In AFR Weekend , senior companies reporter Michael Roddan and myself tried to unpick an elaborate scam in which ordinary Australians looking for safe, high-income investments have been tricked into parting with hundreds of thousands of dollars.
The details of how the scam worked were laid out in the article , but as financial experts explained to us, what has made this scam so effective is the power and reach of Google.
Investors had begun research into investment options by typing in terms such as “fixed rate bond”, “high yield investment” and “high interest investment” into Google – and Google returned scam websites among the top advertised results.
The scam comparison sites seems to have been used to build a database of potential victims, who were then coaxed into providing personal information. This was used to set up banking and trading accounts. When money was deposited into the accounts, they were then emptied.
Identity theft has been committed on an industrial scale. Google has been made aware that the sites are fake and almost certainly a scam. But it doesn’t appear to be in too much of a rush to shut them down.
A spokesman explained on Friday that Google was investigating the sites following queries, and they kill a million advertising accounts a year. But they have been made aware of the issue for some time and, in the interim, more Australians are exposed.
If the article demonstrates anything, it is the importance of independent media investigations and coverage to make investors aware of these scams. It has also, once again, highlighted the perils of relying on websites that feature prominently in Google searches.
Follow the money
Without media coverage of these scams, Google’s reach will continue to be effectively weaponised. There is nothing informing the general public that they’re handing over contact information that will then be used to try to steal their money. Worst of all, the scammers are paying Google – which is willingly accepting a fee to feed the website’s users to the wolves.
This is just the latest of many scams spreading via search engines and social media. It took the platforms ages to stop the celebrity crypto scam despite infuriated celebrities calling for action.
We’re doing our best to alert and inform the public of these fake bond documents, sham sites and the workings of these criminals. But it only moderately offsets the reach of Google’s search engine in attracting more prospective targets to the scam.
Ironically, we worry that by naming the sites, we may have helped enhance their status in the eyes of the search engine’s algorithms, boosting their searchability. Also, if we consider economics and incentives, we don’t see this problem going away.
Consider a legitimate provider of fixed income products that seeks to advertise on Google. That provider only makes a small fee from managing funds – say $700 on a $100,000 investment. A scammer will pocket the full $100,000, so the propensity to pay for leads is higher.
This, we believe, is why other fixed income promoters that have raised and then lost millions of dollars of investor funds have monthly Google budgets in the hundreds of thousands of dollars.
The only incentive holding back social media platforms from cutting these sites off is a reputational one. But that only seems to kick in with limited effect and often too late. The search engine’s fraud unit is apparently engaging with affected organisations – but only after media coverage has been ramped up.
This is, of course, a precarious and tetchy moment in time, as big tech platforms and traditional media organisations search for middle ground under the proposed media code.
But scams such as the one we uncovered are a clear demonstration of the powers and limitations of platforms – social media and traditional. Without the latter, bad actors can flourish almost unchecked.
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