Bond and Term Deposit Scams on the Rise

The Australian Securities and Investments Commission (ASIC) has issued an urgent warning to consumers about a new wave of sophisticated scams involving fake bonds and term deposits. These scams are particularly insidious as they involve the impersonation of legitimate financial services businesses, many of which may not have a significant online presence, making them harder to verify.

According to ASIC, scammers have been meticulously mirroring the details of real businesses, including their addresses, Australian Business Numbers (ABNs), and Australian Financial Services (AFS) license numbers. These elements are being used in scam advertisements and communications to lend an air of authenticity to their fraudulent schemes.

The scammers’ strategy involves using online advertisements and social media to lure consumers with fake investment offers in well-known companies. These ads often redirect to an online enquiry form designed to harvest personal information. Consumers who show interest are provided with counterfeit investment materials and disclosure documents that appear professional and convincing.

ASIC has noted that these scammers are particularly cunning, often presenting themselves as knowledgeable and personable, without pressuring potential victims into making quick decisions. The returns advertised are also crafted to sound reasonable, avoiding the typical “too good to be true” offers that are easier to spot as fraudulent.

Once they have gained the trust of their targets, scammers request personal identity documents and the completion of application forms. They then direct consumers to transfer funds into bank accounts that, while seemingly legitimate, are actually controlled by the scammers. These accounts are often held by reputable banks that are not associated with the supposed investment opportunity, further complicating the detection of the scam.

To help consumers identify these fraudulent schemes, ASIC has highlighted several red flags:

• the use of phrases like “guaranteed,” “secure,” and “free” in investment offers – these terms are often misused by scammers to entice victims;
• impersonation of financial services businesses with no digital footprint, making it difficult for consumers to find legitimate online information for comparison;
• offers of bonds or term deposits in large, well-known companies, which should be a warning sign since these companies would typically issue such financial products directly;
• the presence of fake online reviews, which may be hosted on content-generating websites that lack a focus on investments;
• false investment documentation that may include stolen business details, imitated bond details, and misuse of government agency logos; and
• requests for consumers to transfer funds to third-party accounts or accounts in individual names – the scammers may explain this away as using a “client segregated account”.

Consumers are reminded that legitimate financial services businesses are required to hold client money for investments in a trust account, client segregated account or cash management trust held in the name of the licensee. ASIC also notes that consumers can confirm bank account details (including whether the bank account details match the name of the financial services business) via the Australian Payments Network or by independently contacting the bank directly using the details on the Australian Financial Complaints Authority (AFCA) website.

Those individuals who have fallen victim to this type of scam are urged to contact their banks immediately and not to send any further money. Consumers who are concerned that their ID may have been compromised can contact IDCARE, a free government-funded service which can help develop individualised plans to respond to such incidents. Further, ASIC advises that these scams should also be reported to Scamwatch to help stop scammers from entrapping more people, and that affected consumers should always be wary of follow-up scams that promise to “get your money back”.