‘Treacherous trio of scams’: Markets watchdog FMA issues warning about Covid-19 exploitation

Kiwis are being warned to be on the lookout for a “treacherous trio of scams” on the rise during the global pandemic.

The Financial Markets Authority (FMA) issued the warning today after an increase in complaints about investment scams and fraud lodged with the regulator in the first half of this year.

The markets watchdog urged people to be vigilant about social media scams, romance-investment hybrids and imposter websites exploiting the Covid-19 crisis and economic climate.

From January to June 2021, the FMA received 158 complaints about investment cons and fraud – up 79 per cent on the 88 complaints received during the same period in 2020, when the pandemic began.

It was also up 49 per cent on the 106 complaints in the first half of 2019.

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

The FMA said it had noted a rise in scammers using social media platforms to identify and contact possible victims. This would often involve friending and messaging, asking questions or making suggestions in post comments and conducting fake surveys.

Romance-investment hybrid scams were also targeting prospective victims on popular dating apps, winning people’s trust with sophisticated back-stories and accomplices.

Victims were then convinced to transfer money overseas to buy supposed investments.

Impostor websites, meanwhile, use names, logos, addresses, certifications and other details of legitimate NZ businesses to fool investors to part with their money.

Two recent examples included scammers impersonating Kiwifruit company Zespri and derivatives issuer Rockfort Markets.

FMA general counsel Liam Mason 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.”

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’s website.


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