FMA warns on investment scams amid COVID-19 crisis

by Roxanne Libatique25 Nov 2020

The number of investment scams attempting to impersonate legitimate New Zealand businesses since the emergence of the COVID-19 pandemic has increased – with one in five Kiwis having been targeted by scammers, according to the Financial Markets Authority (FMA).

The FMA issued 61 warnings about investment scams from April 01 to November 05, a significant increase compared to only 40 warnings in the same period last year. Of the 61 warnings, 21 (or 34%) were impostor scams, where scammers unlawfully used the names and details of legitimate businesses to trick investors, such as fake websites or social media accounts.

Cryptocurrency was the most common type of investment scam, followed by investment software packages and seminars and shares. Men were significantly more likely to be approached by scammers than women (27% versus 18%), and one-third of those aged 70 or over have been approached.

The regulator is warning Kiwis to look out for red flags, such as 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. Other signs of investment scams include a promise of high returns and ambiguity about what is being offered.

“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,” said FMA director of regulation Liam Mason (pictured).

“The best solution is for New Zealanders to be inherently sceptical of any investment opportunity that seems too good to be true and to do a bit of background research if there are any red flags.

“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 that could be due to growth of online commerce due to COVID-19. 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.”

Most Read

NZ Adviser TV