5 Your right to be free of financial abuse
Older people, like everyone else, need to be aware of the risk of financial abuse. Close family and friends can abuse their relationships of trust to access older people’s finances or pressure them into giving away money. Scammers and fraudsters use sophisticated methods to trick people out of their money. In retirement this can have a devastating effect. You have a right to be safe from such abuse. This chapter explains how financial abuse happens and gives you information about services that can help you to protect yourself.
5.1 Financial abuse by family and friends
Financial abuse occurs when a person you trust uses that relationship of trust to gain access to your money or property. Sometimes the people pressuring you for money or abusing your trust are your children or good friends. Financial abuse can take many different forms:
- Pressure to act as guarantor for a loan;
- Pressure to transfer or sell your house;
- Pressure to take out a loan in your name for someone else to repay;
- Pressure to give away your money;
- Money you have loaned not being repaid; or
- Persons authorised to manage your money not acting in your best interest, or using your money for themselves.
Keep the following in mind to ensure you are safe from financial advice.
- Get independent legal advice. Never sign any legal documents under pressure without getting advice about the consequences of signing. You always have a right to get your own independent legal advice. Legal documents such as loans, mortgages and guarantees can be difficult to understand. Don’t rely on family or friends to explain these to you. Make sure the lawyer you see is independent, and can be spoken to in private.
- Know what is at stake. If you use your home as security for a loan, you risk losing your home and potentially being made bankrupt. If the borrower cannot pay back their loan, the bank can take your home. You can still be evicted even if you transferred your home to someone else on the condition that you would still have a right to live in it. Find out how your Age Pension will be affected before you agree to anything such as giving away money or selling property. These actions can mean your pension payments will be affected.
- Think about whether your family or friends can repay money. This is important if you are thinking about acting as a guarantor, loaning money, or taking out a loan in your name for someone else to repay. You have probably been asked for help because their bank thinks they cannot repay the loan on their own. The person seeking a loan from you may be optimistic and might not have thought carefully about what will happen to you if they do not meet repayments. Be realistic about whether the loan will be repaid.
- Consider all your options. Before you give others access to your money decide what kind of help you need. This will prevent you giving away too much control over your affairs. If you have many concerns about managing your money and you are not sure who to trust, there are public services to help you manage your affairs.
- Get it in writing. If you give money to a friend or family member make it clear in writing whether you intend to give the money as a gift or whether you expect the money to be repaid. If there is nothing in writing it will be difficult to show that money was given as a loan and not intended to be a gift. Putting the arrangements in writing will assist if there are problems in having the money repaid. The written agreement should state all the terms of the agreement and be signed by both of you. Seek legal advice before you sign.
- Don’t be afraid to say no. You always have the right to protect your own financial security by saying no.
- Be vigilant. If you have authorised others to access your finances or made a loan that you expect to be repaid, keep a close eye on what is happening to your money. Check your bank account statements regularly. If you don’t understand decisions that someone else is making about your money or property, ask questions and seek help.
Where to go for more information
The National Information Centre on Retirement Investments (NICRI) telephone information service provides access to general financial information. Phone NICRI on 1800 020 110.
Visit ASIC’s MoneySmart website at www.moneysmart.gov.au or phone the ASIC Infoline on 1300 300 630. ASIC’s MoneySmart has published a fact sheet, Love and Loans, about acting as a guarantor. Order a copy by calling the ASIC Infoline or it can be downloaded from ASIC’s website.
Centrelink’s Financial Information Service (FIS) can provide information about how your Age Pension will be affected if you give away money or assets. Phone 13 23 00 and ask to speak with a FIS officer.
Where to go for help
Contact a service that specialises in providing information and advocacy services aimed at preventing financial abuse.
