More than 100 young people have fallen victim to the hoax in recent months as a network of cyber criminals continues to prey on vulnerable groups, particularly young males.
Victoria police said sextortion scams usually occur when someone posing as a child approaches an unsuspecting person online through text-based social media platforms.
Communication often quickly moves to a sexualised nature and the victim is manipulated into sending intimate images of themself, which is essentially child abuse material.
"What we see then is very quickly, the dynamics change," Detective Acting Inspector Carla McIntyre told reporters on Friday.
"So now that that offender has that material, what they will do is they will make demands … So there's often negotiations around payment."
Scammers are often based overseas and in some instances have used local mules to carry out the hoax.
Insp McIntyre said in some instances they have demanded up to $2000 from victims, who are often left with an overwhelming sense of anxiety and other mental health struggles.
"So the warning signs for kids is that if you find somebody contacting you that you don't know, be careful," she said.
"Make sure your social media profiles are locked down. Just have that extra questioning."
Investigators have asked anyone who thinks they or a family member may have been targeted to come forward immediately.
Lifeline 13 11 14
Kids Helpline 1800 55 1800 (for people aged 5 to 25)
Lifeline 13 11 14
beyondblue 1300 22 4636
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