How to Spot an Investment Scam and Protect Yourself

The good news is that despite how convincing they can look, most investment scams share a small number of recognisable patterns. Once you know what to look for, they get a lot easier to spot.

This guide walks through the key red flags, how to verify a broker or platform before you hand over any money, and what to do if you think you've already been targeted.

How big is the problem right now

This isn't a niche issue. Australians lost more than $837 million to investment scams in 2025, according to the National Anti-Scam Centre. In the same year, ASIC coordinated the removal of nearly 12,000 phishing and investment scam websites — an average of around 32 every day — and took down more than 1,100 investment scam ads on social media.

Scams are hard to spot partly because they're designed to be. They often mimic real brands, use professional-looking websites, and apply psychological pressure that overrides normal caution — even for people who consider themselves careful with money.

The core red flags of an investment scam

Most investment scams share several common traits. If you notice more than one of these, treat it as a serious warning sign.

Genuine investment opportunities never guarantee returns or claim to be "safe" — every investment carries some level of risk, and no legitimate provider will tell you otherwise.

Scam patterns specific to online trading and investing

Beyond the general red flags above, a few patterns show up specifically around share and crypto trading:

• Fake trading apps or dashboards that show fabricated "profits" growing over time, encouraging you to deposit more before you can "withdraw."

• Cold-call share tipping, where someone claims inside knowledge of an upcoming float or price movement and pressures you to buy quickly.

• Relationship-based investment scams ("pig butchering"), where a scammer builds trust over weeks or months — often starting on a dating app or social media — before introducing a fake investment platform.

• Broker or platform impersonation, using a real, well-known company's name, logo, or staff photos on a fake website or account.

Scammers regularly follow current market and investment trends, and use well-known company names, platforms, and terms — like "crypto" — specifically to appear more credible.

AI is making scams harder to spot

Scam tactics are evolving quickly. Scammers now use artificial intelligence to create deepfake celebrity endorsements, convincing fake websites, and even voice notes designed to sound like they're from a real broker. These can be genuinely difficult to distinguish from the real thing at a glance.

The reassuring part: the underlying red flags don't change. Promises of guaranteed returns and pressure to act fast remain the biggest tells, even when the delivery method looks more polished and personalised than before.

How to check if an investment or platform is legitimate

Before committing any money, it's worth running through a short verification process:

1. Search the ASIC Investor Alert List. This list names companies, businesses and websites that don't hold a current AFS licence and aren't allowed to offer investments in Australia — if an entity appears on it, treat it as a serious warning.

2. Use the ASIC Professional Registers Search. You can look up the AFS licensee name, ABN, ACN, or licence number listed on a website, and check that the details match what's on the public register.

3. Check contact and address details independently — not by using links or numbers provided by the person contacting you, but by searching the organisation's official website separately.

4. Search the company or product name alongside the word "scam." This can surface warnings from other consumers who may have already flagged the same offer.

5. Slow down. Legitimate investments don't disappear because you took a day to check them — pressure to act immediately is one of the clearest warning signs of all.

What legitimate investing actually looks like

It's worth knowing what a properly regulated investing experience typically involves, so you have something concrete to compare against:

• The provider holds an Australian Financial Services Licence (AFSL) and is regulated by ASIC. Selfwealth holds an AFSL and operates under ASIC regulation.

• For ASX shares, your holdings are typically recorded directly against your name via CHESS sponsorship — meaning you hold direct legal ownership of your shares, rather than the platform holding them on your behalf through a custodial structure.

• Fees are disclosed upfront and transparently — for example, Selfwealth's flat $9.50 brokerage per trade, with no hidden account-keeping charges.

• You receive real trade confirmations tied to actual market transactions — not a dashboard showing numbers that only ever go up.

None of this guarantees you won't lose money — investing always carries risk, and holding an AFSL doesn't mean a regulator endorses a specific product or promises a particular outcome. But it does mean there's a real, licensed entity accountable for how your money is handled — which is the fundamental thing missing from a scam.

If you'd like to see this in practice, you can sign up to Selfwealth and explore how a licensed, low-cost platform actually operates.

What to do if you think you've been scammed

If something feels off — or you've already sent money — acting quickly matters:

1. Stop all contact with the person or platform immediately. Don't respond further, even if they claim you'll lose money by doing so.

2. Contact your bank as soon as possible to report the transaction and ask about recovery options.

3. Report it to Scamwatch, run by the National Anti-Scam Centre, so it can be recorded and shared with other agencies including ASIC.

4. Report it to ASIC directly if it involves an investment or financial product.

5. Contact IDCARE (a free, government-funded service) if your personal information or identity may have been compromised.

6. Warn people you trust — sense-checking with friends or family, even after the fact, can help others avoid the same scam.

FAQs

What are the biggest warning signs of an investment scam? Guaranteed or unrealistic returns, pressure to act quickly, unsolicited contact, requests to pay in crypto, and claims that a licence isn't needed are among the clearest red flags.

How do I check if a broker or investment platform is legitimate in Australia? Search the ASIC Investor Alert List, use the ASIC Professional Registers Search to verify an AFS licence number, and independently check the company's contact details rather than relying on information the contact gave you.

Can AI make investment scams harder to detect? Yes. Scammers increasingly use AI to create deepfake celebrity endorsements, realistic fake websites, and voice messages designed to sound like a genuine broker. The core red flags — guaranteed returns and pressure to act fast — still apply.

What should I do if I think I've already sent money to a scammer? Stop all contact immediately, contact your bank to report the transaction, and report the scam to Scamwatch and ASIC. If your personal details may be compromised, contact IDCARE for support.

Does holding an AFS licence mean an investment is safe? No. An AFS licence means a provider is regulated and accountable to ASIC, but it doesn't guarantee a specific investment's performance or that you won't lose money. All investing carries risk.

Are investment scams only a problem for older Australians? No. While some scams specifically target older people, investment scams affect people across all age groups, including younger investors approached via social media and dating apps.