FMA notes rise in business impersonation scams during COVID-19

FMA notes rise in business impersonation scams during COVID-19 | Insurance Business

FMA notes rise in business impersonation scams during COVID-19

The Financial Markets Authority (FMA) has reported a steep rise in the number of investment scams attempting to impersonate legitimate New Zealand businesses during the COVID-19 pandemic.

The regulator also revealed that one in five New Zealanders have been targeted by investment scams.

From April 01 to November 05, the FMA issued 61 warnings about investment scams, of which 21 (or 34%) were impostor scams, where scammers used the names and details of legitimate businesses, including fake websites or social media accounts, to trick investors. By comparison, in the same timeframe during 2019, the FMA issued 40 warnings and only four (10%) were impostor scams.

Due to this spike in scams, the regulator warned the public to look for various red flags that could serve to identify such scams. These include overseas phone numbers or addresses being mixed up with New Zealand contact details, or the website domain name not matching the content of the website. Many scams also promise high returns, often too good to be true, and are ambiguous about what is being offered.

This move to raise public awareness of impostor scams is part of FMA’s Fraud Awareness Week, which runs from November 15 to 21.

According to Liam Mason, FMA director of regulation, the regulator has prioritised warnings about scams throughout the pandemic, as uncertain economic conditions may make consumers more susceptible to falling victim to fraudsters.

“We’re constantly vigilant about the scams that are targeting New Zealanders but it’s like cutting the head off a hydra – two more will pop up in its place. You can never stop or warn about them all and they often operate outside our reach, especially overseas,” Mason said.

He said that New Zealanders should be inherently sceptical of any investment opportunity that seems too good to be true and to be diligent in researching any opportunities.

“In the past, scammers have attempted to exploit New Zealand’s image as a well-regulated market but these impostor scammers seem to be more sophisticated and could be due to growth of online commerce due to COVID-19,” Mason said. “There’s a lot of public information available regarding the registration of New Zealand businesses, which is important for our transparency, but scammers may try to exploit this.”