Your Password is a Problem

Hi Scott,
 
I found out about this through my work last week and I wish someone had told me sooner. It’s a government website that shows you how long it would take a hacker to crack your passwords. It’s quick and easy to use! www.nsw.gov.au/id-support-nsw/be-prepared/passwords 
 
Karen
 
Hi Karen
 
What a cracker of a tool!
 
Here’s what the site told me about my password:
 
“Warning! It would take about 2 minutes to crack your password”.
 
(Even more worryingly, apparently it has been seen in two data breaches).
 
I love it when the government comes up with something actually useful. Thanks for the tip.

Scott.

Artificial Intelligence Stole $300,000 From Me

Hi Scott,
 
I have just read your response to Craig regarding Robert Irwin and Trade 6000 Alrex. I just want to confirm what you have said and warn Craig to ignore this and any other get-rich-quick offers on the internet. I got sucked in by a deep-fake advertisement of Elon Musk and lost over $300,000 – plus at least five years of my life going through stress with the follow-up scams telling me it could be recovered.   Without going into the whole catastrophe, just be aware that it starts off as such an amazingly easy process – you think to yourself “Why isn’t everyone doing it?” The answer is because not everyone is as gullible as me! Please do not use my name.
 
Anonymous
 
Hi Anonymous,
 
Thanks for sharing.
 
Scam losses are like cockroaches: for every one who admits it, there are hundreds hiding in the dark.
 
Your experience mirrors the hundreds of conversations I’ve had with other victims.
 
Losing the dough is financially shocking and in many cases life-changing.  
 
And, as you’ve said, dealing with the follow-up scams (“We can recover some money for you … if you give us more money”) can go on for years and can give victims PTSD.  
 
(Which is why anyone who has been scammed should go to IDCARE.org – call 1800 595 160 – and have them douse their online profile with hospital-grade bleach.)
 
The money loss is one thing, but by far the biggest losses I see with scam victims is with their mental health. Most of the time their self-confidence is shattered by the experience – their sense of shame and disgust eats away at them.
 
I totally understand why you don’t want to share this experience publicly. However, I’m pleading with you to share it with a counsellor, who can help you move forward. The scammers stole your money – don’t let them rob you of your future.

Scott.

Crikey!

Hi Scott,
 
I don’t want to make a huge mistake with what little I have ... so is this Trade 6000 Alrex, as recently revealed by Robert Irwin, still worth a try? I can find $375, but this is scary. What if I go there via a scam website that looks real and so lose everything? Advice please!

Craig
 
Hey Craig,

It’s a scam, man.
 
Robert Irwin handles crocodiles, he’s not an investor.
 
They’ve deep-faked him, the same way they did me.
 
If you deal with these crooks they’ll rip your bloody arms off.

Scott.

We’ve Made $11,400 Profit in Four Months

Hi Scott
 
My husband and I recently started trading CFDs (Contracts for Difference) online. We started with $500 thinking that “if it’s a scam, we’ll only lose $500”. We talk to one of their brokers (who is in Switzerland) a few times a week and it’s going very well (we’ve ‘made’ A$11,400 profit in four months). We have done a withdrawal of $100 to see if we have ready access to the money, and it came through with no problems at all.
 
The broker is now asking us to invest more money – up to US$100,000. We don’t have that kind of money, so he has suggested we set up an SMSF and invest some of our super. We always seem to miss the boat on financial opportunities, so I wanted to get your view on whether we should do it.
 
Rick
 
Hi Rick
 
Somewhere – probably in a compound in Laos – your name is written on a whiteboard.
 
These scammers have got you on the hook … and now they’re attempting to reel you in.  
 
The big barramundi for them is your superannuation. They plan on stealing every last cent of it and leaving you with absolutely nothing.
 
This happens to a trusting, unsuspecting Aussie every single day.
 
My advice?
 
Contact IDCare (idcare.org, 1800 595 160) and tell them you’ve been scammed.
 
Why would you do this?
 
Because here’s the thing that most crooks have worked out: the best people to scam are those who have already been scammed.
 
That’s you!
 
So don’t let it keep happening. IDCare will help you safeguard your identity online, and hopefully ensure your name doesn’t appear on any more whiteboards.
 
Scott.

My Mother has a Lover

Hi Scott
 
My mother has been sending large amounts of money to a holiday fling for the last 14 years. She has almost lost her home, she’s drawn on her super, and I fear she will be in dire straits soon if this continues. It happened like this: in 2010 she met a young Casanova in Egypt, and a holiday fling quickly became a business partnership. My mother has zero business experience. She’s borrowed against her home to fund some outlandish ideas. She has been back a number of times and has seen where her money has gone – apparently! I’m not sure whether it was the car manufacturing plant or the haute couture fashion house. I wish I was kidding – these are examples of their ‘ventures’. Despite 14 years, hundreds of thousands of dollars and zero return, she’s even more optimistic now. In reality she is a teacher struggling to find a permanent position because she is past retirement age, is burdened with debts she can no longer afford, and has enough super to keep her until Christmas this year. And she will not listen to my concerns! I was hoping this was something I could report to the relevant authorities so they can intervene before she loses everything.
 
