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About SCAMwatch Australia - How Scams Work

SCAMwatch is a website run by the Australian Competition and Consumer Commission (ACCC). SCAMwatch provides information to consumers and small businesses about how to recognise, avoid and report scams. Scams that are reported to SCAMwatch will be analysed by the ACCC.

Many scams originate overseas or take place over the internet, making them very difficult to track down and prosecute. If you lose money to a scam, it is unlikely that you will be able to recover your loss. The ACCC publishes this website to help consumers recognise and prevent scams.

The ACCC's roles extend beyond preventing scams and include other areas of consumer protection, infrastructure regulation, cartels and other forms of anti-competitive conduct.

The ACCC also works with state and territory fair trading agencies and other government agencies to promote awareness in the community about scams. In 2005 the ACCC and these other agencies formed the Australasian Consumer Fraud Taskforce (ACFT) to coordinate this work.

How scams work

* Why do scams succeed? * Dangerous myths * Psychological tricks used in scams o Reciprocation o Commitment and consistency o Social proof o Liking o Authority o Scarcity * Scams and identity theft—your personal details are valuable!

Why do scams succeed?

Scams target people of all backgrounds, ages and income levels across Australia. There is no one group of people who are more likely to become a victim of a scam. If you think you are 'too clever' to fall for a scam, you may take risks that scammers can take advantage of.

Scams succeed because of two things.

Firstly, a scam looks like the real thing. It appears to meet your need or desire. To find out that it is in fact a scam, you must first make the effort to check it properly. You need to ask questions and think carefully before you decide what to do. Being aware of the dangerous myths below will help you with this. Depending on the issue, you can decide if something is a scam on the spot, or you might need help—and that could take several days.

Secondly, scammers manipulate you by ‘pushing your buttons’ to produce the automatic response they want. It’s nothing to do with you personally, it’s to do with the way individuals in society are wired up emotionally and socially. It’s because the response is automatic that people fall for the scam. To stop scammers manipulating you into their traps, it can be useful to know how to prevent the automatic response they expect.

Dangerous myths

Some people hold beliefs that leave them even more vulnerable to scams.

One of them is the belief that all companies, businesses and organisations are legitimate and okay because they are all vetted and approved by the government or some other authority. That is not so. Consumer protection agencies can only do so much. While they are constantly on the look-out for dodgy operators, some scams only come to their attention when people report them.

A similar dangerous myth is that internet websites are all legitimate, or that it is difficult to set up a website. It is quite easy and cheap to set up a professional-looking website that is run from outside Australia. A scam website could be used to sell a dodgy product, or it could be easily made to resemble a genuine website, like a bank or credit union website. These websites are often only 'live' for a few days— but that is enough time to trick people into giving up their credit card details or other personal information.

Another belief that makes people vulnerable to scams is the idea that there are short cuts to wealth that only a few people know. Ask yourself the question: if someone knew a secret to instant wealth why would they be spending their time telling everyone, or need to charge people money for it?

Believing these myths can place you at risk.

Psychological tricks used in scams

As well as exploiting the dangerous myths above, scammers often use psychological triggers to get an automatic response from you without you realising it. Watch out for them next time you're approached, or even next time someone asks you for a favour.

Reciprocation

Scammers give you something, such as a 'free' gift or assistance, to get something in return, such as your agreement later on. You are caught up feeling obliged to do something. Protect yourself from those sentiments by recognising the gifts and favours as nothing more than devices to influence you to return the favour.

To get you to agree to what you don't want, scammers may make one outlandish offer, which they know you will reject, so that later they can make one which will not appear so bad in comparison.

Commitment and consistency

Someone will get you to commit to something early in the piece, and later recall that initial agreement to get you to agree to something further. This ploy can make you feel ill at ease. To protect yourself, you should treat each commitment separately and ask yourself whether, under the circumstances, you would make the same choice as you did earlier. Your instinctive gut-feeling will provide the answer.

Social proof

‘Everybody does it, so it must be right’ pretty well sums it up. The other person will refer to what the majority does to get you to agree. Objectively check the facts, your experience and judgement.

Liking

Good looks, similar interests or background, humour and other attractive characteristics are standard tools for the con-artist as well as for honest people who want to generate good rapport with you. If you like someone, you're more likely to go along with what they are suggesting. Your defence is to separate the issue on offer from the person offering it or associated with it.

Authority

Authority, in or out of uniform, will cause an automatic response in almost everyone. Scamwatch appeal to and use authority all the time to justify or support our position. Scammers do it deliberately to hoodwink you into agreement. Your protection here is to ask whether the authority is relevant to the context.

Scarcity

The fear of missing out! Being told that this is the last chance or that there are only so few still available, leads most people to agree hastily before they have had the opportunity to think about what they're doing. Some people have found themselves in horrible financial situations because they rushed into agreements or purchases in the fear of missing out. Your protection here is to separate your emotions from your decisions.

When we're up against these influence strategies, getting caught up in a scam is not necessarily a reflection of our gullibility or poor judgement. It just shows how good the scammers are at manipulating us. Don't be clouded by influence triggers. Recognise them for what they are, and keep a clear head when making decisions.


 * For more information on this subject you could refer to Robert Cialdini's book Influence: the psychology of persuasion ISBN 0688128165. The above information on psychological triggers was drawn from this book.

Scams and identity theft—your personal details are valuable!

Scammers are not just after your money. Scams can also be designed to steal your personal details. The types of personal information that scammers might ask for include credit card and bank account details, passport details and name and address details.

This is known as ‘identity theft’. Many scams, such as card skimming, phishing, lottery scams, money transfer scams and work from home scams could not only cost you money, but could also result in the misuse of your details to commit ‘identity fraud’.

Identity fraud generally refers to the use of a stolen or assumed identity to gain goods, services, money and other benefits, or to avoid obligations. By using your personal details, scammers can sometimes take out loans, claim welfare benefits or run up debts in your name. These activities can damage your credit rating, making it difficult for you to borrow money or get a credit card.

Of course, identity fraud can also cost you money directly (if scammers use a stolen password to take money from your bank account for example). At the very least, setting the record straight after a scammer has misused your identity can be an annoying and time-consuming task.

Apart from scams, identity theft can happen in many ways. Commonly, it may happen if your wallet or purse has been stolen and the thief has used the details on your cards. Or it could happen if someone ‘dumpster dives’ in your rubbish bin, taking your personal details from your discarded mail.