Avoiding Investment Scams

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By Peter Dine

“Gutted’ pensioner loses $150k in bogus HSBC-branded ‘eco bond’ investment scam”

“No red flags. Heartbroken realty agent loses $100k in elaborate finance scam”

These are just two recent examples of New Zealanders being unwittingly separated from their hard-earned savings through sophisticated and elaborate online investment scams, with little to no chance of getting their money back. What can you do to avoid being scammed?

  1. Do your research: Thoroughly research the investment opportunity, including the product, strategy, and historical performance. Look for unbiased sources of information and verify the legitimacy of the investment offer.
  2. Verify Credentials: Ensure the investment professional and firm offering or recommending the investment is licensed and registered with the relevant regulatory authorities. Check their credentials, certifications, and any disciplinary history. In New Zealand offers of investments to retail investors are regulated. Providers of investments are required to have a licence with a regulatory body such as the Financial Markets Authority. Furthermore, providers of financial products and services are required to be registered. You can find out by going to the Companies Office website https://fsp-register.companiesoffice.govt.nz/
  3. Seek Independent Advice: Consult a financial adviser or professional who is not associated with the investment offer. They can provide an objective assessment, identify potential red flags, and offer guidance based on your financial goals. Financial Advice Providers are required to be licensed to give financial advice to retails investors and are also required to be registered. Again, you can find out if they are registered by visiting the companies office website
  4. Scrutinise the Terms and Conditions: Are there any? There should be. Do they look legitimate?
  5. Trust Your Instincts: If something feels suspicious or too good to be true, trust your instincts and exercise caution. If necessary, walk away from the investment offer and explore other opportunities that align with your risk tolerance and financial objectives.

The two scammed investors referred to above thought they were investing through reputable global investment firms. They had been conned into believing the scammers worked for these organisations.  Had they contacted the New Zealand offices of these organisations directly to enquire about the individual and investment offer, the scam would have been uncovered.

Remember, scammers can be skilled at impersonating reputable organisations, but by independently verifying information, exercising caution, and avoiding the sharing of sensitive information, you can significantly reduce the risk of falling victim to these types of scams

We recently received an enquiry from a client about the legitimacy of an investment offer that looked too good to be true. The website of the organisation looked credible at first glance but not quite right, and some of the statements made about investments were outlandish. We checked out the office tower they supposedly worked from. They weren’t a tenant, and they were not registered as a financial services provider in New Zealand. Suffice to say the client didn’t invest and we alerted the regulator https://www.fma.govt.nz/library/warnings-and-alerts/jfm-group/.

If you are concerned about an offer for investment you are considering, or want some impartial investment advice, get in touch with us today. One of our financial advisers would be happy to help.

The information provided in this article is of a general nature and is not intended to be personalised financial advice. You may seek appropriate financial advice from a Financial Adviser to suit your individual circumstances. This article was created with the assistance of AI.