Block letters spelling fraud, with magnifying glass

The massive economic impact of the Covid-19 outbreak is creating a “perfect storm” for investment fraudsters, warns the Australian Securities and Investments Commission (ASIC).

The ASIC reported that, during the pandemic, it has seen a 20% increase in reports of investment scams, compared with the same period last year.

The increase in fraud attempts follows a year in which losses to scams rose by 30%, according to a report from the Australian Competition and Consumer Commission (ACCC).

That report noted that “financial losses to scams are grossly understated,” as approximately one-third of victims don’t report their losses to authorities.

The problem is set to intensify as investment scams appear to be on the upswing.

“The start of 2020 has seen an explosion of scams exploiting the bushfire crisis in Australia as well as the global Covid-19 pandemic,” the ACCC said in its report.

The ASIC said that the economic uncertainty created by the pandemic has increased investors’ susceptibility to scams, and it’s particularly worried about frauds involving cryptoassets.

“We are seeing a spike in reports of scams related to fake cryptoassets (or cryptocurrencies), term deposits, investments and scams that start via romance sites,” said ASIC executive director for assessment and intelligence Warren Day.

“Most cryptoasset investment opportunities reported to ASIC appear to be outright scams, and there is no actual underlying investment,” Day said.

The regulator also noted that fraudsters remain difficult to catch, and recovering money lost to investment scams is challenging, particularly when scammers are offshore.