How to spot a scam before you get ripped off

You've probably heard of the Nigerian scam where you get an email offering you a share in a large sum of money they want to transfer out of their country.

And chances are you know that if you receive an email from "your bank" asking for account details, you just press delete.

But being aware of the most common scams didn't stop 453,100 Aussies being ripped off to the tune of nearly $1 billion in 2007.

To keep your money safe you really need to know how to spot a scam. There are a few obvious warning signs to look out for. First, an oldie but a goodie - if it looks too good to be true it probably is. Financial scams tend to offer a higher return than genuine investments, says the Australian Securities & Investments Commission.

"Some offer 20% a year, others go for 300% a year or even more," says ASIC. Not only do they offer huge returns, they often say that the risk is low! So remember: higher returns always equal higher risks.

Be wary of unsolicited emails or letters and "cold calls". When you're approached out of the blue with a secret offer or inside information, ask yourself why this is being offered to you. The answer probably is that a scammer is after your money! Another sign is a sense of urgency. "Scammers often say 'Don't miss out' or 'Act quickly before it's too late'. They're really just trying to grab your money before you have a chance to check properly," says ASIC.

Also keep in mind that scams don't always involve large sums of money. Sometimes scammers target a large number of people, trying to get small amounts from each person. It may not even be about money - they're simply trying to steal your personal information.

Any of the above signs should set alarm bells ringing in your head. If you're still uncertain a good idea is to go online to see whether it's a scam doing the rounds. Great sites to check out include www.scamwatch.gov.au, www.fido.gov.au and www.accc.gov.au. You could also try to find out information about the company.

ASIC recommends a search of the state government business registries to see who owns the business name. Make sure you deal only with licensed businesses. Here are a few more tips to protect yourself and help keep your money safe:

> Always get independent advice if an offer involves money. > Don't agree to offers straight away. If you think the deal is good, ask for extra time so you can get independent advice before making a decision. > Never send money or give credit card or online account details to anyone you don't know and trust. > Do not send any money or pay any fee to claim a prize or lottery winnings. The same goes for job offers asking for an upfront fee. > Don't rely on glowing testimonials: find solid evidence of a company's success. > Log directly onto a site rather than clicking on email links.

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