Australians lost $2 billion to fraud in 2021. This figure should raise alarm bells for the future
Australian consumers and businesses lost more than A$2 billion to scams in 2021, according to the Australian Competition and Consumer Commission’s (ACCC) annual Targeting Scams survey. report released on Monday. This figure should sound alarm bells – it’s more than double the $851 million lost in 2020.
The increase in losses is mainly due to the doubling of losses related to investment fraud, from $328 million to $701 million, and a substantial increase in payment redirection fraud, from $128 million. dollars to $227 million. Scamwatch alone received over 286,000 reports.
So what does the latest report tell us about the current state of fraud in Australia? And perhaps more importantly, what can be done?
The Rise of Crypto Scams
Cryptocurrencies have played a major role in fraud losses this year. They are largely responsible for the increase in investment fraud losses, with many victims being tricked into investing their funds in fake or non-existent crypto systems.
The request to invest funds in a crypto system raises fewer red flags than a request to send money directly to someone. In the first case, the victim thinks they are potentially making real returns.
Cryptocurrencies have become the most popular means of payment for all types of fraud. This is likely due to the difficulty of tracking crypto payments.
Cryptocurrency also has a significant impact on romance fraud. Romance fraud itself appears stable – with victims reporting $142 million lost in 2021, compared to $131 million in 2020.
However, criminals are increasingly using these fake online relationships as a recruitment mechanism to lure investment into fraudulent cryptosystems. That’s what we call “romantic baiting” Where “cryptorom”.
Who are the victims ?
Research indicates that all demographics are vulnerable to fraud, but not all are also vulnerable. 2021 has seen increased losses for the elderly, Indigenous Australians, people from culturally and linguistically diverse (CALD) communities and people with disabilities.
For example, people aged 65 and over reported losing $82 million, down from $38 million the previous year. It is clear that the most vulnerable in society are extremely affected.
Businesses are also being decimated by payment redirection systems, or “business email compromise fraud”. In these cases, offenders infiltrate businesses and intercept payments and invoices from customers and suppliers. This can lead to serious financial losses, as seen in the immovable industry.
The ongoing impacts of COVID
The COVID-19 pandemic has been a significant disruptor since March 2020. Lockdowns and isolation requirements have driven a global shift towards online activity. Cybercrime has flourished – and fraud is no exception.
The pandemic has impacted fraud in several ways. There are COVID-themed scams targeting Australians, with a focus on vaccinespersonal protective equipment and contact tracing. There is also pet scams trying to capitalize on people’s desire to buy furry four-legged companions.
Read more: Fake COVID-19 test kits and locked puppy scams: how to protect yourself from fraud during a pandemic
The pandemic has also changed the fraud profile of the Australian population. The continued state of anxiety that has characterized the past two and a half years, coupled with financial and relationship strains, has left people exhausted.
This means that fraud approaches that might not have worked before the pandemic are now more likely to succeed. And that provides context for understanding the massive losses in 2021.
What can we expect now?
Despite the magnitude of reported losses, the sad reality is that very few of these reports will result in consumers getting their money back. Even less will cause a outcome of criminal justice. This will leave most victims frustrated and angry with the justice system for failing to meet their expectations.
Fraud poses particular challenges to police and other agencies. Offenders do not use their true identities and often commit offenses in multiple jurisdictions, making it difficult to detect and prosecute them.
Disruption and prevention are key to reducing fraud losses. It’s hard work, and arguably more needs to be done given the recent escalation in losses.
A collective responsibility
It is important to remember that behind the statistics are individuals who have lost money and who, in many cases, have suffered considerably. The impact of fraud is not limited to financial losses; it affects the physical, emotional and relational aspects of our lives.
Prevention tips for individuals are to stay alert, ask questions, and do your own research. Having strong passwords and up-to-date software is important, but that won’t deter a motivated offender.
Fraud is largely a human problem. We therefore need to better understand the psychological techniques used by offenders and develop targeted ways to fight back.
It is also time for the government to take fraud more seriously and invest resources and expertise to reduce losses to individuals, businesses and society at large. Australia currently has no coordinated fraud strategy to mitigate, prevent or respond to losses.
There is a clear need to develop better education and prevention materials that take into account the diversity of victimization. Knowing that certain demographic groups are more likely to be victimized highlights the need to create resources tailored to these individuals.
The latest ACCC report should be an inescapable warning sign. On its current trajectory, Australia is heading for even greater losses than the $2 billion mentioned above. When will we finally act?
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