Kiss your money goodbye

Australians defrauded by offshore scammers are unlikely to see their funds again

Almost daily, cybercrime cop Malcolm Brown delivers an unsavoury truth to everyday Australians conned out of large sums by offshore-based scammers: they are unlikely to see their money again. “With most complaints there is zero likelihood of recovery, that’s the sad reality,” says Brown, a detective senior sergeant with the South Australian police. “Once it’s gone offshore, it’s pretty much gone.”

Last year, Australians were swindled out of almost half a billion dollars – $489 million in losses from more than 378,000 scams reported to the ACCC, the Australian Cybercrime Online Reporting Network (ACORN) and other state and territory government agencies. That was an increase of 44 per cent over the previous year – and the reported losses are just the tip of the iceberg, according to the ACCC’s Delia Rickard.

Of that total, the ACCC estimates that cybercrime scams reported to ACORN in 2018 amounted to $367.9 million in losses from more than 56,000 reports. Brown’s experiences in South Australia are not unique – other police and authorities deal with similar frustrations. Cyber scammers may operate romance rorts or dodgy “boiler room” investment schemes, so called because of the high pressure sales tactics used by fraudsters, typically working out of cramped call centres. Or they may be behind those calls from “the tax office”, warning the householder is about to be arrested without immediate payment of a fictitious debt. “Accounts are constantly created and closed,” Brown says. “The money is shifted within a few days and could be anywhere in the world.”

The core problem is that following the money through offshore bank accounts is next to impossible, although there is some prospect of doing so with the co-operation of foreign police. If authorities can identify the perpetrators, there’s then the process of establishing proof and testifying that the evidence has been securely handled.

Seasoned Sydney private investigator Ken Gamble, co-founder and executive chairman of IFW Global, has been investigating cybercrime since 2007 and is proud to have “shut down a few” scams in that time, showing that offshore redress is possible Gamble says he currently has 50 to 60 cases running, with six “active operations” in Thailand, The Philippines, Indonesia and – increasingly – Vietnam, Cambodia and Laos. If a local entity is involved, the scammers usually have long stopped trading before a complaint lands with the police or the Australian Securities and Investments Commission. “Scams are a complex and evolving problem affecting every demographic in Australia and continue to cause substantial financial and emotional damage,” Delia Rickard says in the ACCC’s Targeting scams report, released last month.

“The scams reported to the ACCC are perpetrated overwhelmingly by criminals overseas, which makes it extremely difficult for law enforcement agencies to track them down and take action against them once the scam has occurred.”

Brown says: “If there’s an Australian bank account that’s a lead we can follow up, but otherwise my jurisdiction ends at my borders. While we can liaise with Australian Federal Police officers offshore, they rely on foreign policing agencies to provide information to us.”

However, South Australian police have had more success in preventing victims from becoming even bigger ones – or receiving the fateful cold calls in the first place. In early 2013, the SA major fraud investigation section launched Operation Disrepair, which involves analysing data on money flowing to and from West African countries including Nigeria and Ghana.

The program involves the police sending a letter to the suspected victim advising that it is likely they are in the process of being defrauded, so they can extricate themselves. “It works 80 per cent of the time,” Brown says. “If not, we pay them a visit.” In the case of one lucky South Australian, a knock on the door from the local police patrol meant that he was able to stop an $80,000 payment – if only because the funds had been remitted that morning. “In [another] case a guy sent half a million dollars and he was about to send $250,000 more,” Brown says. “I said, ‘Don’t do it, convince me it’s not a scam’.”

As of June 2017, Operation Disrepair had identified more than $7 million being sent offshore by more than 2300 individuals. But even after the warnings, some of those being scammed are difficult to win over. “If it’s a romance scam they are harder to convince because they are emotionally attached, especially if it’s been going on for a while,” Brown says.

While local police face jurisdictional barriers and lack of resources, private investigators increasingly are able to at least partially fill the void for victims willing to pay a fee for the chance of recovery.

For everyday victims, there’s a dilemma of whether to throw good money after bad: investigations don’t come cheaply, with Gamble citing a typical retainer of $20,000-25,000 (plus a success fee on recoveries). Amounts of less than $100,000 generally are uneconomic, although victims of the same scam are encouraged to pool their resources.

Authorities continue to look for ways to disrupt scams so that it never comes to the point of consumers battling for the return of funds. Last year, in a “scam intermediaries project” the ACCC sent scam reports to businesses that scammers are likely to use when fleecing consumers, including the four major banks, money remitters and online classified sites, to help them stay abreast of trending scams.

Initial feedback was good and some financial institutions had been able to retrieve funds for customers or block transfers. These notifications, sent only with the permission of victims, are to be automated including via the Australian Financial Crimes Exchange, a collaboration of the four major banks, the federal Department of Home Affairs and the Customer Owned Banking Association.

In March, the Australian Communications and Media Authority began a project to disrupt scams after its research showed more than half of Australian adults had had to deal with scam calls daily or weekly. Chair of the project’s reference group, Fiona Cameron, noted the “need to be better informed and armed”. “We also need to be aware that scammers listen and learn, and adapt their behaviour to suit the environment,” she said.

Scammers’ techniques are ever evolving as they become aware of increased monitoring of their activities. Mal Brown says: “A number of long-term victims have been groomed to act as money launderers (mules) whereby money transfers are directed into Australian accounts so as not to draw attention to the true destination. South Australian detectives actively target and monitor the mules and will take decisive action such as an arrest where appropriate.”

While the odds are against the victims seeing any of their money again, the good news is that Operation Disrepair is working. “Scans of financial data indicate these letters have had a marked effect on remitters with a noticeable drop in funds sent offshore,” Brown says. “However, we cannot be complacent as new senders are invariably identified each month.”

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