Spotting the Signs of an SMSF Scam and How to Avoid Them

Around 2.5% of Aussies fell victim to a scam in financial year 2022-23. If you consider yourself a pretty savvy operator, you might think there’s no chance you’ll join this number.

Some scam attempts are fairly laughable, after all. It’s easy to fall into the trap of thinking it’s only the naïve or elderly who get caught out.

The reality of course is that scamming operations are becoming evermore sophisticated and it’s important to appreciate that you aren’t infallible.

Superannuation is a common target of scams. There are a few different approaches that superannuation scammers take, but all are ultimately trying to steal your retirement savings. Here’s what to look out for.

SMSF scams

One of the most prevalent ways fraudsters target your super balance is a scam involving a Self Managed Super Fund (SMSF).

This often involves convincing you to transfer your existing balance into a (fraudulent) SMSF, controlled by the scammer.

You might be promised huge returns or early access to your balance, but as soon as the money leaves your account, you probably won’t see it again.

How it works

A typical SMSF scam might be initiated through a cold contact, say, a phone call or email purportedly from some sort of financial advisor. The bad guy might even pretend to be representatives of a genuine company that, if you look it up, you’ll find has a Australian Financial Services (AFS) licence.

While some scammers are pushy, trying to create a false sense of urgency to force you into making a mistake, others might take more of a ‘slow burn’ approach, with the scammer building your trust to convince you they're legitimate.

Eventually, they might pitch a fresh approach for your superannuation, which involves you transferring your super into a new SMSF that, of course, the scammer will sort out for you.

If you fall victim to such a scam, you should ask your superfund to block the transaction as soon as you realise. Once your money is gone, it can be really difficult and often impossible to get back.

Other superannuation scams

Identity theft

The personal information of over 65,000 Australians was stolen to obtain money from super, a bank account, or shares in financial year 2022-23, as per the ABS.

You don’t necessarily need to be conned in order to loose your super to criminals. If a scammer gets enough of your details, they might be able to impersonate you for long enough to steal your funds.

If you think your data has been compromised, you should let your bank, superfund, and any other institutions know immediately. You can also contact IDCare, on 1800 595 160, who can help with other damage limitation.

Early release of superannuation

Scammers might also offer you access to your superannuation balance, even if you haven’t hit preservation age.

This might be very tempting, particularly if you’ve got plenty of money in your super. However, it’s against Australian law to access your super before you’re entitled to it (barring a couple of specific exceptions).

If someone is claiming they can get your super balance out of your fund for you, it’s a good idea to simply stop all communication.

How Aussies can avoid superannuation scams

What to look out for

• Speaking to different people who have the same voice
  According to ASIC, some less sophisticated superannuation scams will have the scammer impersonating multiple people from the same organisation. If you're transferred to a ‘regional manager’ who sounds suspiciously like the person you were just speaking to, but with an accent, there’s probably a pretty good chance it’s a scam.

• Pushing investments like cryptocurrency
  Superfunds can invest in a wide range of assets. However, if someone is pushing an unusual investment (cryptocurrency, for example) and promising huge returns, it might be a warning sign of fraud.

• You're being promised early access to your super
  With a couple of exceptions (the First Home Super Saver Scheme, for example) it’s illegal to access your super if you haven’t hit ‘preservation age’. Legitimate financial advisers will know that, so if you’re being told that you can transfer to an SMSF and get early access to super, you’re probably dealing with a scammer.

Precautions

There are a few things you can do to give yourself the best chance of not falling for an SMSF scam:

• Do independent research into whoever is contacting you
  If you’re being contacted by someone purportedly from a legitimate company, get in touch with the company independently to check if you've been dealing with a genuine representative. Hopefully it goes without saying, but don’t contact the company through the email or number of whoever reached out, go through the official communication channels on the company’s website instead.

• Don’t give personal information to people you don’t know
  If you’re below a certain age, you’ll probably remember being taught cybersecurity in school, and being impressed upon never to put your personal details online. Like most people, you’ve probably disregarded those rules – social media, news sites, and even online gaming outlets generally require you to make an account, with at least your email address, if not your phone number or home address. However, there’s big a difference between giving these details to a secure site (though, you should still be careful) and sending them to an individual that you don’t know is legitimate. It might only take a few details for the scammer to access your MyGov account, for example, and from there your superannuation balance could be at serious risk.

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