Linda
 
Hi Linda
 
That sounds like one hell of an expensive shag!
 
Still, you can’t call the cops. From the sounds of it, he’s not doing anything illegal (immoral perhaps, but not illegal). And you’ve tried talking sense to her, but clearly after 14 years that hasn’t worked.
 
So what can you do?
 
Well, you need to protect yourself emotionally and financially.
 
I’d suggest writing a letter to your mum explaining how much you love her and how concerned you are for her financially. Then detail the likely consequences of her actions. Paint her a picture of what her retirement will look like. How will she service her debts when she’s too old to work?
 
Understand her debts will die with her: you won’t inherit them … but that also means you won’t inherit any dough from her either. So double down on your Barefoot plan!

Scott

This is the hardest thing I've ever written

What you’re about to read is very uncomfortable.
 
It’s possibly the hardest thing I’ve ever written, but it needs to be said, and you need to read it.
 
Wayne is a 50-something Barefoot Dad. His son Mackenzie (Mac) is 16 years old, and obsessed with footy, cricket and getting his L-plates. The trouble began when Mac befriended a girl on Snapchat who was friends with some of his friends.
 
“Hi Sweety, what do you do?” she wrote.
 
Mac told her that he was the captain of his footy team and that he liked to work out.
 
She told him he looked like he had great abs, and then sent him a photo of her breasts.
 
Mac responded by sending a nude photo … but without his head in the shot.
 
She returned the favour, sending him a nude photo … also without her head in the shot. And after a few more minutes of flirting, they both sent nude photos of themselves with their heads in shot.
 
Then Mac’s phone rang.
 
On the other end of the line was a middle-aged man:
 
“I’ve got your photo, and I’ve hacked your Snapchat. Mac, you are going to put $500 into this bank account in five minutes, or I will send it to all your contacts.
 
“I’m counting”, he barked, then hung up.
 
Mac immediately transferred $500 to the man’s bank account.
 
And then Mac’s phone rang again.
 
“Mac, I’ve got your $500. But now I want another $500. And if you don’t pay me another $500, you’re going to be embarrassed. Your parents will hate you, and you’ll want to kill yourself”, he snarled before hanging up.
 
And then Mac did what you would want every single kid to do in this situation:
 
He walked out of his room, found his old man, and tearfully said, “Dad I’ve made a big mistake”.
 
And Wayne did what every single parent should do in this situation:
 
He lovingly put his arms around his son and said “Mate, you’ve done nothing wrong. You are the victim here. Everything is going to be all right.”
 
And then Mac’s phone rang … again.
 
Wayne grabbed the phone and, quick as a flash, made something up:
 
“This is Senior Sergeant Holdsworth from the Mornington Police. STAY AWAY FROM MY BOY!”
 
The scammer listened, breathing down the line, and then coolly replied:
 
“I don’t care about you or your son. You can both die.”  
 
And to prove it, he sent the photos to all of Mac’s friends on Snapchat.
 
Now he was forced to live with the consequences of his actions … which began at footy training the next night. (Thankfully, his coach turned it into an educational session for the boys on the dangers of sending explicit photos.)
 
The next few months were understandably rough for Mac. 
 
Yet, at dinner one night, Mac was back to his old self, joking with his sister and laughing at Wayne’s dad-jokes. Things had turned the corner, Wayne thought. As Mac went off to bed that night he told his old man that he was excited to put on his L-plates in the morning.
 
And then Mac went to his room and killed himself.
 
The next morning, Wayne opened Mac’s door and found him dead. He sat there with his son, now cold and lifeless – and his entire world fell apart.
 
The next few weeks were a blur of heartache and uncontrollable, throbbing pain.
 
Mac’s funeral was huge – packed to the rafters. After a lifetime of community service and sport, people came from out of the woodwork to give Wayne and his family their heartfelt commiserations.
 
And then everyone else got back to living their lives, as they must do.
 
One afternoon Wayne found himself in Mac’s bedroom, gazing at his son’s prized trophy cabinet. He saw something out of the corner of his eye. It was a note. Wayne reached over, picked it up, and sat on his son’s bed and slowly unfolded it:
 
Dear Dad,
 
Things haven’t been the same for me since that photo. I’m really embarrassed. I’ve let you down.
 
I am so sorry.
 
Love, Mac

I’ll admit that I’ve shed more than a few tears this week talking to Wayne.
 
As the father of four kids, it all hit way too close to home for me. And, if you have a young person in your life, perhaps it does for you too.
 
So this week I spoke to Susan McLean, widely regarded as Australia’s first cyber-cop.
 
“Sextortion is huge, it’s a massive problem”, she told me.
 
“In my 30 years of policing, I’ve never seen a crime type that is tipping previously mentally well young people into a crisis as quickly as sextortion does”, she said.
 
