Recent reports reveal that misleading clickbait ads are gathering users' data, feeding it to unscrupulous financial advisers who push high-fee superannuation accounts through aggressive cold-call tactics.
While the ACCC issued a warning earlier this year, the Super Members Council highlights an exploitation of legal gaps that fraudsters are taking advantage of, often leading unsuspecting consumers into costly financial traps.
Though anti-hawking laws prohibit unsolicited financial product sales, a loophole enables cold-callers to extract hefty advice fees directly from super accounts. Authorities recommend disconnecting immediately if you find yourself on a suspicious cold call.
"Respected financial advisers do not rely on third parties to cold-call Australians to sell services. This method of lead generation for financial advice needs banning," warned Super Members Council CEO Misha Schubert.
Schubert detailed the tactics used: "These groups post clickbait on social media, make cold calls, and use high-pressure sales techniques to persuade people to switch super funds. This ends in huge advice fees and poorer-performing products. Such predatory behaviour must be stopped."
The ruses vary but typically involve obtaining a phone number, offering a superannuation review claiming better returns with another fund, and forwarding the individual to a licensed financial adviser. ASIC discovered that some statements of advice issued during these calls contained misleading promises of high returns. The end result: consumers taken for thousands in upfront fees and stuck in high-risk funds, laden with significant ongoing costs without a chance to review advice statements.
"Australians should hang up on unsolicited calls promising super reviews by a financial adviser—chances are, it's a scam," Schubert advised. "The regulator does monitor individual advisers providing dubious advice, but the practice of using cold calls to sell financial advice remains legal."
Data brokers are usually the culprits behind these schemes, selling individuals' contact details. This information is collected from various online activities, including publicly available sources, websites visited, social media interactions, quizzes, or competitions.
However, some fraudsters have found shortcuts, using clickbait ads on platforms like Facebook and Instagram to offer 'superannuation calculators' and gather personal data.
The Australian Securities and Investments Commission (ASIC) reviewed these practices thoroughly in May, finding significant superannuation flow resulting from these cold-call operations, including high-risk property investments and large payments to cold-calling organizers. The primary victims are typically aged 25-50, with superannuation balances of at least $50,000.
ASIC’s battle against such dubious practices began with the 2020 ban of Queensland-based financial adviser Smart Solutions. Despite anticipations, financial services ministers and regulators offer various warnings and resources aiming to educate and protect consumers.
