Topic 7: Scams

» Before you buy a major item

Knowing about scams and not being taken in by them is one way of keeping in control of your finances. There are always people out there trying to take advantage of you and trying to get hold of your money. You can use scams - what is a scam or signs of a scam to discuss this further at home.

Some typical scams are:

• 'Free' mobile phones
• 'Cheap' home security systems
• 'High return no risk' investment
• 'Cheap' consolidation of all your debts into one
• Home loan 'wrapping'
• Products sold over the phone or door to door
• Interest-free shopping offers
• Cold calling and phone scams- be aware of callers selling investment products or offering financial advice
• Fake bank emails/phishing - if you receive an email that looks like it is from your bank but is asking for any personal information, especially pin numbers or account numbers, this is probably fraudulent. Contact your bank directly to inquire.
• 'Nigerian' letters and advance fee frauds - emails asking you to send money for investment to another country, often Nigeria

Signs of a scam:

• A promise of unrealistic returns
• Claim to be risk free
• Say they are 100% guaranteed but provide no paperwork to back it up
• Apply pressure to sign in
• Provide incentives e.g. free gifts
• Use lines such as 'Everyone in the street has signed up and you might miss out' or 'It's the best deal anywhere but only if you sign up now.'

Be careful with deals that:

• Are exclusive or need you to make a decision right away
• Try and pressure you to sign up
• Ask you to pay in cash and only provide returns in cash
• Have no written records
• Keep the funds overseas
• Have the only contact as a mobile number

Remember;

• The key thing is to stop and think, and check things out before you buy
• If you feel pressured say 'Thanks, but no thanks. I don't like being pressured into important decisions.

So:

• If something sounds too good to be true, it probably is
• Don't sign anything straight away
• Read the fine print- especially at the bottom of a page
• Ask for time to think about it

Check carefully to see if you're really sure it's what you need and you have the money to cover it Scammers usually manage to trick a large number of people who often feel too guilty or embarrassed to report the scam to the authorities like the Office of Fair Trading, or the Australian Securities and Investments Commission (ASIC), or sometimes the police.

If you do experience a scam you should report it - it might save many others being taken in.

www.scamwatch.gov.au up to the minute information on scams
www.fairtrading.nsw.gov.au To report a scam
www.fido.gov.au/fido/fido.nsf For more information about scams

• Have a hook to grab your attention and
• A rehearsed speech to hold your attention and keep your interest, and
• A way of closing the deal, of getting you to sign up and commit your money there and then.

The seller will try to convince you they can answer all your questions...but they are not unbiased...they have a vested interest in telling you what they think you might want to hear in order to make a sale.

Look out for 'special' offers or deals, especially before signing a contract.

Remember:

• The key thing is to stop and think, and check things out before you buy
• If something sounds too good to be true, it probably is
• Don't sign anything straight away
• Read the fine print - especially at the bottom of a page
• Ask for time to think about it
• Check carefully to see if you are really sure you need the item and you have the money to cover it.

If you feel pressured:

• Say 'Thanks, but no thanks. I don't like being pressured into important decisions.'
• Use the Broken Record speech - You just keep saying over and over again -
  'I understand what you are saying but I'm not interested' or 'I understand but I never sign anything on the same day or without talking with my partner / my friend'

» For more case studies and the latest information on scams visit www.fido.asic.gov.au Scams and Swindlers section and Scams sections
» Office of Fair Trading at www.fairtrading.nsw.gov.au
» Streetwize Moola Talk! www.fido.gov.au
» The Hard Sell NSW Dept of Fair Trading (2001) www.fairtrading.nsw.gov.au
» You can complain ASIC www.asic.gov.au
» How to make a complaint to the Ministerial Council on Consumer Affairs: www.consumer.gov.au/html/faqs.htm#consumers
» Telecommunication Industry Ombudsman - for telecommunications complaints www.tio.com.au