Australians are being warned about the dangers of ‘celebrity endorsement scams’, with hundreds of consumers reporting thousands of dollars in financial losses in 2018.
The Australian Competition and Consumer Commission (ACCC) is urging consumers to be wary of any products or services that are being endorsed by well-known celebrities, including weight loss pills, skin care products and investment schemes.
The ACCC statement comes as a response to a 400% increase in reports to the Scamwatch website in regards to fake celebrity endorsements, with the ACCC reporting that financial losses from the scams had increased by a staggering 3,800%.
“The growth in these scams is very concerning, particularly as over half the reports we received included a financial loss,” said ACCC Deputy Chair Delia Rickard.
“Most people lost between $100 and $500 and in once case, a victim lost more than $50,000 through fake celebrity endorsement of an investment scheme.”
The ACCC says the scams involve consumers signing up for a ‘free trial’, in which they have to provide their credit card details. The ‘free trial’ has strict terms and conditions however, such as having to return the product within a near impossible timeframe, and an automatic renewing subscription that is difficult to cancel. The terms and conditions are only visible on the document that arrives with the product.
“The groups behind these celebrity endorsement scams are organised and sophisticated fraudsters who are often involved in other scams,” added Ms. Rickard.
“It’s easy for them to create fake ads and websites to give credibility to their con, so people need to be very careful and skeptical about ads they read on social media and websites.”
Celebrities being used in scams include:
- Cate Blanchett
- Delta Goodrem
- Kyle Sandilands
- Meghan Markle
- Nicole Kidman
- Sonia Kruger
- Steve Baxter
The ACCC has called upon Google, Facebook and Instagram to do more to crackdown on fake ads to prevent scammers from reaching potential victims.
“Most of the reports to Scamwatch involve these scam advertisements running on Google ad banners or as ads in Facebook news feeds. These tech giants must do more to quickly suspend ads, as every time consumers click on a scam ad, they are at risk of losing money,” said Ms. Rickard.
News: Consumers urged to be wary of celebrity endorsement scams https://t.co/KvZiT83f29
— ACCC (@acccgovau) September 23, 2018
What should I do to avoid scams?
The ACCC has reported that people aged 45 or older accounted for almost two-thirds of losses to the celebrity endorsement scams, with women more likely than men to fall victim.
“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,” Ms. Rickard said.
“If you are caught up in one of these scams, call your bank immediately to try and arrange a chargeback and to stop any further debits to your credit card.”
The ACCC also encourages consumers to visit Scamwatch or to subscribe to Scamwatch’s radar alerts to stay up to date with potential scams, with the ACCC website additionally outlining several ways to avoid potential scams.