Web users still falling for ASIC joke
- — 01 May, 2000 17:34
He believes web users are too often tempted to ignore basic investment procedures, such as company legitimacy checks, when faced with advertisements for "high-yield" investment schemes on the internet.
Dunn said scams conducted via the internet, whether advertised through spam email or convincing websites, were no different to those traditionally conducted through newspaper advertising or telemarketing. "It (the internet) is just another channel," he said.
"Investment frauds and financial scams don't change. They just put on new clothing."
Dunn warned potential investors away from participating in any so-called high-return schemes advertised on websites containing a ".com" suffix in the domain name. US law does not require that companies be registered as a business before securing the rights to these URLs, he explained.
For this reason, scammers hiding behind .com domain names could actually be based anywhere in the world. "It isn't a guarantee the company is based in America."
However, any company whose URL ended with .com.au was required by law to be registered as an Australian business first, Dunn said. Therefore, a company operating a website with the .com.au suffix would be more easily traceable by ASIC, he said.
Moreover, an Australian victim of a scam originating overseas could only rely on the enforcement proceedings in that country.
Dunn said ASIC was unable to estimate accurately how much Australians wasted each year on investment scams, whether via the internet or not. However, he referred to an ASIC ploy conducted in May last year, in which the commission published a bogus investment advertisement on the internet, promising punters high returns for investing in nonexistent "millennium" related software.
Around 400 Australians sent submissions of interest to the bogus company (a heavily disguised ASIC) which valued the total follow-up payments at over $4 million, before the commission unveiled the prank, he said.
Faced with this evidence of Australia's gullibility, ASIC implemented its online "Gull Awards", which invites consumer submissions that detail investment scams. ASIC also offers a free online list of all businesses registered in Australia. Using this list, investors-to-be can access full registration details as well as company portfolios of companies they plan to invest with, Dunn said.
"You don't have to be a genius to spot a scam," he said.