Protecting Yourself Against Online Investment Scams – by Chrissy Davidson

In 2017 New Zealanders reported in excess of $10.1 million to online fraud and scams. To date, the largest single loss reported was $480.000 to an online investment scam while Auckland was the region with the highest losses, reaching nearly $2.7 million. Over the past five years alone, Kiwis have reported losses equating to nearly $47.6 million as a result of online scams which is, more than likely, only a portion of the actual losses suffered. As much as we would like to believe that all lucrative investment opportunities are legitimate it is imperative, for our own safety, to be suspicious of any unexpected investment offers and any offers that seem like they may be too good to be true.

Steps to take before you invest your money

There are a number of steps you should take to help ensure that the investment opportunity you are interested in is legit and that you not about to become the victim of a vicious scam.

Trace the legal business name & determine if they are regulated by the FMA

Conduct an online search and try to find both the trading and legal name of the business offering the investment opportunity as they often differ. If you cannot find any information on the company, it could be a warning sign that you are being scammed. The Financial Markets Authority offers lists of individuals, business enterprises and markets that are either licensed or authorized to operate within New Zealand. If the entity is not legally conducting business in NZ, it could be a scam.

If the business is international, establish who regulates it

The FMA only regulate financial enterprises operating within New Zealand. If your investment opportunity is from an international service provider you need to find out who they regulated by. Once you have established who the regulator is you need to find out if they are legitimate as many scams make use of fake regulators in a bid to make them appear legitimate. If an enterprise is based outside of NZ you need to be even more vigilant in determining whether it is legitimate before you part with any of your hard-earned money as it may be impossible to recover any lost money if your investment is based overseas.

Study the FMA’s warning list and trust your instinct

The FMA has released an extensive list of a number of individuals and businesses that potential investors should be very wary of. All the entities are listed because they are either not registered as a service provider in New Zealand, prior action or misconduct has been taken against them or they have not responded in a satisfactory manner when information was requested from them. Whether you have identified any warning signs or simply have a feeling that something isn’t right it is important to always trust your gut feeling. If something seems off, chances are good that it is.

Be on the lookout for future scams

If you have fallen victim to a scam once before chances are good that you will be targeted again as you will now be flagged as an easy prey. Be extremely cautious of anyone offering you assistance in salvaging some of the money you have lost. It is very possible that it is all part of the original scam or that your personal details have been shared with another clutch of scammers.

As tiresome as it may be to conduct background checks on everyone offering investment opportunities, it has become an absolute necessity as new scams are surfacing on nearly a daily basis. You need to take whatever steps necessary to ensure that your hard-earned money is safe and only entrusted to legitimate organizations and individuals who have your best interest at heart.