Scams Impersonating NZ Businesses Rises during COVID-19

The Financial Markets Authority (FMA)​ has reported a sharp increase in the number of investment scams attempting to impersonate legitimate New Zealand businesses since the emergence of COVID-19.

FMA research has also shown one in five New Zealanders have been targeted by investment scams.

From 1 April to 5 November 2020, the FMA issued 61 warnings about investment scams, of which 21 (or 34%) were impostor scams, where the names and details of legitimate businesses are unlawfully used by scammers to trick investors, such as fake websites or social media accounts. By comparison, in the same time frame during 2019, the FMA issued 40 warnings and only four (10%) were impostor scams.

The regulator is warning New Zealanders to be on the lookout for signs of such scams, which could include overseas phone numbers or addresses being mixed up with New Zealand contact details, or the website domain name not matching the content of the website. Other red flags might be the promise of high returns and ambiguity about what is being offered.

The FMA is running an impostor scams public awareness  as part of Fraud Awareness Week, which runs from 15 to 21 November.

Liam Mason, FMA Director of Regulation, said warnings about scams and fraud have been a priority for the regulator throughout COVID-19, as consumers may be more susceptible to seeking high return investments in uncertain economic conditions.

“We’re constantly vigilant about the scams that are targeting New Zealanders but it’s like cutting the head off a hydra – two more will pop up in its place. You can never stop or warn about them all and they often operate outside our reach, especially overseas,” Mr Mason said.

“The best solution is for New Zealanders to be inherently sceptical of any investment opportunity that seems too good to be true and to do a bit of background research if there are any red flags.

“In the past, scammers have attempted to exploit New Zealand’s image as a well-regulated market but these impostor scammers seem to be more sophisticated and could be due to growth of online commerce due to COVID-19. There’s a lot of public information available regarding the registration of New Zealand businesses, which is important for our transparency, but scammers may try to exploit this.”