Australians being scammed out of $90 million

Australians are being scammed out of millions each year with credit card fraud, phishing, identity theft, and even romance scams growing year-on-year.

However, individuals who want to protect their hard-earned cash can adopt a number of strategies to protect themselves.

Australians suffer serious financial loss

The Australian Competition and Consumer Commission (ACCC) recently released its annual scams activity report, noting that $90 million of financial losses were reported in 2013.

“Actual losses are likely to be much higher than what is reported to the ACCC — people report scams to a number of agencies, some don’t recognise that they have fallen for a scam, and unfortunately many others are too embarrassed to report their experience,” said Delia Rickard, ACCC Deputy Chair and Australasian Consumer Fraud Taskforce Chair.

Scams aren’t limited to credit card-related fraud only: Dating and romance scams surged to the top position for reported financial losses during 2013 ($25 million).

Be aware of existing scams

There are a number of scams that Australians succumb to. Being aware of what you could fall for is the first step in scam prevention.

Scammers continue to take advantage of Australians looking for love or companionship, although the proportion of individuals who respond to scam admirers’ advances is dropping — in 2011 the figure was 48 percent, which dipped to 46 percent in 2012 and 43 percent in 2013, according to the ACCC.

Identity theft and phishing scams increased markedly in 2013, with reported scams surging by 73 percent year-on-year. However, financial losses were low, indicating scammers focus on obtaining personal information to use for gain at a later date.

Phishing scams trick individuals into disclosing passwords and personal details, such as transaction or savings account numbers or tax file numbers, according to the federal government.

Computer prediction software scams are worth keeping an eye out for – associated losses reached $9.1 million in 2013, which was more than double the 2012 figure.

Check website credentials

Online shopping is incredibly popular, but are you protecting yourself when pulling out the plastic?

Always check the credentials of any e-commerce website you use — make sure there’s authorised payment software that’s secure, and always type the URL in yourself, rather than clicking on email links.

Be vigilant about your banking

The Australian Federal Police notes that sophisticated bank-implemented software tends to stonewall scammers. Accordingly, fraudulent individuals directly target customers.

Take note of the above scams and protect yourself by following the Australian Bankers’ Association’s advice:

  • Don’t post too much personal information on social networking sites
  • Set your social network profiles to private
  • Apply a lock function to your smartphone and tablet
  • Use official banking apps to complete transactions
  • Get in touch with your bank if you lose your smartphone or tablet
  • Install anti-virus software on your desktop computer, laptop, tablet and smartphone
  • Don’t complete banking activities using unsecured wireless networks

Finally, here’s the most important tip to remember: If something sounds too good to be true, it’s possibly a scam!

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Learn more about credit cards

What happens if I have a bad credit score?

If you have a bad credit score, you might encounter two main problems. First, the lower your credit score, the more likely you are to be rejected when you apply for a loan or any other credit product. Second, if your application is accepted, the less likely you are to qualify for the lowest interest rates.

Why should I check my credit rating?

There are two reasons you should check your credit rating: so you have a better understanding of your financial position, and so you can take action (if necessary) to improve your credit rating.

Lenders use credit ratings or credit scores to assess loan applications. The higher your score, the more likely you are to get approved, and the more likely you are to be charged lower interest rates and lower fees. Conversely, the lower your credit score, the less likely you are to get approved, and the more likely you are to be charged higher interest rates and higher fees.

Why do different credit reporting bureaus use different scores?

The reason Equifax, Experian and Illion use different scores is because they are independent companies with their own different methodologies. As a result, a score of, say, 700 would mean different things at different credit reporting bureaus.

However, the one thing they have in common is that they divide their scores into five tiers. So if you receive a tier-two credit score from one bureau, you will probably receive a tier-two score from the others, as well.

Can I get a credit card on part-time/casual work?

Yes, as credit card providers look at your annual income amount as well as your occupation. Minimum income requirements tend to be between $30,000 – $40,000 for standard and rewards credit cards, however low income credit cards can have minimum income requirements as low as $15,000 per year.

