GOVERNMENT scam alert services have been warning the community over the past couple of months about binary option investment scams.
For the first eight months of 2016, ScamWatch revealed that about $3million had been lost by Australians to these types of scams.
Binary options are speculative bids that aim to predict the movement of a commodity, asset or index prices over a short time. They're akin to a live sports spot-bet where punters during a game can bet on who scores the next try or gives away a penalty.
In Australia, binary options are not illegal, unlike other countries around the world. In the past month, IDCARE has spoken with investors who have lost a combined $880,000 to binary investment scams.
These investors range in age between 65 and 80 and are all now back seeking employment, just to make ends meet. Their life savings have not been lost from a poor investment. Their life savings have been lost to scammers pretending to offer investments that were never there to begin with.
Investment scams are not new, but the methods revealed by the Australians who have lost out to binary option scams in the past month underscores the involvement of sophisticated organised crime.
In all cases, the investors were given a slick-looking website, their own login, and could watch their fake balance grow. The tip-off for some of these investors that things were not legitimate was at the point of withdrawing their money, or ironically, being offered by the scammers to travel to London for company events. When airline tickets failed to arrive, the idea that the investor had been scammed cemented in their minds.
So what can be done about these scams? We probably should re-think the legality of binary option investments in any case. They are high risk and high-speculative investments - all the hallmarks of a pre-GFC low doc loan scenario.
Investors are keen to make money quickly (or in the case of the GFC, get a loan quickly), and the controls around the legitimacy of offerings and the predictability is not always there. The best one can offer for advice at the moment is to "investigate before you invest". Visit www.moneysmart.gov.au. This government website is run by the investment market regulator ASIC.
Anyone offering a financial product in Australia must have an Australian Financial Services Licence. But unfortunately these can easily be stolen and misrepresented. The real art in detecting an investment scam is to do some online sleuthing. Check to see how long the website offering the investment has been around - (do a "whois" look-up on the website). Have a look at who is behind the investment and do a web search on their history.
Professor David Lacey is IDCARE managing director and a professor in cyber security at the University of the Sunshine Coast.
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