Types of financial fraud: reclaim scams

Everyone loves a rebate, but scammers also like to use this to their advantage to exploit business owners. How can you stop scammers from claiming your cash?

Reclaim scams are an increasingly common type of financial fraud affecting SMEs and consumers alike.

These scams can exploit hard-pressed business owners by offering a large reward, usually an amount of money, with an up-front free that has to be paid before the reward can be claimed.

In fact there is no reward to begin with, and the scammers run away with your cash.

Reclaim scammers approach a business owner, primarily via the phone, and claim they come from either the government or a bank, and that you have a large rebate coming your way.

To claim it, however, you need to pay an up-front administration fee.

How common are these scams?One hand holds money, while another hand reaches for it

Most people have heard of reclaim scams and, sadly, more and more Australians are falling victim to them.

In calendar 2015, the ACCC reported losses of $1.3 million specifically to this type of financial fraud, from a total of 12,589 reported cases.

However, the true number of victims and losses is estimated to be considerably higher, given that not all victims report the crime.

How to identify a reclaim scam

According to the ACCC, there are a number of signs SME owners can look for to identify these types of scams.

They include:

  • The scammer will claim to be from a government organisation or financial institution
  • To claim the money, you will need to pay an up-front fee for administration or tax purposes
  • The scammer will ask for you to pay the fee via a money transfer
  • You are asked to give additional personal or financial information

Example

My Business’ sister publication The Adviser in 2015 reported on customers of mortgage broking company Mercury Money being targeted by scammers.

The consumers were informed by someone claiming to be from Mercury Money that they had been approved for an unsecured loan, and were asked to pay either establishment fees or loan insurance.

The loans, however, did not exist, and the money was sent mostly to Australian and New Zealand bank accounts.

One person lost $6,000; another lost $4,000; while a third paid $980 into an account in India.

The owner of Mercury Money, Alex Palmer, found out about the scam when a client came to his office to discuss a loan.

“A client walked into my office and looked up on the wall to check my ABN registrations, company number and then said ‘I applied for a loan with you’, and I said ‘Sorry, no you didn’t’,” Mr Palmer said.

“We went through what had happened and then I took them down to the local police station.”

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