What is a scam?

In simple terms, a scam is a trick to make you pay money to someone you may not know. Scams can be sophisticated and the amount of money lost to consumers has increased. They have the potential to cause great distress and financial loss to unwitting consumers.

There are many methods of perpetrating scams, including by email, phone or in person.

The promise of making quick money through investments is attractive to some people but may be a scam. Another common tactic is to use threats to personal safety or property, which often occurs when a scammer impersonates a public authority or trusted business. This type of threat is a common sign of a scam.

Agreeing to transfer money or goods for someone else can constitute money laundering under federal legislation. Money laundering is a criminal offence with significant maximum penalties.

Scams can originate from relationships formed online (dating and romance) which gains trust and then may result in a request for money for travel or medical procedures.

Phishing is a method of getting personal or sensitive information from a consumer. Scammers then use the information to get loans or access bank accounts.

Scammers may also try to trick consumers with the promise of a job or a home rental, or by donating to a bogus charity.

Gaining trust of the consumer is one way scammers may succeed. Another method is to create a sense of urgency or threat to personal property or life. The scammer may try to impersonate a trusted organisation such as a bank or government agency, and may call unexpectedly.

Financial abuse by family members or friends may also be a type of scam. For more information about financial abuse, please visit the Law Handbook sections on Elder Abuse and Family Violence.

Dealing with scams

Scams perpetrated by phone and email are difficult to stop because of the broad reach of the internet. The roll out of the National Broadband Network means that most phone services now use the internet, rather than a landline.

Scammers find ways to use either fake phone numbers or private numbers to hide their identity or make it difficult to trace the call. They can also take control of a person's phone number without their consent or knowledge, allowing them to use the two factor authentication process to access person accounts. Telecommunications companies have agreed to co-ordinate their efforts to disrupt scams and will use specific authentication methods to ensure that the origin of the calls are genuine. There are also industry codes and standards which require telecommunication companies to actively monitor for scam activity, share the information they collate and to disable phone numbers being used for scam calls.

Proprietary anti-viral software can filter emails and warn users about suspicious links to avoid phishing or malware. Be careful of unexpected emails from trusted institutions like banks or government agencies. From September 2022, website domain names ending ".au" (as opposed to ".com.au") are openly available to be registered, creating another opportunity for scammers to mimic genuine emails from trust organisations. Particular care should be taken to identify whether an email is from a ".com.au" or ".au" website, and to compare the email address with the genuine website address of the organisation.

Money paid to a scammer can be difficult to trace and recover. This is because many scams originate outside of Australia. Money paid into an overseas bank account is often withdrawn immediately and the account closed.

Unfortunately many people do not realise the scam until it is too late. Delay decreases the chance of recovery of any money.

Another way that scammers will prevent the tracing or recovery of money is to ask for payment using vouchers or crypto-currency. Visit the website of the business or government body to find out the correct way to make payment if necessary.

Any attempt to get money or personal details accompanied by a threat to life or property must be treated with suspicion. If the perpetrator claims to be a government authority or trusted institution or business, ask for a reference number then hang up and call the organisation back to verify the information. An unexpected call may also be a sign that it is a scammer.

For more information regarding data breaches, see Consumer Data - Breaches and Rights.

What else can you do?

Visit the Australian Government Scamwatch website for the latest information and resources. Pass the information on to vulnerable family members and friends to help spread the word. The South Australian Police also have a webpage on Scams and cybercrime.

It can be devastating to lose money to a scam. Get help from an organisation such as the Australian national identity and cyber support service ID Care who provides support in cases of identity theft and cyber-crime.

In circumstances where access to a mobile service has become blocked, contact should be made immediately with the service provider.