Scammers use surveys, friendship and romance to cheat investors

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FMA warns against fraudulent online schemes

Financial Monetary Authority General Counsel Liam Wilson (INL File Photo)

Wellington, September 16, 2021
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The Financial Monetary Authority (FMA) has cautioned against an increasing number of scams and advised New Zealanders to be aware of various fraudulent schemes, mostly online.

General Counsel Liam Mason named three scams that have been on the rise since the advent of Covid-19 about 20 months ago.

He said that the complaints about investment scams lodged with FMA rose by 79% during the first half of this year compared to the same period in 2020.

Three types of scams

From January to June 2021, the Authority received 158 complaints about investment scams and fraud up 79% on the 88 complaints received during the same period in 2020, when the pandemic began, and up 49% on the 106 complaints in the first half of 2019, he said.

The FMA issued 36 public warnings on suspected scams and other non-compliant entities during the first six months of this year, accounting for an increase of 29% and 80% compared respectively to 2020 and 2019 (28 and 20 warnings).

According to Mr Mason, three types of scams have been on the rise as follows:

Social Media Scams: Scammers using social media platforms to identify and/or make contact with possible victims – friending and messaging them, asking questions or making suggestions in post comments, conducting fake surveys.

Romance: Investment Hybrid Scams: Targeting prospective victims on popular Dating Apps, winning people’s trust with sophisticated back-stories and accomplices, before convincing victims to transfer money overseas to buy supposed investments.

Impostor Websites: Using the names, logos, addresses, certifications and other details of legitimate New Zealand businesses to fool investors that the website and/or its managers are part of, or associated with, the legitimate business.

Two recent examples included scammers impersonating Kiwifruit company Zespri and derivatives issuer Rockfort Markets.

(Image from FMA website)

Covid-19 advantage

Mr Mason said that scammers are taking advantage of the pandemic either by using Covid-19 as part of their pitch or using the economic climate to prey on peoples’ fears and desires.

“Scammers are constantly looking to evolve their approach and this treacherous trio of scams can be sophisticated, the red flags are not always obvious. They want to be believed and are willing to play the long game to gain your trust over several months. We strongly encourage New Zealanders to only deal with locally-registered entities and if you see an investment opportunity, step back and ask yourself if this is real. Don’t be rushed, be sceptical and ask lots of questions,” he said.

He said that among the signs of a scam are little or no information in writing, asking for payments via unusual platforms, continually requesting money and exerting pressure.

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The case of Nisha on LinkedIn

Nisha contacted the FMA in May 2021 to report a scam that was targeting users of the popular social media platform LinkedIn. It cost her more than $3000.

She had connected with a woman on LinkedIn, who convinced her to send money to an entity called Standard Coin Options, which later insisted that she pay ‘tax’ on her supposed ‘profits’ before they would release them – a variation of ‘advance fee fraud’, where a person must pay to release non-existent funds.

“I connected with a girl name ‘Rayes Moore’ on LinkedIn on May 3, 2021. She claimed that she was a professional stock broker and an expert in binary trading. As I often invest, I thought this was a good opportunity. I gave her my number and started chatting on WhatsApp. She suggested that I invest with Standard Coin Options Brokers, and she gave me their website which all looks very real,” she said.

A week later, Nisha agreed to invest just over $400 in binary options – a type of investment in which you predict the price movements of a share, commodity, currency or index.

Another week later, Standard Coin Options said that she had already made a profit of over $20,000. Nisha was happy and thought that she could pay off her student loan.

(Image from FMA website)

Demand for ‘tax money’

However, before she could withdraw the money, they said that she would first have to pay $2800 as ‘tax’. None the wiser, she sent images of her debit card and passport, and other personal details, to a man called ‘Mr Wilson,’ and then remitted the amount via money transfer to a ‘Jackson Joy’ in India.

“Mr Wilson told me the next day that I could finally withdraw my profit. But as I was giving details of my bank account, he said I have to pay another $3000 as ‘tax’, this time to the New Zealand government. I said that I wouldn’t pay, but he said I have to, or else the trading session was finished and that I will not be able to withdraw the funds. And I would have paid if I had the money. But thankfully I didn’t have enough in my account. I said I have no money, and he said he will help me with the first $900 and I can pay him the rest,” she said.

Post-scam action

It was then that Nisha realised that it was a scam, just 15 days after first being approached on LinkedIn. She then blocked ‘Rayes Moore’ on WhatsApp and attempted to warn her own contacts on LinkedIn.

“I posted on LinkedIn and a few friends said that Rayes Moore had also contacted them, and then I saw she was connecting with everyone I know. Now, the scammers constantly message me and even sent me screenshots of so many people who have paid them money.”

Nisha reported her case to the FMA, which investigated and then issued a public warning about Standard Coin Options.

Nisha said that the experience cost her money, sleep, and confidence as an investor.

Source: FMA Press Release

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