Report a scam

Report a scam to Netsafe.org.nz (external link) or 0508 638 723. They will direct you to the organisation best able to investigate or advise you on various types of scams or frauds.

How to avoid finance, banking and investment scams and what to do if you have been scammed.

 

How to avoid falling for a scam

Investment scams come in many guises including business ventures, superannuation schemes, managed funds, and the sale or purchase of shares or property. Each type of investment fraud is unique. Often the scammers offer returns that are attractive, but not too unreasonable.

Financial scams are increasing and affect everyone. Scammers can be articulate and appear financially knowledgeable. They have credible websites, references and materials that can be hard to distinguish from the real thing. Scammers actively groom their victims by forming relationships. The victims become emotionally attached to the scammers.


Checklist to avoid finance and investment scams

  • Invest using a registered New Zealand broker/financial advisor. Check the Financial Markets Authority (external link) (FMA) register. Investments should have a registered prospectus.

  • Hang up if you’re cold called about an investment opportunity – either by phone call or email.

  • Visit the Financial Service Providers or the Financial Markets Authority (FMA) website to make sure that any offer you receive is legitimate.

  • The FMA publish a list of firms that have tried to scam people in New Zealand. You can also phone the FMA Helpline on 0800 434 567.

  • Check the scam alerts published on our website.

  • Beware of service providers not based in New Zealand. The International Organization of Securities Commissions (IOSCO) gathers investor protection alerts and warnings from countries around the world. You can search the IOSCO Investor Alerts Portal (external link) .

  • Get independent financial advice before you make any investment decisions, and don’t be pressured into making a quick decision.

  • Avoid giving out personal details including financial information and identity documents such as a scan of your passport or driving licence, which can be used for future scams.

  • Even if a company provides hospitality, flights and hotels, you don’t have to invest.

  • Before signing up to any multi-level marketing scheme, question whether it could be a pyramid-selling scam with its success based on the costs of being a member, eg fees or training.

Investment scams can look very convincing

Investment scams can be difficult to identify from the real thing. Scammers often produce fake financial reports, forged share certificates, glossy initial public offerings and slick websites. This increases the likelihood of financial loss, even for experienced investors.

Popular contact methods for these scams are cold calling or unsolicited emails. Any investment offer out of the blue should be a clear warning sign that it is likely to be a scam.

Typically, the people who report scams are older and were seeking to invest their savings and retirement funds.

High returns come with much greater risk of losing all your money.


Common finance and investment scams

Boiler room investment scams

A professional sounding ‘broker’ calls you with an investment offer from an overseas company that’s hard to resist. The scammer promises excellent returns on your investment for little or no risk. The scammer may offer you shares, mortgage investments, property investments, managed funds, options trading, carbon-trading, forex trading or other business opportunities. They are all similar in that the scammer is looking for a direct transfer of funds that they will claim to manage for you.

They may say:

  • they’re stock brokers or portfolio managers, approved by a trusted company
  • they are only making the offer available to you
  • keep the offer confidential.

The scammer will provide glossy brochures, fake reports and realistic websites with fake historical data. The offer will usually be for a stake in the business or a set return on the investment.

Share scams

Share ramping: Scammers appear to have ‘inside info’. You get an email from a ‘company insider’. You’re told that stock in a certain company is set to rise dramatically. You check out the claim. Sure enough the stock is rising. That’s because it’s being ramped up by investors’ responses to the scammers' emails. You buy and the stock price plummets because of mass selling.

Hot tip: insider trading is illegal.

Share offers: Scammers offer to purchase shares from shareholders at a price lower than market value and rely on their victims not researching this price. They use short time limits to pressure the sale.
Similarly scammers may offer to sell shares at a lower than market price. Once money is sent, the victim will receive nothing from the scammers.

Scammers will often use current events, such as creating fake initial public offer reports for reputable companies who are publicised as going public in the near future.

Investment seminars and real estate scams

Scammers may use seminars on how to build wealth to target would-be investors. They create a high-pressure, act-now environment to draw people in. They charge you for expensive reports and consultancy that have little or no value. Some seminars may even fly you to a property location. While you are there you may be pressured into committing to the deal.

Prediction software

Computerised gambling systems promise to predict accurate results for horse races, sports events and even share markets. The scammers make exaggerated claims that you'll be able to make money through betting. Scammers charge a lot of money for these programmes.

Superannuation scams

In a superannuation scam, you’ll be offered the secret to unlocking your superannuation funds now rather than at retirement. Funds are usually legally locked until retirement age. The scammer arranges to have the funds released into their bank account, then they charge you huge fees to pass on the money.

Pyramid-selling scams

Pyramid-selling scams promise money or some other reward for recruiting new members into a pyramid scheme. They make money primarily by recruiting people who all put money into the scheme. Pyramid-selling schemes may involve:

  • the sale of a poor quality product
  • chain letters asking for money
  • multi-level marketing with expensive training materials.

Pyramid-selling schemes only work for those at the top and are illegal under the Fair Trading Act.

Cease all contact with the scammer

Often, if you are the victim of a scam you may be in denial. Once you’ve realised you are being scammed, stop all contact and avoid sending further payments.

Block the scammer if you have been scammed online. Don’t reply to emails or letters that scammers have sent you.

Unfortunately, if you have been scammed, the chances of recovering your money are not good.

Contact your bank

If you are the victim of a financial scam or credit card scam, contact your bank immediately. They will have a policy in place to deal with fraud.

Read Resolve a problem to find out more.

Do not fall for a ‘recovery’ scam

Don't give anybody any more money on the promise that they will get your lost money back. It’s just another scam. Don't believe them if they say they are from a government agency and they want you to play along with a ‘sting’ operation.

Report a scam

Report scams to Netsafe.org.nz (external link) or 0508 638 723. They will direct you to the organisation best able to investigate or advise you on various types of scams, frauds and spam messages. This information may be used to compile data and publish scam alerts based on the most commonly reported scams.


Next steps

If you are unable to resolve your issue directly, our Resolve It tool has information to help you take the next steps. These may include going to the Disputes Tribunal or District Court.

Resolve IT: Scams


Need more help?

Contact the Ministry of Business, Innovation and Employment's (MBIE) Consumer helpline for more guidance.

Common finance and investment scams

Boiler room scam

Jay is a professional and looking to invest some capital. He sees an advertisement in a newspaper from an overseas investment company promising a low-risk,
high-return investment in their specialist venture capital, managed fund. He contacts them by email and after a few emails, and looking at their websites and brochures, he invests $5,000 with them. He gets regular monthly statements showing him how well the fund is doing. After a year he tries to withdraw some of the money invested. He is unable to contact them and becomes suspicious. He contacts FMA and finds a warning notice about the company. He informed his bank but there is very low chance he will get his money back.

Pension scam

Jack sees an advertisement in the newspaper about a company that can unlock his pension savings before retirement age. He needs some money to do repairs on his house, so he signs up and pays an up-front transfer fee of $1,000. Jack finds out that the company has not stated the tax penalties and other charges that he will have to pay if he does so. He asks for his money back but the company does not return his calls. He contacts Netsafe and finds out it is a scam.

Investment seminar scam

Aria is a young accountant and wants to invest some funds. She sees an online advertisement for a free investment seminar in Wellington and decides to go. The scammers are selling expensive forex software that they claim will make her wealthy in a short time. The offer is only available at a discount if she buys at the seminar. She phones her dad and he tells her not to waste her money. The software is a scam.