Is Australia a soft target for scams?
by: Paul Curby
Be it the well-spoken ‘stock broker’ encouraging you on the phone to invest in the latest ‘hot stock’ or financial product, or the email you receive from a known contact who, unbeknownst to them (and you!), has had their email compromised and is now instructing you to change remittance bank account details, Australians are being proactively targeted by fraudsters and we are handing $634[1] million (at least) a year to these sophisticated scam networks.
A June 2020 report released by the Australian Competition and Consumer Commission (ACCC) reported that the top scams, in order, were:
- Investment scams (up 59.1% from 2018);
- romance & dating scams (up 16.1% from 2018); and
- false billing scams (up 83.4% from 2018).
The ACCC research revealed that one in five people had experienced a scam in the past five years, with one in four people having been affected more than once. The report also identified that 33% of victims did not report the scam/loss to any agency or organisation. While the average of loss per instance increased from 2018, there were 5% fewer reports in 2019 which is a troubling trend (unless you are the scammer).
Interestingly, reports made directly to the police accounted for only 11% of total reports received. Concerningly, the reluctance of people to report scams results in a loss of valuable information that could be gathered for analysis, intelligence, and enforcement purposes.
A tried and tested method crime syndicates use to liberate Australians of their hard earned cash is via boiler room scams. The US Securities and Exchange Commission defines boiler room scams as “large-scale operations designed to lure in as many investors to an investment scam as possible, often using high-pressure sales tactics. Boiler room scheme operators may cold call investors or solicit investors through emails, text messages, social media and other means.[2]”
It is a sad state of affairs when so many Australian’s are being conned by international boiler room scam operators. Victims often don’t know where or who to turn to or alternatively are passed around between state and federal government agencies who cite jurisdictional issues. These agencies are not necessarily resourced to investigate this type of crime and/or lack the specific expertise to advise the victim on other potential avenues to recover their losses.
I know of instances where victims have reported to the police that they have been the victim of a boiler room scam and have remitted funds overseas and were told that no crime has been committed in Australia! It is no wonder that victims can feel despondent and reluctant to report matters to the authorities.
Our financial intelligence agency, AUSTRAC, is in a position to play a lead role in helping to protect the Australian community from organised crime groups. Law enforcement agencies in Australia have Memoranda of Understanding in place with AUSTRAC to allow them to interrogate their database which may help identify both the victims and perpetrators of these crimes.
With the precise bank account information provided to AUSTRAC, other potential victims can be identified. Police can work with the private sector and the private sector can feed information back to the police. By way of example, a person who may lose say, $50,000, is not likely to get any traction with the state police to investigate the matter as generally, they will not allocate resources to investigate a crime where the perpetrator is overseas and where the loss is not significant enough to incur the associated costs to investigate. However if there are multiple victims of the same scam and millions of dollars are involved, the number of victims and the total losses can influence whether the police will allocate resources. Even then, it is problematic for law enforcement as they need to secure support through ‘mutual assistance’ regimes in place with different overseas jurisdictions.
It is also important to remember that the primary function of police relates to breaches of the criminal law. Recovery of assets is secondary to their mission, hence the need to be able to have a parallel civil path towards recovery.
My suggestion is for government to recognise and tap into public/private partnerships in the fraud investigation space. Government already engages with the private sector on other initiatives including the construction of infrastructure. The private sector can do some of the ‘heavy lifting’ by obtaining access to bank accounts, books and records and ‘freezing’ funds and other assets through action in the civil courts.
At the moment, the private sector is identifying multiple victims of fraud and using civil remedies to freeze bank accounts and to seek to recover losses. As investigators, we are licensed by the police and are credentialled to conduct investigations. We don’t have access to intelligence databases such as AUSTRAC but have the skills and networks to effectively investigate these matters.
Cross border international investigations are problematic for law enforcement as well as the private sector. The solution does not rest solely on the shoulders of respective state police forces. There is great opportunity for public and private partnerships to potentially expose the fraudsters and obtain compensation for any victims which will have a knock-on deterrent outcome. Overseas based crime groups continue to operate with relative impunity as they do not seem to fear criminal sanctions in Australia. This is something that needs further consideration by law enforcement with regard to their strategy to disrupt organized crime and to change the notion that Australia is an ‘easy target.’
In my view, Australia is a soft target and much more can be done collegiately between public and private partnerships to bolster our incident response and our resilience against scammers.
CurbyMcLintock is committed to combatting scams and we have initiated our own efforts to identify multiple victims of scams by providing victims and the broader public access to an anonymous reporting platform to help us link victims and join forces. If you or someone you know has been the victim of a scam, please go to https://curbypartnersreports.whispli.com/SCAM_Cybercrime_Report so that we can try and help you identify a path forward and build Australia’s resilience to scams.
[1] https://www.accc.gov.au/media-release/scams-cost-australians-over-630-million
[2] https://www.sec.gov/fast-answers/answersboilerhtm.html
If you would like to make contact with the author or would like more information about CurbyMcLintock' services, please contact office@curbymclintock.com.au and we will arrange a call/meeting to discuss your requirements.
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‘Because fraud happens’, you can’t afford to ignore it. A fraud can have a significant impact on an organisation beyond losses suffered directly from the fraud. There are also the costs associated with investigating, litigating, regulatory ramifications, public relations, staff management and the time required managing the fallout from a fraud.
A proactive approach is a sensible and cost-effective method to prevent fraud occurring in the first instance. We typically find that organisations rely on standard controls supported by policy and procedures as the only line of defence against fraud. This is simply not enough, and your stakeholders and regulators expect you to take a more robust, proactive approach to protecting your organisation from financial loss and other associated risks.
CurbyMcLintock can assist you become fraud resilient by adopting a methodology which combines skilled interviewing techniques and tapping into the knowledge of your staff who are at the coalface of business operations, to help uncover where your organisation is exposed to internal and external fraud. We will then provide you with mitigation strategies to reduce the risk of a fraud incident occurring