How to get a credit card for the first time

A credit card can be a useful financial tool, provided you understand the risks and can meet repayment obligations.

If you’re a credit card first-timer, review your options. Think about what kind of credit card would suit your lifestyle, and compare providers by fees, perks and repayments.

Once you’ve selected a card, it’s time to apply. Credit card applications can generally be completed in store, online or over the phone.

When you apply for a credit card for the first time, you must meet age, residency and income requirements. As proof, you must also provide documentation such as bank account statements.

How do credit cards work?

Think of credit cards as a short-term loan where you use the bank’s money to buy something up front and then pay for it later. Unlike a debit card which uses your own money to pay, a credit card essentially borrows the bank’s money to fund the purchase. When you apply for a credit card, the bank assesses your income and assigns you a credit limit based on what you can afford to pay back. At the end of each billing cycle, which is usually monthly, the bank will send you a statement showing the minimum amount you have to pay back, including any interest payable on the balance.

How do you use a credit card?

Credit cards are a quick and convenient way to pay for items in store, online or over the phone. You can use a credit card as a cashless way to pay for goods or services, both locally and overseas. You can also use a credit card to make a cash advance, which gives you the flexibility to withdraw cash from your credit card account. Because a credit card uses the bank’s funds instead of your own, you will be charged interest on the money you spend – unless you pay off the entire debt within the interest-free period. If you pay the minimum monthly repayment, you will be charged interest. There are many different credit card options on the market, all offering different interest rates and reward options.

What's the best credit card for rewards?

There is no one-size-fits-all best rewards credit card. It's best you research what type of rewards program you'd like, as well as the fees, interest rate and conditions associated with those types of cards before making a choice. 

Rewards credit cards can also come with high annual fees that may end up nullifying the rewards, so think how often you use the card to decide whether the benefits outweigh the extra cost for you. A card with a lower annual fee might require a lot of spending to get any useful rewards, while another card with a higher annual fee might need fewer purchases to get a reward. 

How many numbers are on a credit card?

The numbers on your credit card actually follow a universal standard which is used to identify specific functions. Each credit card has a different amount of numbers. Visa and Mastercard have 16, American Express has 15 and Diner’s Club has 14. 

The first number on a credit card always identifies what type of credit card it is. Visa cards start with a 4, whereas Mastercard starts with a 5 and American Express with a 3. The remainder of the digits represent the account number, including the last number which is used to verify that your credit card is actually valid. 

Credit cards also have additional verification numbers, which are mainly used when the card isn’t present for phone and online purchases. These are the three-digit numbers on the back of Visa and MasterCard or the four-digit numbers on the front of an American Express card.

How to make a credit card online

If you’re wondering about how to make a credit card online application, here are some steps to follow:

  • Test the market. Many credit card options are available online. Compare providers by fees, interest and perks to ensure you’re getting the best deal.
  • Complete the application. Once you’ve selected a card, head to the provider’s website and complete the online credit card application form. Forms vary by providers.
  • Provide details. Most cards require you to meet age, residency, income and credit status condition, and you need to provide details like a bank account statement to prove this.
  • Review details. Ensure the information you’ve entered is correct.

Current Interest Rate

This is the current interest rate on your existing credit card.

Where can I get a credit card?

Looking to get your first credit card? You might be confused as to exactly where to go to apply for one. Here’s where to go when you are ready to put in that application.

The bank: Your bank is a great place to start, provided that you have a good banking history. Since you already have a financial history, you have more chance of your application being approved.

Credit card provider: Another option is to apply for a credit card directly from the issuer, such as Visa, Mastercard or Amex. This will most likely be an online application, so do your research and apply for a suitable card for your circumstances.

Major retailers: Coles, Woolworths, Myer and David Jones all have credit cards available. But watch out for the interest rate and annual fees – these cards are designed to help you spend more in store.

Can a pensioner get a credit card?

It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:

  • Annual income. Look for credit cards with minimum annual income requirements you can meet. 
  • Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee. 
  • Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.

Should I get a credit card?

Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch.