It can be hard to know if you’ve been scammed or are being scammed. Scammers know how to win people’s confidence, hence why they’re also called ”con artists”. Many even form close relationships with victims. With investments, often they first charm you by telling or showing you how wealthy they are, then talk you into giving them your money so you can be wealthy too, and then finally keep on giving you excuses as to why they can’t pay you your money back.
What are the obvious signs of a scam?
You might not see all of these common signs of a scam, but just one or two should ring alarm bells:
They give you little or no information in writing. Trustworthy investments should have written documents that clearly explain the investment in plain English to you, including any important details. Generally, offers of financial products (such as shares) also have specific rules around what must be disclosed to investors to help ensure that they receive accurate information that is not misleading / deceptive.
They ask for unusual payments. Scammers hate using ‘normal’ banks. If they want you to pay using wire services or credit cards, by cryptocurrency such as Bitcoin, or into an overseas bank account or a NZ bank with a different name than their company, such as a personal account, they’re probably not legit.
They claim you’ve already made a profit despite not yet paying them any money. This is to fool you into paying an ‘initial deposit’. Legitimate providers generally don’t let you invest on credit.
They keep wanting more money. They may tell you the sale can only go ahead if you buy more of the investment, or that there are taxes or fees to be paid.
They can’t or won’t pay you back. Legitimate investments in financial products such as such as shares, foreign exchange and derivatives can usually be sold within hours or days. You should be able to get some or all of your money back that quickly. Exceptions include shares that no one wants. Investments sold outside licensed markets may take longer to sell, but you should only deal in those investments through licensed firms.
They’re on the FMA’s Warning List of known scams. BUT beware scammers regularly change their names, so just because they’re not on our list doesn’t mean they’re not a scam.
If you think you’re being scammed
Get a reality check:
Stop and ask yourself: "Is this for real?" Read the signs listed above and if any of them apply to your situation, write down your own list of reasons it could be a scam.
Don’t assume something is safe just because a family member, friend, workmate, church leader or other trusted contact recommends it – they may be victims too, or scammers themselves.
Don’t be tricked into thinking a company is legitimate because their advertising is on a credible website or social media platform, and be suspicious of ‘celebrity endorsements’.
Ask family or friends what they think. See what someone you know who’s good with money thinks about what your suspicions. Others can help you ‘wake up’ to the reality of a scam.
Check with your local Citizens Advice Bureauor budgeting advice service. They’re usually able to give free advice.
Do some digging:
Search for the company on NZ’s online Financial Service Providers Register. If it is not there, they probably can’t provide financial services in NZ.
Note any discrepancies in their bank details. If they say they’re in one country but their bank account is in a different country, it could be a scam.
Check the website registration details. Use a “who is” web tool to find out who registered it, and when. If it wasn’t in a country where the business says it is based, and/or was recently set up when they claim to have been operating for years, be very suspicious.
Reverse search any images on their website. Sites like Tineye.com let you copy and paste images into their search engine and they will tell you where else it’s been used.
Ask to see the Public Disclosure Statement (PDS) for the investment. Almost all legitimate investments offered in NZ must have some form of disclosure document.
Take decisive action:
Tell them to communicate by email. Get what they’re saying in writing, and ask for summaries of your investments to date, so you can begin a paper trail.
Stop paying them money: Make no more payments even if they say it will help get your money back. This is all part of the scam.
Ask for all or some of your money back. Say you need it urgently. Most investments traded on financial markets can usually be sold immediately, at most within days. If they can’t or won’t trade yours that quickly, or say you must pay more to get it back, it’s probably a scam.
If you know you’ve been scammed
Stop contact with the scammer. If they phone, hang up. If they send emails or letters, don’t reply. If you maintain contact they will only try to get more money or information out of you.
Contact your bank immediately. They will have a policy to deal with fraud. If you have sent money through another bank or transfer service, contact the service you used to do that.
Contact us: We can give you advice or put you in touch with someone who can. We’re limited in what we can do if the scammers are overseas, but if they are in NZ we can investigate and warn others. Contact us by phone or email firstname.lastname@example.org.
Tell family or friends what’s happened. It can be hard to admit that you’ve been tricked and lost money, but scammers rely on this shame and secrecy because it helps them keep scamming others.
Contact Victim Support on 0800 842 846 or visit their website. They can provide free emotional and practical support and information.
If a relative or friend is being scammed
Tell them you think it’s a scam. Scam victims usually don’t realise what’s happening until it’s too late and they can’t get money back, or they may not want to believe they have been tricked.
Suggest they visit the FMA website. Some victims don’t even know what a scam is, or they can’t believe that scammers can be so good at tricking people. Ask them to read the warning signs of a scam listed above, and to do some digging online. Help them to do this if necessary.