Beware of celebrity endorsement scams

Australians were increasingly being caught out by celebrity endorsement scams, consumer watchdog the Australian Competition and Consumer Commission (ACCC) said this week.

Reports to the ACCC’s Scamwatch website have jumped by 400 per cent with losses soaring by 3,800 per cent so far in 2018.

People aged 45 and older accounted for 63 per cent of losses to celebrity endorsement scams and women were more likely than men to be victims.

The scams often appear as online advertisements or promotional stories on social media or a seemingly legitimate website. They include fictitious quotes and doctored or out-of-context images of the celebrity, such as presenters from the TV show Shark Tank, promoting products such as skin care creams, weight loss pills or investment schemes.

“The growth in these scams is concerning, particularly as over half the reports received included a financial loss,” the ACCC’s Delia Rickard said.

“Most people lost between $100 and $500 and in one case, a victim lost more than $50,000 through fake celebrity endorsement of an investment scheme.”

Ms Rickard said the scams usually involved consumers signing up for a “free trial” of a product. As part of the process, they provided their credit card details.

The “free trial” had strict terms and conditions such as having to return the product within a near-impossible timeframe, and an automatically renewing subscription that was difficult to cancel. The terms were often only visible on the document that arrived with the product.

“The groups behind these celebrity endorsement scams are organised and sophisticated fraudsters who are often involved in other scams,” Ms Rickard said.

“It’s easy for them to create fake ads and websites to give credibility to their con, so people need to be careful and skeptical about ads they read on social media and websites.

“It is vital to research and read independent reviews of the company. Consumers should verify celebrity endorsement of products from the celebrity’s official website or social media account.

The ACCC was calling on Google, Facebook and Instagram to do more to crack down on fake ads to prevent scammers reaching potential victims.

“Most of the reports to Scamwatch involve these scam ads running on Google ad banners or as ads in Facebook news feeds,” Ms Rickard said.

“These tech giants must do more to quickly suspend ads, as every time consumers click on one of them, they are at risk of losing money.”

She warned consumers who suspected they’d been caught up in one of these scams to call their bank immediately to try to arrange a reversal of the charges and to stop further debits to their credit card.

For more advice on how to avoid or report scams, visit Scamwatch.

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