The Melbourne Cup is one of the biggest days on the Australian calendar, but punters should be aware of sports and investment scams during the racing carnival.
The Australian Competition and Consumer Commission’s (ACCC) Scamwatch found nearly $1.6 million has been lost to betting and sports investment scams this year already. Men are “overwhelmingly” likely to be victims, sending in three out of every four reports the ACCC receives.
Minister for small business, Michael McCormack said those considering a flutter should watch out for scams that falsely promise high odds.
“Do not believe anyone who says they have foolproof systems that can ‘guarantee’ a profit through betting. If someone can accurately predict gambling results, why would they need to sell it to you to make money?” Mr McCormack said.
“Scammers use fancy brochures and technical terms to try to convince you their ‘opportunity’ is legitimate. If you are contacted by someone trying to sell you ‘investment opportunity’ or ‘prediction software’, hang up the phone, delete the email or toss the glossy brochure in the bin.”
The ACCC identified three dominant forms of sports betting and investment scams:
1. Computer prediction software: Scammers may try to sell software that promises to “accurately predict sporting results”.
2. Betting syndicates: In this instance, scammers will attempt to convince people to join a betting syndicate at a large fee. This fee will often be in excess of $15,000 and people are also required to make frequent deposits.
“The scammers say the funds are being used to place bets on behalf of the syndicate but in reality the scammer is pocketing all the funds,” the ACCC said.
3. Sports investment: According to the commission, this particular scam is “nothing more than a con to get people to put money into an investment that does not exist”. The scam is often presented as a business or investment opportunity and the scammer will use terms like “sports arbitrage” or “sports trading” to give the schemes a legitimate appearance.
Commenting on the scams, Mr McCormack said: “Unfortunately, sports investment scams are very successful with half of the reports to Scamwatch from people who have already lost money.”
“The average loss is very high at more than $18,000 compared to about $6,500 for all scams. These scams are sophisticated and convincing which is why it is vital people should know the warning signs.”
Nearly $1.8 million was lost in betting and sports investment schemes last year and of the 319 reports made, 35.7 per cent had suffered a financial loss.
Forty-seven per cent of scams were delivered by the phone, followed by email (12.2 per cent), internet (9.4 per cent), text message (8.8 per cent), mail (6.6 per cent), social networking (6.3 per cent) and in person (5.3 per cent).
In the nine months to the end of September 2017, Australian investors collectively lost more than $21 million to investment scams. While more money has been lost, the rate of scams resulting in financial casualties has been less, with just 27.7 per cent of the 1,374 reports made resulting in financial loss.
- Opinion: Why do so many claim to represent small businesses?
By Adam Zuchetti
- Opinion: House prices not all doom and gloom
By Adam Zuchetti
- Analysis: How can SMEs realistically stay competitive?
By Adam Zuchetti