With financial scams and traps increasing during COVID-19, we’ve listed the top four to avoid.
The classic scam. You receive an email from a Nigerian Prince offering you a slice of a huge a fortune he can’t get out of the country without your help. All he needs is your bank details, and a small advance to help cover the expense of transferring the money.
Unfortunately not all scams are as easy to detect as this one, especially since our world was turned upside down. So far this year the ACCC’s Scamwatch program has received over 2,000 reports about COVID-19 scams and reported losses are now more than $700,000. Individuals and organisations are becoming far more sophisticated in how to fleece money both from the vulnerable and kind-hearted. And take advantage of a time of crisis.
So to help you stay clear of these scams, and highlight a few traps that might come your way, we’ve put together the ones you need to be most aware of during COVID-19.
If it looks phishy, it is phishy.
Phishing is when scammers email or call requesting your personal or account details to steal your identity. Common types of phishing during COVID are scammers pretending to be government agencies or well-known businesses such as banks, travel agents, insurance providers and telco companies.
Most alarming (and unfortunately most successful) are the scammers pretending to be a super fund offering early access to super or moving it to a self-managed super fund (SMSF). They may then use this to transfer super to an account they can access, like a fake SMSF.
Another good rule of thumb for any email or SMS you receive is not to click on hyperlinks even if it appears to come from a trusted source; go directly to the website through your browser. And never respond to unsolicited messages and calls that ask for personal or financial details.
When your payday doesn’t pay off
There’s been a lot of coverage in the news recently concerning short-term lending, also known as payday lending. Although not illegal, some questionable lenders are advertising short-term, high interest loans as a means to get people “through” the pandemic. In some cases these lenders charge equivalent interest rates of more than 400 per cent. Typically advertised via SMS, these payday loans can trap vulnerable people who may be in a debt cycle already, or may put them in a debt cycle which is difficult to escape.
If you or someone you know requires some financial assistance, please talk to a trusted advisor first before committing to these type of offers. Rather than short-term gain, it’s more likely to end up in long-term pain.
How much is that puppy in the window?
When it’s too good to be true (and resist), it often is. This has definitely been the case for puppy scams which have grown significantly during COVID-19. In fact Australians have lost nearly $300,000 to puppy scams this year.
Scammers set up fake websites or ads on online classifieds and social media (FaceBook/Gumtree) pretending to sell sought-after dog breeds at amazing prices. Cavoodles and French Bulldogs have been the scam of choice. As the buyer hasn’t been able to visit the pooch, the scammer asks for up-front payments via money transfer to pay for the pet and transport it to you. Once paid, you never hear from them again.
If you’re thinking of buying a dog or any pet soon, the best advice is to wait until you can meet your new companion face-to-face.
Is accessing your super a super choice?
Every situation is different, and for some accessing super early is a viable (and potentially) only choice available.
The most important thing to consider, no matter how difficult the situation, is that super is a key part of your retirement savings. Removing super early can have a dramatic impact. Industry Super Australia (ISA) estimates that if a 35 year-old with a $60,000 balance removed the entire $20,000 available, the balance would drop by $66,000 at retirement.
That’s a significant amount of savings to claw back.
Again, with any decision of this kind it’s important to speak to a trusted advisor to look at all the pros and cons. There may be better choices to consider that provide financial relief, but not at the expense of your financial wellbeing.
At Tribeca Financial we’re here to help. Currently we’re offering free of charge, 45-minute financial consultations (via phone or video conference) to those who are affected by this crisis, for example people who have lost their jobs, have reduced work hours, have been stood down and/or are under financial stress.