AI scams soar: The high price of our financial literacy slump

With the market still digesting the scale of the First Guardian collapse, Dr Tracey West, the education manager at financial literacy foundation Ecstra, said self-defence in the form of financial literacy is crucial amid AI-empowered fraud.

Ms West told The Australian’s The Money Puzzle podcast scams would get worse.

“Scammers are now everywhere and they are using every tactic in the toolbox to get people

sucked into their scams,” she said.

“Investment scams are by far the biggest in terms of losses reported – they represented nearly $1bn out of the $2bn lost in 2024.”

Ms West said even if investors check that products or promoters are registered with the corporate regulator, the Australian Securities & Investments Commission, the most useful weapon against scams and fraud is financial literacy.

Australia has dropped behind the rest of the world on key measures of financial literacy after the government shifted responsibility for financial literacy from ASIC to Treasury in 2016.

While the US and New Zealand have moved to having financial literacy as mandatory in the school curriculum, Australia has no active policy in place. School education on the subject is largely left to groups such as Ecstra’s ‘Talk Money’ program, which has reached more than 400,000 students across 10,000 workshops in the last three years.

As regulators continue to probe the alleged mismanagement at First Guardian, Ms West said Australians need to get up to speed on financial literacy more than ever, especially younger people who are encountering financial scams at a much earlier age than previous generations.

“Investors need to keep up with the area because scammers have got so good,” she said.

“They can create fake websites, they can make it look like you are getting returns in those website. They use AI-created fakes of well-known investors such as (Barefoot Investor author) Scott Pape … it’s overwhelming for investors and we need a mechanism by which these sort of actions are defined, planned and reported.”

Newly-elected Tasmanian Labor senator Richard Dowling recently committed to putting financial literacy back on the agenda.

“We need a national plan to teach people how money works, not just once but across the school years and beyond,” Senator Dowling said in his maiden speech to parliament this week.

“Financial education should be as fundamental as literacy and numeracy. Now we have a chance to lead again by making financial literacy a core part of how we empower every Australian.”

Financial literacy, as defined by the OECD, is “a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing”.

Ms West said men score better on financial literacy than women. Men are also more likely to report being scammed than women.

However, when it comes to long-term investment success women outperform men.

A UNSW study showed women outperform men when it comes to stock trading over the longer term. The study found women were better at researching investments, they traded less and they remained calmer during times of market stress.

Ms West said the key areas of engagement with students on financial literacy in the classrooms were crypto, gaming technology payments and scams.

Ms West said the best way to alert every generation of investors to the new layers of danger across investment is awareness. Australians reported more than 108,000 scams in the first half of 2025, according to the National Anti-Scam Centre’s Scamwatch service.

This article first appeared in The Australian as AI scams soar: The high price of our financial literacy slump