Now, I’m a money expert with no cyber qualifications, yet there are a few things I got out of my chat with Susan, starting off with what does not work:
 
Most parents read the doom and gloom headlines about tech rotting their kids’ brains, causing them to overreact and go all Judge Judy on their kids. Not only does this not work, it makes their kids much less likely to come to them if something goes wrong.  
 
Try these three things instead:
 
Ask Your Kids to Create an Online Contract
 
Sit down with your kids and explain the concerns you have about the addictiveness of the apps, the mental health challenges they create, and the risks posed by the internet.
 
Now here’s the trick:
 
Have your kids create a contract on how they’ll manage their day-to-day online use.
 
You should give them some pointers of what a good contract should contain:

• Regular tech-free times

• Sharing passwords and logins to all accounts

• No phones in bedrooms and bathrooms

• What they should do if they feel unsafe or see something that makes them uncomfortable.

Then, have them pick their punishment for breaking the contract they’ve set. (When I get my kids to do this, it’s always harsher than what I’d come up with!)
 
This works because you’re treating your kids with respect … and that goes a long way.
 
No Social Media until 16
 
Have your kids read this article.
 
When they do, the first thing they’ll say is … “Yeah, but I’d never send a nude pic”.  
 
And the next thing you’ll say is, “You don’t have to. Scammers are now creating AI-generated fake nudes and using them to blackmail kids.”
 
Right now there’s a petition on Change.org to get the Government to raise the age limit of social media to 16 (I signed it this week).
 
Do I think it will actually do anything?
 
Shrugs.
 
Zuckerberg (and the other tech bros) will likely get around anything imposed on them.
 
They’re way ahead – investing tens of billions a year into AI algorithms that promise to change the way humans interact, with the sole aim of making as much money as humanly possible.
 
So anything we can do to make these pricks’ lives harder is good by me.
 
The bottom line?
 
Don’t wait for the Government to protect your kids. That’s not their job. It’s your job. Keep your kids off social media as long as possible. Nothing good is happening there.
 
Don’t Be a Hypocrite
 
Imagine if you told your kids not to drink … while they watch you down a beer at breakfast.  The truth is your kids may not listen to you, but they never fail to model you.  
 
So, how often are you at the kitchen table blankly scrolling through Instagram in front of them?
 
Know this: to make lasting change, you need to have a good hard look at your technology habits.
 
And so, here’s one final cock-a-doodle-doo:  
 
Sign the same contract your kids came up with. I guarantee you’ll be much happier for it.
 
Tread Your Own Path!

(If this story has triggered anything for you please call: Lifeline 13 11 14, Kids Helpline 1800 55 1800 or Beyond Blue 1300 224 636)

Thanks for reading,

Scott

P.S. I’ll leave the last word to Wayne, who is a man on a mission to end the tragedy of suicide. He has created a 40-minute session that’ll teach you how to really listen, so you can change the course of a person’s life. Organisations can book a live session at smacktalk.com.au. 
 
This isn’t about money (he’s doing it free of charge).  
 
This is about making a difference and leaving a legacy.
 
And you know what?
 
I think Mac would be incredibly proud of his dad and the work he’s doing.  

The Betrayal

Hey Scott
 
We have – well had –  a much-loved receptionist. She was like a second mum to our child, even taking paid time off to go to the grandparent/important person day at her school. She was paid above award wages and has been looked after with bonuses and gifts for the last 17 years. Here is the kicker: I caught her stealing! Cash out of my wallet – on my birthday! The look on her face as I watched from the door was not one of guilt or fear of getting caught, but quiet intent, as if it was normal activity. I pretended not to notice, but I was shocked to my core. This was right before she went on holiday. While she was away, I called the local detectives and asked for advice. Here’s where I have a conflict: do we prosecute or not?
 
Sally

Hi Sally,
 
Should you prosecute?
 
HELL YES.
 
If I were in your shoes I’d want to see her face a (pre-morning coffee) Judge Judy.
 
And I’d also employ a forensic accountant to look over your accounts and see if she’s stolen money from the business, not just your wallet. If they find anything, you should hand that over to the cops and add it to the rap sheet.

I know the hurt and betrayal must be weighing on you, and the prospect of a drawn-out drama might fill you with dread, but I’d encourage you to see it through – not only as a sense of resolution for you but as a way of helping her next boss.

Scott.

Lovestruck

Hi Scott,
 
Last year I got caught in a romance scam and lost $240k. I was just so stupid to send money to the stranger, but I thought there were lots of signs to believe him. I haven’t told any of my family about this. I’m 56 years old, a single mother and working full time as a nurse. I didn’t have $240k, so I sold my house (making $100k profit) and then took out three loans for the rest. I also moved into my adult daughter's house, so my current expense is the bare minimum and I am so grateful. I would appreciate it if you could give me any advice on how to pay this off quickly.
 