Older Persons Abuse Prevention Referral and Information Line
02 6205 3535
NSW Elder Abuse Helpline
1800 628 221
The Older Persons’ Legal Service
1800 424 079 or 02 9281 3600
Aged and Disability Rights Team, Darwin Community Legal Centre
1800 812 953 or 08 8982 1111
Elder Abuse Prevention Unit
1300 651 192
Seniors Legal and Support Service, Caxton Legal Centre
07 3214 6333
Aged Rights Advocacy Service
08 8232 5377
Tasmanian Elder Abuse Helpline, Advocacy Tasmania
1800 441 169 or 03 6237 0047
Seniors Rights Victoria
1300 368 821
1800 655 566 or 08 9479 7566
Contact Legal Aid in your state or territory for legal information, referrals, and in some cases advice.
Legal Aid ACT
1300 654 314
1300 888 529
NT Legal Aid Commission
1800 019 343
Legal Aid Queensland
1300 65 11 88
Legal Services Commission of SA
1300 366 424 or 08 8463 3555
Legal Aid Commission of Tasmania
1300 366 611 or 03 6236 3800
Victoria Legal Aid
1800 677 402 or 03 9269 0120
Legal Aid Western Australia
1300 650 579 or 08 9261 6222
If you are thinking of helping family or friends with loans, money or property, or asking for their help managing your money, get independent legal advice. The law society in your state or territory can help you to find a private solicitor or refer you to a community legal centre.
The ACT Law Society
02 6247 5700
The Law Society of NSW
02 9926 0300
Law Society Northern Territory
08 8981 5104
Queensland Law Society
1300 367 757
The Law Society of South Australia
08 8229 0288
The Law Society of Tasmania
03 6234 4133
Law Institute of Victoria
03 9607 9550
The Law Society of Western Australia
08 9324 8600
Every year scammers trick people out of millions of dollars. Scammers can approach you in many different ways: through phone calls, emails, letters and door-knocking. Take these basic precautions to protect yourself:
- Do not agree to offers or deals straightaway;
- Do not hand over money or sign any documents until you have checked the company that you are dealing with;
- Be on guard about every offer that is made to you. If the offer sounds too good to be true, it probably is;
- Get independent advice; and
- When unsure, call the SCAMwatch Infocentre on 1300 795 995.
Avoid scams by knowing as much as you can about the different scams. There are a few kinds of common scams.
(a) Online banking and credit card scams
Online banking and credit card scams, also known as phishing scams, work by tricking you into providing your banking and credit card details over the internet. Scammers will send you emails and direct you to fake websites where you are asked to provide your banking and credit card details including passwords. They pretend that you must do this to ‘update’ or ‘confirm’ your account. These emails and websites can look convincing. Generally, your bank will not ask you to click on links or attachments through an email. When in doubt, don’t click on email links that will take you to websites. Go to your bank in person or go to your bank online through your own shortcut or by typing your bank’s address into your internet browser. For more information on staying safe on the internet, see chapter 12.2.
(b) Pyramid schemes
A pyramid scheme is a scam where unsuspecting people pay large up-front joining or membership fees to participate in ‘money-making’ ventures. Money is never invested. Instead, you recover money by convincing others to join and taking their money. These schemes eventually collapse when no new members join. Everyone in the scheme then loses their money.
(c) Investment scams
Investment scams happen when a person approaches you, often by phone, email or in person, with an investment offer that sounds irresistible. The money you think you are investing is kept by the scammer. You may be talking to a scammer if:
- They approach you rather you approaching them;
- You are offered big returns with low risk;
- You are told they have inside information;
- The person does not have an Australian Financial Services licence;
- The person is pushy and calls many times; or
- The person says they are associated with a reputable organisation.
(d) Dating and romance scams
Some scammers use dating services and websites to find their victims. Scammers do this by creating fake profiles on real websites. They pose as potential romantic interests and quickly express strong feelings for you in order to gain your trust. They then insist that you should communicate away from the website. Eventually they will ask you for money, gifts or your banking and credit card details. Other scammers set up dating websites where you have to pay for each message. Scammers pretend to be a real romantic interest to get you to keep sending messages and paying to use their service.
