Property investors can be easy targets for scammers – so it's important to know a scam when you see one, and how to avoid being the victim.
Blogger: Robert Stevens, co-director, Allied Investment Group
Sadly, there are scammers who target Australians by trying to steal money from their super. The scammers often gain access to the super by promising to help set up SMSF property investments. There are three common SMSF property scams I will outline below:
1. The investment seminar
According to the government regulator, the Australian Competition & Consumer Commission, many seminars have a sting in the tail. You may have received a letter to attend a seminar or you might have seen an advertisement online or in a newspaper. Free tickets to see motivational speakers or an investment “expert” are often used to promote these events. Seminar promoters make their money by charging you a ticket fee to attend or by selling books, education services or expensive reports. They might even make misleading or deceptive claims or try to pressure you into signing up for an investment on the night.
2. Early release of your super
The promoters of these schemes offer easy and early access to your super, often through the use of your SMSF or for a fee. Here’s the truth: there is no easy way to access your super until you reach your preservation age, which can range from 55 to 60 years old, depending on your year of birth. Of course, there are exceptions around financial hardship, but the restrictions, rules, and regulations to get access to the money are extraordinary. Your super is for your retirement years, not now.
3. Cold calling
You receive a call you didn’t expect. The person making the call is offering you investments with high returns, possibly located overseas. You might be offered free financial advice. Common investments touted are cheap or foreclosed property deals in the United States, or properties in exotic locations such as Bali. The caller might recommend using your super to engage in high-risk investments such as foreign currency trading (FOREX), options trading or dubious stocks.
Remember: if anyone recommends any investment product or products, they must be licensed and provide a written Statement of Advice (SOA).
Warning signs of a potential scam
- Anything that promotes something as free without a good reason.
- The promise of big returns on your investment – with little or no extra risk.
- Seminars that are free, but demand you pay hefty fees for education at the end of the first day or night.
- Investment seminars that offer to teach you “secret” or “exclusive” techniques for building riches.
- High-pressure sales people who expect a decision on the spot.
- Companies that claim to be approved by a government body or regulator without making their licence details available in writing.
6 ways to protect yourself and your super
- Use the commonsense approach: when something is free or sounds too good to be true, there is likely something wrong.
- The only people who “get rich quick” in these promotions are the scammers.
- Be careful when friends tell you about a scheme: they (innocently) believe it’s real, too.
- Avoid spam email where you did not sign up.
- Check with the appropriate regulator to make sure the promoter is licensed to offer the advice.
- Always make sure you get any financial advice in writing.