How to avoid financial scams online: protecting your money in an online world

Written by Glen James
Host of the Retire Right & money money money (formerly my millennial money) podcasts & author of The Quick-Start Guide to Investing.

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Technology really has changed the way we manage our money, hasn’t it? Every dollar we earn and spend is managed online, and this often leads to concerns about online safety.

Have you ever opened an email or a text message and wondered if it’s a scam? You are certainly not alone. After working so hard in your career over a lifetime, it’s natural to feel protective of the funds you are setting aside to cover your cost of living into your retirement years. And you’re right to be protective! Across Australia scams are becoming more common and scammers are getting smarter with how they catch you out, a lot of it thanks to technological changes. So, today I wanted to share some practical tips to help protect you and your money, plus share an episode with a powerful story of a romantic scam.

In 2023 these were the top 5 scams in Australia:

• Investment: $1.3billion

• Remote access: $256million

• Romantic: $201.1million

• Phishing: $137.4million

• Payment redirection: $91.6million

Together these total $2.6billion in losses. Clearly scams are a huge issue. The data is shocking when you dive even deeper, as the statistics show that Australians over the age of 55 report more cases of attempted scamming, and report the greatest dollar value of cash stolen.

What these scams are:

Investment Scams

Investment scams lure people into putting their money into fake investment opportunities. These scams often promise high returns with little or no risk, which can seem very attractive. Scammers may pose as financial advisers or use fake websites and documents to appear legitimate. It's important to research any investment opportunity thoroughly and be cautious of unsolicited offers, especially those that pressure you to act quickly.

Remote Access Scams

In remote access scams, fraudsters contact you claiming to be from a well-known company, like a tech support service, and tell you there's a problem with your computer or internet connection. They then ask you to install software that gives them remote access to your computer. Once they have access, they can steal personal information, install malware, or demand payment to fix non-existent issues. Never give remote access to someone you don't know or trust.

Romantic Scams

Romantic scams involve fraudsters creating fake profiles on dating sites or social media to build relationships with their victims. They often spend weeks or months gaining your trust before inventing a crisis and asking for money. These scammers prey on your emotions, making it hard to recognise the scam. Be cautious about sharing personal information or sending money to someone you've never met in person, no matter how convincing their story may seem.

Phishing Scams

Phishing scams trick you into giving away personal information by pretending to be legitimate organisations or individuals. These scams usually come via email, social media, or other electronic messages that look real but aren't. They often direct you to fake websites that look like the real thing, where you’re asked to enter sensitive information like passwords or credit card numbers. Always verify the source of unexpected messages and avoid clicking on suspicious links.

Payment Redirection Scams

Payment redirection scams, also known as business email compromise, occur when a scammer hacks into an email account and changes payment details in invoices or requests. The scammer then tricks you into sending money to their account instead of the intended recipient. This often targets businesses but can affect individuals too. Always double-check payment requests, especially if the payment details have changed, by contacting the sender through a different communication method.

How to protect yourself from scams

To help protect yourself from scams moneysmart.gov.au recommends the following:

• do not give your money to someone you do not know well and never send money to strangers online that you have not met in person. Meeting their connections like family members and friends in person is also a wise move before you even consider sending money.

• do not let anyone use your name on a loan or credit card application.

• use strong passwords that use a combination of letters (upper case and lower case), numbers and symbols. Avoid using one password for all of your online accounts – create passwords unique to each account you need to access.

• secure your computer and mobile devices with antivirus software, and never save your password on a public computer.

• delete unsolicited or suspicious emails or messages straight away.

• only input your card numbers on trusted websites. The web address should show a closed padlock or key and start with 'https'.

• avoid public Wi-Fi networks, and if you must use public Wi-Fi don't send or receive sensitive information.

• shred documents with personal information on them.

• check that a lender offering you a loan is licensed by the Australian Securities & Investments Commission (ASIC).

This information is from moneysmart.gov.au and scamwatch.gov.au – please check these websites for more.

A romantic scam case study

On the Retire Right podcast recently Glen James had the opportunity to chat with Tracy Hall about her romantic scam experience and what she’s shared about it in her book, The Last Victim. Tracy had $317k stolen by her boyfriend who, little did she know, was a serial conman. In 2019 he was sent to prison for 16 years (later reduced to 12 years), after having taken 15 victims and swindling $7.6million from those he conned. It’s an unbelievable story. He told Tracy he was investing the money for her, when really he was using it to fund a lavish lifestyle. Sick. She’s now starting again, rebuilding her superannuation and life savings from the ground up. In the episode Tracy bravely shares her story and some incredibly practical tips for vetting those you might look to date through online dating websites or apps. I encourage you to check out the episode and hear just how easy it is to be conned – Tracy had no idea he had ill intent, until he was arrested. You can listen on Spotify or Apple Podcasts, or listen below:

*All statistics in this blog are sourced from scamwatch.gov.au.