Financial scams see spike since beginning of pandemic

The Financial Markets Authority (FMA) has warned New Zealanders about three types of scams that have become more common since the start of the COVID-19 pandemic.

FMA recorded 158 complaints about investment scams and fraud for the first half of 2020 – a 79% increase year over year. From January to June, the regulator issued 36 public warnings about suspected scams and other non-compliant entities – up 29% from the same period last year.

The three types of scams FMA is particularly concerned with are:

• Social media contact scams, where scammers use social media platforms to identify and/or make contact with possible victims. Actions include friending and messaging the targets, asking questions or making suggestions in post comments and conducting fake surveys
• Romance-investment hybrid scams, which target prospective victims on popular dating apps. Scammers win the victim’s trust with sophisticated backstories and accomplices before convincing them to transfer money overseas to buy supposed investments
• Impostor websites, which use the names, logos, addresses, certifications and other details of legitimate businesses in order to fool investors. Recent examples are the impersonations of kiwifruit company Zespri and derivatives issuer Rockfort Markets

According to FMA general counsel Liam Mason, some of the signs of a scam include little or no information in writing, asking for payments via unusual platforms, continually requesting money and exerting pressure.

“Scammers are constantly looking to evolve their approach and this treacherous trio of scams can be sophisticated; the red flags are not always obvious,” Mason said. “Scammers want to be believed and are willing to play the long game to gain your trust over several months. We strongly encourage New Zealanders to only deal with locally-registered entities and if you see an investment opportunity, step back and ask yourself if this is real. Don’t be rushed, be sceptical and ask lots of questions.”