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Doug thought he did his due diligence. He still lost $1m to scammers
By Emily Chantiri
After receiving a payout from a head-on collision, Queensland-based businessman Doug Wright wanted to invest the money. He came across an advertisement from a firm on Facebook, looking for investors and promising high returns on their investment.
Wright filled out the online form and included his contact details. That simple interaction would end up costing him $1 million.
Over five months, Doug Wright received returns on his initial investments until communication suddenly stopped. Credit: Ben Shipway
After receiving a call from an individual claiming to work for the firm, Wright was told his colleague would soon contact him to set up an account. Wright checked the company and tracked its investment returns before investing.
“After I saw how much the fund was returning, I asked them for a contract in writing,” he says.
Wright thought he was sending money to MCI, a legitimate investment firm based out of Poland. Little did he know that the scammers had copied web pages from MCI to scam people.
“I’d done my due diligence on what, I thought, was a reputable company. The fake website used by the scammers copied the MCI website, even had the same directors and photos,” he says.
Over the course of five months, Wright received returns on his initial investments until all communication suddenly stopped.
“I was due for my next return, then nothing. I was constantly chasing them up. They didn’t return my calls,” he says. “It hit me; I’d realised it was a scam – I’d lost close to $1 million.”
Wright’s story is far from uncommon. In 2023, the Australian Competition and Consumer Commission’s (ACCC) ScamWatch reported losses of nearly $300 million for investment and cryptocurrency scams, affecting around 8000 people.
A spokesperson for the ACCC said scams are the work of organised crime groups who have years of experience in perfecting scam scripts, knowing what works with certain people and using a mixture of reward, fear and loneliness to trick people.
Australia’s high rate of gambling and risk-taking behaviour may also contribute. Scammers often exploit these tendencies.
UNSW Business School’s Dr Kam-Fung (Henry) Cheung
After realising his error, Wright immediately contacted the Australian authorities. “They had no real interest and today, after all this time, there is still no progress,” he says.
Taking matters into his hands he hired a private investigator, which led him to the culprit, living in Israel.
“I really wanted to bring the guy to justice, but that would have cost $250,000 for court proceedings in Israel,” he says. It took him 12 months to recover from the ordeal.
Everyone is vulnerable
Everyone is vulnerable to scams at certain times in their life.
“(There are) dating and romance scams after a relation breakdown, a job scam when the cost-of-living crisis is high, investment scams when you may have money and you want to invest it,” the ACCC says.
Scammers use techniques to pretend to be someone else, a legitimate business or even a celebrity. They can set up fake email addresses or accounts pretending to be celebrities or even take over Facebook or Instagram accounts of people you know.
UNSW Business School’s Dr Kam-Fung (Henry) Cheung and Shesha J Maheshwari say financial desperation and a lack of awareness contribute to why many individuals today are falling for scams. According to the pair, there are six key reasons people fall for scams.
- Financial desperation. When faced with financial difficulties or a desire for quick financial gains, people become more vulnerable to scams promising high investment returns.
- Trust and authority. By masquerading as trusted individuals, posing as government officials, company representatives, or law enforcement, scammers exploit trust to convince victims to share personal information.
- Social engineering. Scammers exploit personal relationships and connections to manipulate victims and make them appear more legitimate and trustworthy.
- Lack of awareness. Many people are unaware of the varying types of scams that exist, such as those involving cryptocurrencies and blockchain.
- Lack of vigilance. Victims are busy and distracted, meaning they are less vigilant than they would usually be.
- Emotional triggers. Scammers create a sense of urgency, fear or excitement, causing their victims to act irrationally.
Australians are also more susceptible to scams due to a combination of factors, Dr Cheung adds, including a generally high level of trust in authorities and institutions.
“Australia’s high rate of gambling and risk-taking behaviour may also contribute. Scammers often exploit these tendencies with promises of quick returns and high rewards,” he says.
Anti-scam framework under way
In 2023 budget, the Australian government invested $86.5 million as part of its anti-scam platform. This included establishing the National Anti-Scam Centre within the ACCC. In September 2024, the government released legislation to establish a new Scams Prevention Framework for public consultation.
The framework establishes scam prevention principles in legislation that will impose mandatory obligations on specific sectors to help prevent, detect, report, disrupt and respond to scams. Initially, it will apply to banks, telecommunications, digital platform service providers and social media companies.
Wright has one piece of advice for any would-be investors. “Learn how to do it yourself so you are in charge of your money, and also don’t put your eggs in one basket.”
To report a scam or seek assistance, visit the National Scam Centre website.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making financial decisions.
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