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The lyin’, the rich and the watchdog: Scammers swindle $323m from retail investors as ASIC and ACCC vow to fight harder

March 23, 2022

The lyin’, the rich and the watchdog: Scammers swindle $323m from retail investors as ASIC and ACCC vow to fight harder

Two major Australian regulators are stepping up efforts to protect retail investors from would-be scammers taking advantage of the rapid growth in first-time traders.

Two major Australian regulators are stepping up efforts to protect retail investors from would-be scammers taking advantage of the rapid growth in first-time traders.

Corporate watchdog ASIC and its consumer counterpart the ACCC are both intensifying their campaigns against fraud after Australians lost a record-breaking $323 million to scammers in 2021.

More than half of that money ($177 million) was lost to investment scams, ACCC data showed.

Hoping to reduce the number of Australians being duped, ACCC instituted Federal Court proceedings against Meta, the parent company of social media site Facebook, for failing to take down ads that used falsified celebrity endorsements to spruik cryptocurrency scams.

Former ACCC chair Rod Sims – whose tenure only ended this week, on Monday 21st March – said the case seeks to show that Meta should be responsible for the ads published through its platform and did not act appropriately after concerns were raised that users were being swindled.

“Meta should have been doing more to detect and then remove false or misleading ads on Facebook, to prevent consumers from falling victim to ruthless scammers,” he said. 

“Apart from resulting in untold losses to consumers, these ads also damage the reputation of the public figures falsely associated with the ads. 

“Meta failed to take sufficient steps to stop fake ads featuring public figures, even after those public figures reported to Meta that their name and image were being featured in celebrity endorsement cryptocurrency scam ads.”

Mr Sims said one victim has lost approximately $650,000 to one of these “disgraceful” schemes, and the ACCC is seeking declarations, injunctions, penalties, costs and other orders in its legal stoush with the social media giant.

ASIC spearheads global regulatory toolbox

On Monday, corporate regulator ASIC separately launched a consultation paper concerning “rapid” changes in retail trading markets following the influx of new investors during the pandemic.

The paper was developed in partnership with the Central Bank of Ireland for the International Organization of Securities Commissions, with a focus on mitigating risks facing markets and market participants in this new environment.

“This is a worldwide phenomenon, and likely to be an ongoing challenge for regulators and the broader investment community, especially where the harm is digitally enabled,” ASIC commissioner and task force co-chair Sean Hughes said.

“Like ASIC, our counterparts around the world are observing common types of harmful behaviour, including mis-selling, mis-labelling and misleading disclosure – all of which have the potential to undermine confidence and stability.”

ASIC and its co-contributors warned the current market environment has created “fertile ground” for fraudsters, and disclosure requirements alone may not be enough to protect vulnerable investors.

Market participants, central banks and investors have been invited to share their feedback on the document, in hopes their views and information will help create a regulatory toolkit to better protect people from scammers.

Sources


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