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Navigating the rise of scammers | Essential tips for financial protection

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By Aden Wilkins Lifestyle

If you’ve been reading the news of late, it seems like the prominence of scammers and fraudsters has reached unprecedented levels. There have been data breaches of large multinational corporations, the $8 billion collapse of the world’s second-largest cryptocurrency exchange, and of course, the constant barrage of phishing messages turning up in our inboxes.

Whilst the methods used by these fraudsters may be new, history tells us that there have always been individuals who seek to take advantage of others for their own personal gain.

In the 19th century, there was the ‘gold brick scam’, where con artists would sell fake gold bricks to unsuspecting buyers at inflated prices.

In the 20th century, Charles Ponzi promised his clients that he could generate a 50% return on their investment within 45 days by taking advantage of the difference in the price of international reply coupons. In reality, he was using money from new investors to pay off earlier investors, once this fraud was uncovered, the term ‘Ponzi scheme’ would become synonymous with the event of ‘robbing Peter to pay Paul’.

In 2008 former Wall Street icon Bernie Madoff’s $64.8 billion hedge fund and its ‘Split Strike’ strategy was found to be nothing more than a Ponzi scheme. The Netflix series is a great watch for anyone who loves to sink their teeth into a true crime documentary.

Flash forward to 2023 and scammers have got a whole new suite of tricks up their arsenal. Think phishing emails, fake social media advertisements, and everything in between. I actually began keeping track of fake ‘entrepreneurs’ and ‘traders’ who tried to connect with me via social media in July last year. At the end of December, the tally sat at 35….

However, where it starts to get a bit scary is when scammers use official-looking logos and language to trick people into thinking a ‘Ponzi scheme’ is a legitimate investment. There are several scams imitating high-profile institutions floating around at the moment.

The concept of unsavoury individuals trying to con people out of money through a dodgy investment scheme is not a new trend. The only thing that is new, is the methods being used to do so and the ability of the scammers to make them look more convincing.

So, what can you do to protect yourself?

  1. Maintain a healthy dose of scepticism. If something seems too good to be true… it probably is. If you receive a message that seems a little out of character (even from what appears to be a trusted source), contact them via a method that you know to be secure.
  2. Don’t let emotions cloud your financial decision-making. Give yourself the time to think rationally and understand whether the decision is appropriate for your circumstances.
  3. Get a second opinion from your financial adviser or an expert that you trust.

At Capital Partners, your adviser and support team will always be available for a chat or to act as an independent sounding board if you ever require it.

The information provided on this site is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if these strategies and products are right for you.

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