promoters

that payment entitles the partcipant to recruit others to the scheme, and

the participant is induced to make the payment because they are told they will receive a benefit in respect of the introduction of those others to the scheme.

A pyramid selling scheme is a multi-level selling technique where the main feature is that earning money and gaining promotion depends on recruiting other people into the operations rather than selling a product or provding a service.

A person is generally required to pay a fee to take part. If commsslon comes only from
recruiting others, people who start the scheme have a large advantage over those who join later.

Pyramid selling schemes can look a little like multi-level marketing (MLM) where partcipants earn commissions from the sale of products. MLM usually involves commercially viable products (e.g. clothing, cosmetics, cookware etc) that present genuine business and income earning opportunities through repeat sales. However, pyramid selllng schemes often involve no product at all or 'gimmick' type products or servlces that do not generate regular income through repeat sales.

Phishing
Phishing scams (via the computer) have one thing in common - they trick people into disclosing their personal details by enticing them to click on a link that directs them to a hoax website where personal informatlon is captured. Often the emails and the fake websites are designed to replicate the appearance of a bank or company's legitimate website, and the website address can also be very similar.

Financial institutions do not contact their customers in this way, so don't be trapped by this scam. If you click on a dubious link you may be opening up your computer system to a 'trojan' virus, which can go on to access your personal details or financial accounts.

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