Kelly
 
Hey Kelly,
 
Each week my editor wades through hundreds of questions and gives me five (or so) to look at.
 
He wrote a note on yours that simply read “awful”.
 
Indeed.  You’re paying $140,000 off at high(er) interest rates, you’re living with your daughter, and you’re a dozen years from retirement.
 
Here’s what I’d suggest.
 
First, don’t let them rob you again: these scammers took you for $240,000 – but don’t let them take your self-respect. The fact is that romance scams are a multibillion-dollar a year business. You’re not the first, and (sadly) you won’t be the last.
 
Second, don’t suffer in silence. This is too big to shoulder on your own. You owe it to your daughter to explain what’s happened.
 
Finally, go and see a free financial counsellor (call 1800 007 007). The banks are running a mile from all this scam business, but there may be a 1% chance that they’ve lent irresponsibly, and if I were in your situation I’d be chasing down that 1%.
 
Thank you for sharing.
 
Scott

You Have 60 Seconds to Do This NOW

Hi Scott,
 
My good friend wants to invest $100,000 into a crypto-style investment strategy called GsPro. They say in 18 months you will 10 x your investment. What advice do you have for her as she feels she needs to take a risk to make some money. She is feeling behind where she should be and doesn’t trust the regular banks and mainstream investment options. Would she be better off with ETFs as they’re a relatively simple, set-and-forget strategy?

Heidi
 
Hola Heidi,
 
I have no advice for her, only for you.
 
Are you ready?
 
I want you to grab your car keys and get in your car. While you’re driving, ring your friend and tell her you have something life-changingly important that you need to speak to her about, immediately, in person.
 
When you get to her house, give her a hug. As you’re doing this, reach around and take off her belt. As in slip it out of her pants. Use her belt to strap her to her dining chair. Then take out your phone and turn the flashlight on and shine it in her eyes, while repeatedly yelling at her:
 
“DO YOU WANT TO LOSE $100,000? THIS IS A SCAM. THE BAREFOOT INVESTOR TOLD ME SO!”
 
You are only allowed to unshackle her when she promises you that she won’t give her hard-earned money to strangers on the interwebs.
 
Hurry up, Heidi. Your time starts now. Your friend needs you.
 
Give it a belt.

Deep Fake

My father still washes the dishes by hand each night because he doesn’t ‘trust’ the dishwasher.
 
(And my parents have had a dishwasher for 30 years. How’s that for staying power?)
 
The other night, while he was doing the dishes, I showed him a Facebook video of me enthusiastically promoting a scam trading program, calling it an “exceptional financial collaboration”.

As he watched I could see his old soap suds circling the drain:
 
It sure looked like his son. It sure sounded like his son. What the heck was going on?
 
I explained to him that it was a deep fake video … possibly the first one he’d ever seen.
 
“Was it the bloody Russians?” he asked innocently.
 
“No idea,” I replied.
 
All we knew was that someone had taken footage of me from an old interview on Sky News and manipulated it into something very weird.
 
See, for all the hype of artificial intelligence, so far the big winners have been the scammers, who have weaponised deep fake videos and voice cloning to systematically con tens of billions of dollars a year from victims across the globe.
 
There are now 46 million cyber attacks launched each day, and many of them are targeted at financial institutions, according to a report in the Financial Times.
 
That explains why the world’s biggest bank, JP Morgan, spends $23 billion a year on technology, and employs more engineers than Google or Amazon, largely to stop cyber crooks.
 
And all this has left me wondering whether the dinky little credit union I bank with (which still has biros chained to the desk) will have the budget to fight the hackers and keep me safe.
 
(Annoyingly, after a career of bashing the Big 4 banks, it’s dawning on me that perhaps they’ll be some of the only institutions who will be able to afford to build an AI army.)
 
And what about my deep fake problem?
 
Well, when I reported it to Facebook, they called and said they were immediately dispatching a crack team of ninjas to the Kremlin to duke it out with the Ruskies.
 
Yeah, nah.
 
They didn’t even bother responding.  
 
Yet even if they did bother to shut down the page, my guess is another 20 videos would automatically pop up. It’s like trying to get rid of thistles in my paddocks with vinegar and hot water. Yes, it’s environmentally friendly, Liz, but all the farmers around town are laughing at me!
 
Besides, Zuckerberg is up to his zucks right now taking deep fake videos to a very freaky new level. In an interview with tech podcaster Lex Fridman last year, Zuckerberg said his company was working on AI technology that will help you create a virtual avatar – or human-like clone of yourself – which people will be able to ‘have conversations’ with.
 
True dinks.
 
Zuckerberg is creating his own (Facebook) Frankenstein … and that story turned out okay, right?
 
Tread Your Own Path!

