Nearly $200 million of New Zealanders money was lost to scams in the last year, with a huge rise in the number of investment scams (and these are just the ones that have been reported.)
Since 2020 the Financial Markets Authority (FMA) has received more than 1,300 complaints and issued 373 warnings about investment scams.
At Moneyworks we monitor the investment warnings through the information that we receive from FMA, and discuss the new warnings at each of our business meetings. We want to help our clients to avoid getting caught in any kind of scam, be it because of a cyber security issue, or an investment that looks too good to be true – which is why we keep telling you about these scams.
We have provided you with a real life ‘sexy investment or scam’ article below that we are helping a client work through. Our main message is, we do spend a lot of our time watching these and monitoring them, so please check with us if you are thinking of trying out something a little different.
The FMA says that two common types of scams that target New Zealanders are fake investment prospectuses and term deposit comparison sites. These scams are becoming increasingly sophisticated and have caught out experienced investors, as well as vulnerable communities and with advertising through social media.
Here is the FMA’s Warnings, Alerts and Scam’s page - https://www.fma.govt.nz/library/warnings-and-alerts/
Please check this if you are provided with an investment opportunity and you aren’t sure, but at the very least, google ‘name of the offering’ with the word scam and look through the first two pages of results.
There are lots of indicators and red flags with an investment offering for you to be worried out, and we have provided you with more detail in the article about the real life client situation and our own checklist.
Here is the FMA’s checklist:
1. Check the source to make sure it’s real. Make sure that the company is based here, has a New Zealand phone number and the website url matches the company. [Moneyworks addendum – don’t just click on the information that the promoter had given you. Go to a different browser, on your computer or on a different device and type the website address in and see if it comes up. Do the same thing for the company name, if it is legitimate it should come up on the first page (and at the very least on the second page).
2. Get a second opinion before handing over the money. Press Pause and think hard before handing over any money. Check with a trusted adviser (eg your adviser at Moneyworks) or a friend or family member, often it takes is a fresh set of eyes to raise red flags you may not have considered. [Moneyworks addendum – don’t just ring the phone number that the promoter has given you, google their phone number, and call the head office and ask for the person who they have said will give them a good reference. A recent example for a Term Deposit scam gave a phone number and someone answered the phone and said how brilliant the offer was, but the person had no connection with HSBC, which is where he was supposed to working]
As you will see when you read the “Sexy Investment or Scam” article, this client decided NOT to talk to their Moneyworks adviser because they knew that we would say no. That in itself should be a major red flag.
3. Real investments don’t come out of the blue. Banks and fund managers are licensed and regulated (as are financial advisers) and do not generally call you out of the blue offering a new opportunity that demands you immediately send them money.
4. Check very carefully before sending money or personal information to an investment opportunity, even if you think you’re investing with a legitimate of well-known institution. Do not trust links, emails or contact details supplies by callers. Check for yourself with the institution.
5. Pay attention, listen to your bank if it raises questions or concerns about your payment requests or money transfers – they may have seen other customers lose money responding to the same opportunity. [Moneyworks addendum – it is NOT the banks responsibility to stop you doing things with your money – so if they raise an issue it is probably really significant.]
6. If you don’t understand it, walk away. [Moneyworks addendum – we do this. If we can’t thoroughly understand what the investment proposition is that a fund manager is proposing (and we know our questions drive them mad sometimes!), we walk away.]
As we have said in other articles, if you work with Moneyworks as your adviser, it is our job to watch your incoming and outgoing transactions to your investments (it is part of our AML obligations). What this means is that if we see a pattern that doesn’t seem right, we may well ask you what is happening, to help you avoid getting yourself caught up in a scam.
We have helped at least four clients in this way over the last 10 years.
Please don’t be offended if we ask you, we aren’t judgemental about where you are spending your money, we are just keeping an eye out for you.