Most of the losses due to cold calling related to offers of investment opportunities in binary options, according to the Australian Competition and Consumer Commission’s eighth annual report.
Binary options fraud continues to spark concerns in Australia, as suggested by the latest numbers released by the Australian Competition and Consumer Commission (ACCC) today.
In its annual report on scam activity for 2016, the ACCC says it received 155,035 scam reports in 2016, up by 47% compared to 2015. In the face of the significant increase in reports, financial losses to scams have marked a 2% fall, with $83.6 million reported lost. Losses due to investment scams amounted to $23.6 million last year.
This number is not conclusive, given that many victims do not report their experiences. In 2016, the ACCC and the Australian Cybercrime Online Reporting Network (ACORN) got a total of 200,103 reports about scams. Losses reported to Scamwatch, ACORN and from other scam disruption programs amounted to about $300 million.
The ACCC report shows that phone based investment scams remain popular. Cold calling investment scams resulted in the highest reported losses for phone based scams with $11.5 million lost based on 879 reports. Most of these reported losses related to offers of investment opportunities in binary options, as well as “the opportunity” to buy shares at lower than market rates.
As FinanceFeeds has already reported, sales teams of online trading companies often use manipulative tactics to lure potential customers and to obtain more money from existing ones. A recent study by scientists at the Laboratory of Social Psychology at the University of Aix-Marseille has provided an elaborate picture of how these psychologically abusive tactics work. In a report accompanying the scientific study, the French financial markets regulator AMF has explained how these tactics break the law.
The ACCC report shows the amount of money reported lost to scams increased with the victim’s age. The over 65 age group reported the highest financial loss of $13.6 million.
This result is in line with findings reported by Japan’s Financial Services Agency. Most of those complaining of fraudulent investment solicitation were elderly people. Around 21% of the complaints came from people in their 70s, whereas 20% came from people in their 60s. People in their 80s accounted for 10% of these complaints in the first quarter of 2017.
In the meantime, the ACCC seeks ways to tackle scams. It continues its Scam Disruption project, with more than 2,834 letters sent to potential scam victims in 2016. Of those that were sent a letter, 74% stopped sending money within six weeks. In 2016, the ACCC also started work with financial institutions, telecommunication providers and Facebook to implement better scam prevention systems to make it harder for scammers to access victims or receive money from them. This work is set to continue this year.