Generally I don’t speak about politics in this column, but last week my editor requested (read: demanded) that I write about the changes to tax cuts. Now I know why. Holy Hector, what a response! So, here we go again …

Watch Your Back, Barefoot

Scott,

I like you. And I like your advice. Which makes me want to give you some of my advice. Watch your step. You’re a finance guy, right? Let me run some numbers by you: you said the three credit bureaus in Australia made $521 million collectively. You are challenging their entire business model. Do you see where I am going with this? You are a pretty bright fellow, and I respect your advice (and BIG BALLS!). Just remember, an American president got murdered in broad daylight.
 
Tony
 
Hi Tony
 
Thanks for your concern, but I don’t think the credit bureaus take me very seriously. After all, they have highly paid lobbyists who have better access to politicians than I’ll ever have.
 
Still, I think locking your credit file is one of the best ways to safeguard your identity, and to stop scammers who’ve accessed your personal details via a hack from applying for credit in your name.
 
The most logical solution would be to put a ‘lock and alert’ system on all credit reports. That is, give people the ability to lock their credit file so no one can see it (without the customer’s consent) and send an immediate two-factor-authenticated alert to the customer if someone tries to access it.
 
 In America, the government forces credit bureaus to offer exactly this service. I’ve asked federal Finance Minister Stephen Jones why he doesn’t follow their lead. He told me he’d look into it, but I haven’t heard anything for months. Bang!

I’ve never seen anything like it

In almost 20 years of writing this column, I’ve never seen anything like it.
 
Just this year, I’ve had the following people email me:
 
A veteran policeman who was scammed out of his life savings.
 
An experienced tech journalist who was swindled for ten grand.
 
And literally hundreds of readers who’ve lost amounts ranging from $1,000 to $1 million.
 
What the hell is going on?
 
Scams are red hot right now … in fact, they’ve increased a staggering 80% in the last year alone.
 
Most of it, to be honest, is the run-of-the-mill scammy stuff that you and I try our best to avoid, like taking dodgy calls from dodgy people in dodgy overseas call centres, or romance scams, or clicking on fake links and text messages.
 
Yet don’t get too comfy – an army of robots is coming for your money.
 
A new artificial intelligence app called VoiceLab can recreate your voice with just a three-second clip which it can gain from a spam call (you answer: “Hello, who is this?”) or, more likely, from one of your TikTok posts.
 
Scammers have even been using voice-cloning tech to trick parents into believing their kids are calling them in a panic and needing money fast! (Which is horrifying, but also makes me want to try it out on my mum, who complains I never call her anymore.)
 
Yet what the scammers are really after is voice authentication. The Australian Tax Office, Centrelink and many banks give customers the option of using their voice as a way to confirm their ID when they call or want to make a transaction. Bingo!
 
And if that doesn’t freak you out, how about the fact that criminals are using machine learning AI to hack your passwords (yes, the same password you’ve used for every single login since 2015).
 
So, what’s the answer?
 
I don’t think the government can do much: the tech and the scammers are moving too damned fast.
 
And Aussie banks are lobbying furiously behind the scenes to avoid being on the hook for their customers’ losses (as UK banks will soon be forced to be). In truth, the banks are as good as useless. Last year the Big Four managed to stop just 13% of scam payments. Worse, the banks only compensated their customers for around 2% to 5% of what they lost, according to ASIC.
 
So, given the leaves are falling and the nights are getting cooler, one way to warm your cockles is to grab a bottle of wine, take a moment, and make sure you have two-factor authentication set up on all your accounts. And, if you’re really concerned, lock down your credit file (though, according to the first question below, telling you this could get me killed).
 
Tread Your Own Path!

Barefoot Got Hacked!

Hi Scott,
 
Have you been hacked? Recently I was tagged by ‘Scott Pape’ from a Facebook page congratulating me on being one of 20 people chosen to ‘win $1,000’. According to a Facebook user called ihack on this page, all I had to do was to ‘follow a few simple steps’ such as clicking on the link to the ‘official website’ and registering my credit card details. I have reported the post, but I also wanted to bring this to your attention.
 
Sarah
 
Hi Sarah,
 
Yes, this is one of the many Facebook scams that target me, or more specifically my followers.
 
Let me be crystal clear:
 
I will never contact you via social media, and for a very good reason: I can’t.
 
You see, my long-serving assistant controls all my social media profiles and I don’t have any of the logins. Honestly, I spend zero time on social media.
 
As in none.
 
Finally, Sarah, if anyone actually fell for this scam it’s a sign that it’s time to delete their Facebook account. After all, the scammer’s profile name is ‘ihack’?!
 
Get off the grass!

Scott.

My Wife Has No Idea What I’ve Done …

Hi Scott

I write this with a heavy heart. Three days ago I found out that the investments that my wife and I were making were a scam. We have lost $90,000, our entire house deposit savings. The thing is, she doesn’t know yet. Tough pill to swallow.

This wasn’t a run-of-the-mill scam like clicking on a link or allowing a hacker access to our banking details – it was a sophisticated scam involving purchasing of ‘shares’ for multiple ‘companies’. What concerns me most is how do I face the shame when telling her? (Yes, she was on board with it at the time, but it was my idea.) During our Barefoot Date Nights, along with other topics, we discuss the shares we’ve ‘purchased’. This is probably my biggest fear – letting her down.

