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FMA sees spike in investment scam complaints since COVID

FMA sees spike in investment scam complaints, issues more warnings, since start of COVID-19

The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko – is warning New Zealanders to be on the lookout for three unique types of scams that have been on the rise since the start of COVID-19.

The warning comes as the FMA responds to a rise in complaints about investment scams and fraud lodged with the regulator in the first half of this year – up 79% on the same period in 2020.

From January to June 2021, the FMA received 158 complaints about investment scams and fraud – up 79% on the 88 complaints received during the same period in 2020, when the pandemic began, and up 49% on the 106 complaints in the first half of 2019.

As a result, from January to June 2021, the FMA issued 36 public warnings about suspected scams and other non-compliant entities – up 29% on the 28 warnings issued during the same period in 2020, and up 80% the 20 issued in the first half of 2019.

In particular, since the start of the pandemic, the FMA has noted a rise in three new types of scams:

  1. Social media contact scams: scammers using social media platforms to identify and/or make contact with possible victims – friending and messaging them, asking questions or making suggestions in post comments, conducting fake surveys.
  2. Romance-investment hybrid scams: targeting prospective victims on popular dating apps, winning people’s trust with sophisticated back-stories and accomplices, before convincing victims to transfer money overseas to buy supposed investments.
  3. Impostor websites: using the names, logos, addresses, certifications and other details of legitimate NZ businesses, to fool investors that the website and/or its managers are part of, or associated with, the legitimate business. Two recent examples included scammers impersonating Kiwifruit company Zespri and derivatives issuer Rockfort Markets.

Liam Mason, FMA General Counsel, said scammers are taking advantage of the pandemic crisis either by using COVID-19 as part of their pitch, or using the economic climate to prey on peoples’ fears and desires.

“Scammers are constantly looking to evolve their approach and this treacherous trio of scams can be sophisticated, the red flags are not always obvious. Scammers want to be believed and are willing to play the long game to gain your trust over several months,” he said.

“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.”

Mr Mason said some of the signs of a scam included little or no information in writing, asking for payments via unusual platforms, continually requesting money and exerting pressure. More information about how to spot investment scams can be found on the FMA website.

Several victims of investment scams have agreed to have their stories told by the FMA to raise awareness, including:

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