The Confidence Man, and how Australians lost $2bn

In the late 1840s on the streets of New York City, a good-mannered and well-dressed William Thompson, would approach upper-class citizens and politely strike up a conversation.

After gaining their trust, Thompson would then ask, ‘Do you have confidence in me, to trust me with your watch until tomorrow?’ Not wanting to offend, the person would oblige, and Thompson would leave with their watch. Unsurprisingly, they would never see Thompson, nor their watch, again.

Thompson was dubbed by the New York Herald as ‘The Confidence Man’, and over time this was abbreviated to ‘conman’.

Despite Thompson finally being caught and imprisoned, he was admired by many for his brazenness, whilst his victims were shamed as fools.

A leading psychologist, studying Thompson, said that he was an independent man, courageous and bold, a ladies-man who could quickly gain someone’s confidence. He loved variety and novelty and was artful and plausible with a great desire to make money. He could talk with remarkable ease and relevance and had great tact and self-confidence.

William Thompson wasn’t the first conman, nor has he been the last. In fact, today scam activity is at record levels worldwide, as authorities struggle to keep up.

The ‘confidence’ game is everywhere, in Ponzi schemes, pyramid schemes, lottery scams, false charities, fake tradies, shady investment schemes, get-rich-quick schemes, romance schemes, phishing and identity theft, false billing, threats of arrest scams, and online shopping scams. And the list goes on and on.

Australia

In 2021, according to the ACCC (Australian Competition & Consumer Commission), Australians lost more than $2bn to scammers. This was an all-time record despite government, law enforcement and the private sector disrupting more scams than ever before.

Of the $2bn lost, investment scams were the highest category at $701m. Payment redirection scams was next at $227m, followed by romance scams at $142m. Across all scams, the average loss was $12,742.

According to the ACCC Deputy Chair Delia Rickard, ‘Scam activity continues to increase, and last year a record number of Australians lost a record amount of money’. She said, ‘Scammers are the most opportunistic of all criminals: they pose as charities after a natural disaster, health departments during a pandemic, and love interests every day’.

However, the cost of scamming goes well beyond money. Rickard says, ‘The true cost of scams is more than a dollar figure, as they also cause serious emotional harm to individuals, families, and businesses’.

Intellectually conned

Scams aren’t just limited to financial scams. People all around the world are deceived daily by misinformation and conspiracy theories, often for political purposes. It’s important to be on your guard against this, and always independently fact-check claims.

At the 2020 Daily Journal AGM, Charlie Munger speaking on the US situation said, ‘Think of all these clowns on the opinion channels lying to us in a very shrewd way, and they’re really good at it. The ability to mislead people is greatly underestimated’.

Being vigilant, and understanding how conmen work, can save you a lot of money and emotional stress.

How to prevent yourself from being scammed

Conmen can be really good at their craft, but there are a number of things you can do to protect yourself. Here are eight:

1. Stay alert. Be aware of the latest scams, and always be vigilant. The website www.scamwatch.gov.au is run by the ACCC and provides details of all the latest scams and allows you to report a scam.
2. Unknown Texts or email. If you receive a suspicious email or text, don’t open it and definitely don’t click on any attached links. Doing this may result in your phone or computer being compromised, and valuable personal information stolen.
3. Family and friends. If you face any situation that may be a scam, as a first point of call, talk to a family member or friend to gauge their opinion.
4. Do some research. If you are dealing with, say an unknown charity or tradesperson, a simple google search can sometimes provide valuable information on the legitimacy of the person or company. Speaking to past customers may also provide some valuable insight.
5. Financial or Legal advice. If you have a potential ‘investment opportunity’ but are unsure who the person or company is that’s selling the investment, always check it out with an accredited financial or legal adviser. Never hand over money to someone, until you are 100% certain who you’re dealing with.
6. If something appears ‘too good to be true’, it probably is. If a so-called ‘investment opportunity’ offers high returns with no risk, it’s probably a scam.
7. Characteristics. Remember the characteristics of William Thompson. He was charming and convincing, and often scammers are just that. Many scammers will also have no qualms exploiting the vulnerable.
8. Give it time. Take all the time you need when making a decision. Make sure you’ve done your research, and don’t allow anyone to rush you into a decision.