And where to from here? Four years of savings, all gone. Thanks to Barefoot we’ve been debt free, but I’m in such disbelief that our house deposit has vanished. Your words keep replaying through my head: “put it into a high-interest savings account if you plan on using it in the next five years”. Fool me once ...

Steve

Hi Steve

I’m so sorry this has happened to you.

The only thing you can do is to be honest with her. Admit that you screwed up and then quickly ‘assume the brace position’, as they say on the Qantas safety cards.

Then, once the turbulence has passed, I have a practical suggestion for you:

I want you to go on a Barefoot Date Night and ask yourselves the following questions:

– What can we learn from getting scammed?
– How could this be a good thing?
– What are we grateful for?

Look, this scumbag scammer already took your money. Don’t let him steal your most precious assets: your self-esteem and your time. You two got yourself out of debt and built up a deposit in four years. You’re still standing. You have each other. You’ll build back better. You got this.

Scott.

Our Son-in-Law is a Nothing Burger

Hi Scott,

Our 48-year-old daughter was $2,000 away from paying off her house when her husband of 23 years told her that he had used the redraw facility attached to their housing loan to withdraw $150,000 to invest in a cryptocurrency scam! He has now left her with $5 in the bank and two young boys to support. It seems our daughter was too trusting way back (23 years ago) when the home loan was set up. Even though it was in both names, the redraw facility required only his signature.

It has been extremely stressful and embarrassing, and like a snowball as unpaid bills have rolled in. As retirees we now find ourselves with a second family to support. All avenues for help have been fruitless so far. Can you give us any advice? Also, please alert other trusting young wives that they must have two signatures on a redraw facility or they may find themselves in this same devastating situation.

Tania

Hey Tania

It sounds like your son-in-law is an addicted gambler.

The fact that he was caught up in a crypto scam is neither here nor there – it all ends the same way:

The scammer (or betting company) ends up with all the money, the punter is lumped with the losses, and tragically, as is the case with your daughter, there’s often an innocent partner who becomes collateral damage.

So what advice do I have?

She has two choices: work it out, or kick his arse to the curb.

If she chooses to stay with him, I’d suggest she insist he get professional counselling (call Gambler’s Help on 1800 858 858). If she’s not planning on staying with him, I’d get her to speak to a family lawyer and an accountant and set up plans for life as a single parent.

Yet I’ll tell you one thing that’s totally off the table: getting the money back. The horse hasn’t bolted, it’s dead. No amount of flogging your son-in-law will bring it back. At some point they have to put it behind them and move forward financially (together or apart).

Scott

The Bitcoin Babe

Dear Scott,

I have been trying to find a partner and get married for a while. Recently, I was matched with a guy on a dating app and we got to talking. He kept saying money is very important to him. He said he’d like a partner who is a ‘digital shepherd’ who would carry his phones and laptops and work from anywhere in the world. I’m an engineer, love my job, and don’t want to be a digital shepherd, yet the idea of having a husband got me interested.

He said he’d teach me to trade crypto, so I put $2,000 of my hard-earned money into the FTX Pro app.

After a while I got suspicious and said I’d like to do it either face to face (I have never met him) or stop and get my money back. He got very defensive and threatening, and told me I’d face consequences and he’d stop talking to me. I have reported him to cyber crime, and reported his profile on the dating app. But my money is still trapped in FTX Pro. How can I get it back?

Shyla

Hi Shyla

There is no way my answer is going to be anywhere near as entertaining as your question!

So, in summary, a random dude you met on the internet who told you he was looking for a shepherd … turned out to be a wolf. Don’t beat yourself up: you’re not the first person this has happened to, nor will you be the last!

Oh, and don’t feel bad about losing money to a scammer, either. Sequoia Capital is a legendary American fund manager that employs the smartest people in the world, including the very best graduates from Harvard, Stanford and Yale.

Well, these geniuses invested $US210 million ($A313 million) into the crypto exchange you used, FTX. FTX is run by 30-year-old Sam Bankman-Fried, hailed as the ‘next Warren Buffett’. Sequoia loved the fact that Sam played video games in their investment meetings instead of listening to them.

Well, it turns out Sam was also a wolf. This week his crypto exchange has collapsed, with billions in customer deposits apparently gone.

Who would’ve thought that a 30-year-old living in the Bahamas with a 10-person “drug-fuelled sexual polycule” (tip: don’t google that term on your work computer) would turn out to be a little wolfy?

Sequoia, meanwhile, has written down their $US210 million investment to $0.

I hope I’m wrong, but I suspect you might need to do the same.

Scott.

How to be unhackable

This is an open letter to the Federal Minister for Financial Services, Stephen Jones.

Minister,

The cyber hacks on Optus and Medibank have justifiably freaked everyone out.

