News : Investment Scam Complaints Hit Two-year High
Wellington and Auckland, New Zealand, Nov, 2017 -- Investment watchdog the Financial Markets Authority believes increased awareness of the risks of online trading is behind a spike in scam complaints to it.
The FMA received the highest level of complaints in October in over two years.
A spokesman said it typically averaged around 10 complaints about fraud/scams or cold calling a month but in October it rose to 24.
"We take the view that the jump that we saw in October 2017 largely reflected the extensive coverage of binary options fraud the FMA led in early October as part of World Investor Week, coverage that was cited by some complainants when they contacted us."
Last month the watchdog released a warning about binary options - a form of online trading - after a Bay of Plenty woman was left $7000 out of pocket after she invested money in a scheme advertising itself as "make easy money from home".
The woman saw an advert online and rang a call centre in Scotland where a broker convinced her to begin trading on currencies.
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The woman changed her mind and decided to get her money out. But was told she needed to make more trades to do so.
Realising she would probably lose more money by continuing to trade the woman pulled out but continued to be hounded by late night calls from the broker.
In the end she had the number blocked and told him she would report him to police if he did not stop calling.
The FMA has also highlighted a second scam case this week as part of a fraud awareness week being run by the Ministry for Business, Innovation and Employment.
A Christchurch man lost $67,000 after he was cold-called by scammers who convinced him to invest in a pharmaceutical company.
He initially said no to the investment after receiving the call from an overseas company but decided to invest after doing some research and believing the company was legitimate.
At the time it did not appear on the FMA's warnings lists and wasn't connected to any scams.
The man became suspicious when the company told him the shares had been sold, and he would receive the funds the following week.
But he never received the money and was told he would need to pay another $21,000 to get the money released. He didn't pay.
Paul Gregory, FMA head of investor capability, said people should hang up on cold callers offering an investment from offshore.
"The best thing investors can do to someone cold-calling offering an investment from offshore is to put down the phone. Ignore that email. If you hand over money and it turns out to be a scam, it's often impossible to get your money back."
Mark Hollingworth, MBIE's consumer protection manager, said scams were a global issue.
"We're seeing scammers use more sophisticated methods as technologies advance to target consumers, as well as fronting scams with well known brand or organisation names to make the scam seem more legitimate."
Posted by Veronica Silva Cusi, news correspondent
Today's Tip of the Day - Recognition
More Editorial From Financial Markets Authority New Zealand
Published: Tuesday, November 21, 2017
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