BSB107 Chap.5 Investment Scams and How Scammers Operate
Investment Scams and How Scammers Operate
The scale of the problem
The Topic 4 lecture closes with investment scams.
The National Anti-Scam Centre's report for 2025 records $2.18 billion of combined reported losses, with investment scams the costliest category at $837.7 million, even after an 11.4% fall.
How the schemes work
A Ponzi scheme pays returns from new investors' money because nothing is really invested, so it collapses when inflows stop.
The prescribed excerpt by Frank Abagnale focuses on the psychological tactics scammers use and how to resist them.
Defences at every layer
Regulators remove scam websites and list suspect entities on Moneysmart's Investor Alert List, banks are adding Confirmation of Payee checks to transfers, and Crypto ATMs now carry a cash limit and mandatory warnings. The personal defence is the national message, Stop. Check.
Protect., and a habit of testing every offer against the risk and return principle.
Scams also connect back to wellbeing: many Australians lose retirement savings to them, and stigma or shame keeps some victims from reporting what happened.
What this chapter covers
- 01
Reported scam losses in 2025
- 02
Investment scams as the costliest type
- 03
Who loses and how they pay
- 04
How a Ponzi scheme works
- 05
Scammer tactics and red flags
- 06
Protections from regulators and banks
Worked example · free
Reading the 2025 scam figures
- +1Share = 837.7 ÷ 2,180 = 0.384, about 38% of all losses.
- +1Change = (837.7 − 945.0) ÷ 945.0 = −0.114, a fall of 11.4%.
- +1Despite the fall, investment scams remain the single largest category.
Key terms
- Investment scam
- A fraud that persuades people to hand over money for an investment that does not exist or does not perform as promised.
- Investor Alert List
- Moneysmart's list of companies and websites suspected of being scams, to which ASIC adds entries each month.
- Confirmation of Payee
- A bank service that checks a recipient's name against the account details before a transfer and warns of a mismatch.
- Crypto ATM
- A machine that converts cash into cryptocurrency, now subject in Australia to a $5,000 cash limit and mandatory scam warnings.
Investment Scams and How Scammers Operate FAQ
Why do investment scams cause the largest losses?
They ask for large sums and often target savings built over years. The report notes many Australians lose retirement savings to investment and romance scams, and that people aged 65 and over lost $50.8 million to investment scams in 2025.
What is the clearest warning sign of an investment scam?
A return that is promised to be both high and safe. The unit's first principle of investing says higher returns come with higher risk, so a guaranteed large return contradicts the basic economics of every genuine investment.
What should I do if I suspect a scam?
Follow the national Stop. Check. Protect. message: pause before acting, verify that the person or company is legitimate, for instance on Moneysmart's Investor Alert List, and report it promptly so regulators can act.
Who reports the largest scam losses?
People aged 65 and over reported the largest losses to Scamwatch in 2025, $88.8 million or 26.5% of the total, while making up 17.2% of the population. Their typical, or median, loss of $716 was also the largest for any age bracket.
Why are scam reports falling while losses rise?
The report suggests several reasons for fewer reports, including more sophisticated scams, more ways to report and call and text blocking that works. At the same time more reports involved a loss, so the total can rise even as many people report nothing lost.
What should I write about Abagnale's advice in the tutorial?
Summarise the tactics he describes and pair each with the defence that answers it. Because he is a former con artist writing for the public, his value is first-hand insight into the psychology scammers exploit, such as urgency and trust.
Exam move
Memorise three figures from the 2025 Targeting Scams report and what each shows, and redraw the Ponzi money loop unaided. Prepare two-sentence summaries of Abagnale's advice and of why Ponzi schemes collapse, and turn sample offers into cited verdicts: broken principle, documented tactic, check you would run.
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