And as you know the 17 million records that have been stolen in the last month are a drop in the ocean compared to the number of data breaches that never make it into the media.

So today I’m writing to you with a simple solution.

It basically involves putting a ‘lock’ on every Australian’s private financial information – plus an ‘alert’ that lets us know anytime someone comes near our personal data.

In this month’s budget the Government put aside $5 million to investigate the hacks. However, setting my idea up won’t cost the Australian people (or the Government) a single cent.

All you’ll need is to muster up some political ticker, Minister.

Let me explain:

A criminal can hack a person’s ID and then apply for credit in their name.

When the bank gets the criminal’s application, their system automatically checks the customer’s credit file.

Importantly, the customer does not get an alert telling them the bank has checked their credit file.

The criminal can use this to their advantage, often clocking up dozens of credit card and personal loan applications as quickly as they can.

So, the most logical solution would be to put a ‘lock and alert’ system on our credit reports. That is, lock every credit file so no one can see it (without the customer’s consent) and send an immediate alert to the customer if someone tries to access it.

But there’s one problem (or three actually).

There are three credit bureaus in Australia (Equifax, Experian and illion) who keep credit files on practically every Australian adult.

They are owned by large investors, and last year they collectively made $521 million in revenue selling our private data to financial institutions, according to IBISWorld.

The problem is, putting a lock on our credit files would put a lock on their profits. They’re not going to let it happen, and they pay highly paid lobbyists to make sure the government doesn’t allow it.

Those lobbyists will tell you, Minister, that “it can’t be done”.

But it can. In fact, in America, the government has already forced credit bureaus to offer it. And in Australia the ‘lock and alert’ technology already exists, via an app called Credit Savvy.

So, my suggestion is that the government (i.e. YOU, Minister) should force the credit bureaus to automatically lock down our credit files and provide us with an alert service. This will block criminals while still allowing legitimate credit inquiries to be made.

The fact is, Minister, these credit bureaus are like Facebook. Our private data is the product they sell, and their customers will pay handsomely for that data. Let’s be honest: the credit bureaus’ only allegiance is to their shareholders.

Yet your allegiance is to the Australian people you have the honour of representing. So, we need you to stare down these billion-dollar companies and stand up for us.

As the Minister for Financial Services, I know your worst nightmare is that one of our banks will get hacked, which some analysts (like Standard & Poor’s) suggest is only a matter of time.

Right now you have the power to protect all Australians with a stroke of a pen.

Will you?

Tread Your Own Path!

P.S. I invited the Minister to respond (in 140 characters or less). Here is his response:

“Sounds good. We’ll take a look. Stephen”.

Please open this right now, it’s very important

Today I’m going to show you the exact steps that will stop scammers from running up credit in your name.

Best of all, it’s fast, easy, and free.

Yet before I do, I want to take a moment to reveal the name of a company that made MILLIONS from the Optus Hack.

That company’s name is Equifax and they’re a credit bureau.

This week, in a blind panic, Optus agreed to purchase 12-month subscriptions to Equifax’s ‘Credit Protect’ service for their most affected customers. This service sends an alert if your credit file is accessed (by a scammer applying for credit in your name using stolen docs), and it costs $14.95 a month per person.

That’s not just a huge amount of dough for Equifax, it’s insanely great advertising to boot!

So let me square the ledger …

Equifax is the financial equivalent of Mark Zuckerberg. They hoover up your personal private credit information and sell it off to any financial institution they damn well please. Yet unlike Zuck, if you want to monitor who they’re pimping your private data out to, well, you have to pay them $14.95 a month*!

*Except you don’t.

I’m afraid Optus has been scammed again.

They didn’t need to pay Equifax all that money. There’s a much better workaround, and it’s free.

I want you to pay close attention to this, even if you aren’t an Optus customer. After all, just this week Standard and Poor’s came out saying that Aussie banks are among the most vulnerable to a cyber attack in the region because of their work from home policies and all the stuff they’ve got in the cloud.

Bottomline?

This isn’t the first mass hack, and it won’t be the last.

Now, I don’t think simply having an alert on your credit file provides you enough protection.

Here’s the way I think about it:

An alert is like having a security camera on your front door.

You’ll get an alert that you’re getting robbed … but your TV still gets flogged!

If you are scammed – and one in four Aussies have been – it can take upwards of 30 hours to sort everything out, (most of which involves sitting in long telephone bank cues, listening to Daryl Braithwaite’s Horses.)

Instead, what you want is a big arse lock on your door that makes it impossible for the robber to get in your house.

Thankfully there is one app that will let you put a lock on your credit file.

That company’s name is CreditSavvy, and it’s a division of the Commonwealth Bank. (The fact that they’re owned by big yellow gives me a certain level of comfort … though I still wouldn’t trust them educating my kids).

Creditsavvy bills themselves like a fitness coach for debt, which in itself is kind of weird. Their schtick is that they calculate a personal ‘credit score’, which for me is about as useful as the score I give my four year old daughter’s nightly dance concerts:

“10 out of 10 Honey, BRAVO!”

