As you know, we don’t provide investment advice or recommendations – there are plenty of good investment advisers in New Zealand who are qualified to do so.
However, what we do is care about your finances, and your financial future. And in this guide, we’d like to share some top-level tips to help you protect your hard-earned money from scammers. Read on to learn more.
Scams are getting more and more sophisticated
Many of us have been propositioned by a fake Nigerian prince at one point or another in our lives, and offered a million-dollar reward if only we’ll hand over our bank details.
But not every scam is as obvious as a poorly worded email promising riches, or a phone call from a pushy person demanding access to your computer.
Scammers are becoming increasingly sophisticated, and they continue to catch New Zealanders out all the time. In the second quarter of 2021 alone, there was $3.9 million in direct financial loss reported, up 30 per cent on the previous three months. It’s believed that a lot of scams go unreported.
Some of the tricker scams to spot are those claiming to offer an “investment”. They often pop up on social media or via email or phone and can look quite legitimate. You’ll sometimes see documents that look professional and some scammers even impersonate officials to try to convince you.
If you’re interested in investing opportunities anyway, you might find yourself wondering if it’s worth taking a chance. Our advice is – seek expert advice. An investment adviser can help you check if the investment is legit and appropriate for your goals. And they will also provide guidance on legitimate investment opportunities. In the meantime, read on for a few ways to spot a scam.
Some ‘red flags’ to watch out for
So, how do you spot a scam? Here are some tell-tale signs:
The contact is out of the blue
Scammers usually draw attention to themselves because they get in contact with you out of nowhere. It’s illegal to “cold call” about an investment product like shares in New Zealand, so anyone who tries it with you is breaking the law and you should be wary.
It sounds too good to be true
Remember that adage? Turns out, it’s a good marker of a scam. Investment scams will often promise you huge returns. They’ll also tell you that whatever they are pushing is “very low risk”. That should set off your scam radar – any investment adviser would tell you that if something offers likely high returns, it’s usually high-risk too, and that future performance is never guaranteed. According to Netsafe, scammers sometimes talk about very high returns on foreign or crypto markets – be wary.
They’ll put pressure on you
Scammers don’t want you to have any time to think about what they’ve told you, or to check it with anyone else. They’ll put the heat on by telling you that it’s for a limited time, or there are only a certain number of spaces available.
You can’t find information about the “business” online
All financial services businesses in New Zealand need to be registered on the Financial Services Providers Register. This is a good place to start when you’re researching someone you might invest with. You should also be able to get ample information about the people running the investment company or dealing with your money. You should be able to Google them and find out their career histories. If there are lots of secrets or unnamed people involved, be wary.
You’re told to keep it quiet
Scammers are often keen for people not to spread the word about what they’re doing. They might be tell their victims to lie to the bank about why they need money, for example. If you’re told to keep an investment quiet, it should prompt you to worry.
The FMA offers a guide to spotting a scam, which includes a rundown of some of the most common including Ponzi schemes, where the returns you ‘earn’ are paid with other investors money, and share scams, where people are sold worthless investments.
Can we help you?
We’re not investment advisers, so we can’t guide you on investments. But there are still many ways that we can help you with your finances. Give us a call or email today if you have any questions.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.