Since the start of the pandemic, we have seen a sharp spike in the number of clients seeking help after discovering they are victims of an online scam. Perhaps this is simply because with repeated lockdowns, people are confined to their homes much more than usual, bored and spend a lot more time on their computers.
A news alert posted on Scamwatch, a website run by the Australian Competition and Consumer Commission, states Australians lost a record amount of over $851 million to scams in 2020 (https://www.scamwatch.gov.au/news-alerts/scammers-capitalise-on-pandemic-as-australians-lose-record-851-million-to-scams).
The two most common forms of online scams we see are investment scams and romance scams.
Investment scams include online cryptocurrency trading scams, imposter bond scams, binary options scams, forex scams, and CFD scams. The list is endless.
Investment scams typically occur when a person comes across what appears to be a website for a legitimate investment business offering better returns than traditional investments. After making an online inquiry, the victim is contacted through an untraceable communication platform such as WhatsApp by a professional sounding person who persuades the victim into providing their identification documents as a prerequisite to opening an online trading account. Emails are received from the business which suggest legitimacy. Funds are then transferred by the victim to a bank account, usually held with an Australian bank, and the victim believes the funds will be used for their online trading account. Unbeknownst to the victim, the money is diverted to the fraudster – often for the purchase of digital currency.
After a small amount of funds are transferred, the victim sees what they think are profitable trading results on a fictitious portal showing details such as an account balance and exchange rates, and is lured into investing larger amounts. They may even receive a repayment early on to give them a sense of security and confidence that the operation is legitimate.
When the victim ultimately seeks to recoup part or whole of their profits, the “legitimate” business stops returning calls or emails and ignores all demands for repayments. Any ‘withdraw my funds’ function on the fictitious portal usually produces nothing and is no more than an empty link. In other cases, the victim is told that there are substantial penalties or taxes that will apply if they wish to have their money refunded.
In all cases, the investment business is not genuine and the people behind it are almost impossible to track down.
There are steps we can take using the civil process to try and trace and recover your funds.
Romance scams typically occur when contact is made via dating apps and social media – usually Facebook, Instagram, WhatsApp chat groups and so on. Like investment scams, the fraudster skilfully builds the trust and confidence of the unsuspecting victim. Over time the fraudster and victim become “online friends” but they never meet in person. Typically, the online “face” of the person is a photo of an attractive looking person but not the real face of the fraudster. After a period of time the fraudster will conjure up a reason for requesting money from the unsuspecting victim – small amounts at first, which become larger and larger. The reasons for requesting money are as wide as your imagination – chemotherapy or other medical expenses, costs associated with migrating to Australia, a payment to tie them over while they wait for some other income to come in, business or household expenses.
After time, usually when the victim has no more money to give, the ruse is discovered when the fraudster stops all contact with the victim. Once again, the true identity of the fraudster is very difficult if not impossible to ascertain but there are steps that can be taken using the civil process.
What to do?
The page “Where to get help” on the Scamwatch website, states “If you’ve lost money to a scam or given out your personal details to a scammer, you’re unlikely to get your money back.” We do not agree.
We have secured positive outcomes for clients who have been victim to online scams. See for example our successful claim for Romeo and Carmela Avallone: https://duxtonhill.com.au/claudine-bryce-forced-to-repay-450000-to-mortgage-scam-victim-romeo-avallone/
Many people come to us after they have reported the fraud to police or other government agency only to discover the hard way that it is not the role or objective of law enforcement to recover your money. That’s where we can assist.
We are a multi-disciplinary team of fraud lawyers and fraud investigators experienced in using the civil justice system to recover stolen funds for victims of online scams. How do we do it? We follow the money trail. By identifying the recipient of the funds we can produce favourable outcomes for victims of fraud.
Here are some “do’s’ and “don’ts”:
- Seek our preliminary advice to determine the merits of seeking recovery action through the civil justice system.
- Contact your financial institution as soon as you discover the fraud – ask if they can stop a payment or request a recall of funds.
- Replace/cancel any identity documentation you have provided to the scammer.
- Change your online password/s.
- Report the scam to the relevant authorities – see https://www.scamwatch.gov.au/get-help/where-to-get-help#report-scams-to-the-authorities.
- Don’t assume you will have no chance to recover your losses without having received expert advice.
- Don’t seek the services of companies who guarantee you recovery or claim to have won hundreds or thousands of cases with a 90% success rate. They are often scammers themselves! The warning signs are when they have a highly visible online presence but have no physical presence and the identity of the people behind the company is not identified. Often they demand USD 15,000 upfront and once the money is paid, they do nothing.
- Don’t rely on police or government agencies to recover your money. It is not their job to recover money.
Note: this article is for information purposes only and is not legal advice. If you wish to obtain advice about a particular matter, please contact Duxton Hill.