In both cases we’re just needy adults desperately trying to keep your attention. (Credit Savvy makes its money by selling leads to finance companies to get you into debt).

However, part of their app that I’m interested in allows you to lock your credit file with a swipe or click of a button.

So here’s what I want you to do, step-by-step to lock down your credit file so that scammers can’t rip you off.

Step 1: Download the Credit Savvy app (either in the Apple or Google app stores).

Step 2: Verify your details (I used my driver’s licence and Medicare card).

Step 3: Press “protect” from the bottom navigation.

Step 4: Press “Request a ban”. Credit Savvy will then let the other credit agencies know you’ve got a ban on your file within 2 business days.

Step 5: On the 16th day the Credit Savvy app will remind you that your pause is ending. When you get that alert – and this is important – click “ban my credit report for 12-months”.

And that’s it!

From then on if anyone tries to access your credit file, the Credit Savvy app will alert you.

Though it will also be locked so the bank or financial institution won’t be able to access your file. However, this will not count against you. To be clear, it will not harm your ability to take out credit.

Now if you are applying for credit (or say moving home and applying for utilities and the like), all you need to do is temporarily lift the ban on your credit file for a week or so. And then put that lock straight back on using the Credit Savvy app.

Tread Your Own Path!

Barefoot Calls a Single Mother in the Middle of the Night

Hi Scott

I’m a 57-year-old single mum. I bought a property 3 years ago and work, as a nurse, almost every day to make ends meet. I get anxious when I think about the age I will be when I finally pay off my house, age 71! Will I even be able to work at that age? Then I start thinking of how to make money quickly. The lotto obviously is not going my way, so I looked into the stock markets and opened an account with CoinDaq. They are very helpful, but I do feel uneasy. I invested $2,500 and they supported me, so I added $2,500. I made 23% profit, about $1176.17. Which I’m excited about but somehow it seems too good to be true? Now they try to convince me to take $50,000 from my super and then I will make up to $9,000 a month with a ‘bonus’ of about $230,000 every 3 years. What is your opinion about this?

Kind regards

Linda

Linda,

As I’m reading this, it’s currently 4:35 am, (see above).

I’m debating whether I call you right now and completely FREAK YOU OUT.

It would go something like this:

“Good morning, it’s the Barefoot Investor. You are being robbed RIGHT NOW!”

(I’d scream ‘RIGHT NOW’ down the line, for dramatic effect).

Then you’d bolt upright in bed, and listen nervously for the burglars rifling through your stuff.

However, they didn’t climb through a window, and nab your telly Linda. They came in via your computer, and they convinced you to willingly hand over your cash.

Linda, they are scammers.

Literally the very first website that comes up when you Google ‘CoinDaq’ says:

“Coindaq is a scam site”.

The robbers have already stuffed $5,000 of your money into their duffle bag. Yet they haven’t left. They’re now searching around for the big pay day: your superannuation.

Again, to be clear:

YOU ARE BEING ROBBED RIGHT NOW!

No matter what they tell you, never ever speak to them again.

Scott.

Chilled to the Bone

Scott,

I felt chilled to the bone when I read about that poor family who lost their house deposit to scammers. Is there anything we can do for them? They have seven kids! It just doesn’t seem fair that the bank would only refund them $5,000 and the cops say ‘too bad’. There has to be justice!

Raj

Hi Raj,

I feel like I need to take a cold bath and scrub myself clean after the week I’ve had.

I’ve been inundated by readers sharing their scam stories with me. I also spent the week researching what could be done.

Here are some back-of-the-envelope calculations:

Last year Aussies lost $227 million to payment redirection scams. Yet we also know that roughly a third of people are too embarrassed to report they’ve been duped, so let’s call it $300 million.

Five years ago banks in the Netherlands introduced account name checking and it reduced this type of fraud by a staggering 81%! So that would save consumers a massive $243,000,000.

Yet that’s the customers’ money, and who gives a toss about them?

So let’s look at it from the bank’s perspective.

How many of the bank’s staff hours are chewed up dealing with those $300 million in losses?

From chasing the scammers, to dealing with the heartbreak of customers who lost their life savings, and even sometimes, maybe, kinda, partly refunding them.

It’d have to cost the banks tens of millions, at least.

It seems like common sense to me. Kind of like, if your bank makes you give them the account name of the person you’re transferring money to – it’s because they’re actually going to cross-check it.

So I had a commonsense chat with Stephen Jones, the Minister for Financial Services, this week.

I asked him if he could, say, get all the bank chiefs in a headlock and not let them go until they all agreed to check account names, and in doing so save their customers as much as $243 million and untold amounts of heartbreak.

He said that’s a really good question and one that he’ll be asking the banks. But he thought my headlock idea was taking things a little too far. I also gave him the details of the young family with seven kids who were scammed out of their deposit.

Let’s hope commonsense prevails.

Scott.