(e) Early access to superannuation scams
Beware of offers to access your superannuation early. It is illegal to access your superannuation before age 55, at the earliest, except in very special circumstances such as in instances of terminal illness. Some people offer to withdraw your superannuation or move it to a Self-Managed Superannuation Fund. Scammers that promise to help you access your superannuation end up taking it for themselves or taking a large commission once it has been withdrawn or transferred. You may also have to pay tax penalties and be exposed to fines if the scammer has convinced you to sign a false statement. For more information about when you are entitled to your superannuation, read chapter 4.4 or contact the Australian Taxation Office Superannuation Info Line.
(f) Lottery and prize scams
Beware of claims that you have won a prize in a lottery or competition that you did not enter. These are designed to trick you into giving your personal and bank account details to scammers. Sometimes you will be told you must provide money to claim your prize. If a prize is legitimate, you should not have to pay anything to collect it. Remember that you cannot win money in a lottery unless you enter it yourself.
(g) Job and employment scams
Job and employment scams work by promising you jobs that appear irresistible because they have high pay with little work or offer a guaranteed income. The scammers then take your money by making you pay up-front fees. You should not have to pay up-front fees to take up a job.
Where to go for more information
Read the Australian Competition and Consumer Commission’s (ACCC) The Little Black Book of Scams for more detailed information on scams. Order a free copy by calling the ACCC Infocentre on 1300 302 502.
Phone the SCAMwatch Infocentre run by the ACCC on 1300 795 995.
Contact the Australian Taxation Office Superannuation Info Line on 13 10 20.
Where to go for help
If you think you have been the victim of a scam, act immediately. Contact your bank. In some circumstances, they may be able to help by suspending your account or taking back a transaction.
Report a scam that has happened to you. This will help authorities find and stop the scammer.
- Report the scam to the SCAMwatch Infocentre on 1300 795 995; or
- Report the scam to the Australian Securities and Investments Commission (ASIC) by calling 1300 300 630 if the scam relates to superannuation, investment, financial advice, financial products or insurance.
If you are in financial trouble speak to a financial counsellor. Phone the National Helpline on 1800 007 007 to access free financial counselling services.
5.3 Protecting yourself from identity fraud
Identity theft is a type of fraud where criminals steal and use your personal identifying information. They then use your identity to spend your money, open bank accounts, take out loans or conduct illegal business under your name. Your identity can be stolen in many ways. Your mail may be stolen or diverted, your rubbish may be searched for bills, or your credit card or bank details skimmed when you make a purchase or use an ATM.
To protect your identity:
- Lock all personal documents in a safe container when not using them;
- Destroy personal information before putting it in the bin;
- Put a lock on your letterbox; and
- Avoid giving personal or financial information over the phone.
Identity fraud can also happen on the internet. For information on how to stay safe online, see chapter 12.2.
Where to go for more information
Read the Australian Government’s booklet, Protecting Yourself Online. Order by calling Stay Smart Online on 1800 753 178.
Where to go for help
Contact local police if you believe you have been a victim of identity theft.
Contact your bank, credit provider or the relevant financial institution and tell them what has happened. They may be able to close any new accounts opened with your details and set up new passwords or accounts.
Inform the relevant agency or business if documents like your driver's licence, passport, tax file number, superannuation or pension details have been stolen.
Contact the SCAMwatch Infocentre if you have been a victim of a scam on 1300 795 995.
5.4 Consumer shopping rights
As a consumer, your rights are protected by Commonwealth and state and territory laws. These rights mean that you are protected from faulty services and products, unsafe products, and misleading claims and advertising.
When you buy products and services they come with consumer guarantees. Products must be safe and they must do what you would normally expect them to do and match descriptions. Services must be provided with acceptable care and skill and be fit for purpose.
You are protected by law from being misled about the products and services you buy. Businesses are not allowed to make statements that are incorrect or likely to create a false impression.
Where to go for more information
Contact the Australian Competition and Consumer Commission (ACCC). Visit their website at www.accc.gov.au/consumers or phone the ACCC Infocentre on 1300 302 502.
Where to go for help or to make a complaint
If your goods or services are faulty, unsafe or you feel you have been misled, contact the retailer or manufacturer.
Contact the ACCC to make a complaint. For more information on how to complain to an industry ombudsman or other third party speak to the ACCC. Phone the ACCC Infocentre on 1300 302 502.