What you need to know about investment scams in 2024

Article written by InvestNow – 6th May 2024

It’s cybersecurity week, and to support investors staying alert online, InvestNow GM Mike Heath offers his best tips for avoiding investment scams in today’s environment.

In 2024, it’s vital any investor – or anyone at all – takes a vigilant approach to protecting themselves from scams.

MBIE figures show New Zealanders lost nearly $200 million to scams in the last year, and the FMA reports investment scams are increasingly common.

Even careful, security conscious people can fall victim to investment scams, and lose hundreds of thousands of dollars.

Investment scammers can pretend to be advisers or portfolio managers, encouraging victims to put their money into low-risk, high-reward opportunities. They can be armed with very convincing fake investment prospectuses or comparison websites, making detecting the scam extremely difficult.

In a Netsafe survey last year, 62% of Kiwi respondents said they encounter a scam at least once a month. Complacency is a dangerous approach in a world where it’s not if a scammer will target you, it’s when.

These are some things you can do to help avoid being a victim of an investment scam.

Tips to avoid investment scams

1. Don’t engage with cold callers.

It’s illegal to sell financial products via a cold call in New Zealand. If someone you don’t know contacts you out of the blue with an investment opportunity, it’s almost certainly a scam.

2. Make sure you have strong, unique passwords for your online accounts.

If you need help remembering them all, use a password manager to store passwords securely. These are very reliable, and easy to access online.

3. Use two-factor authentication for online accounts.

This means anyone logging into your accounts needs to have access to your email or cellphone to get in. Some people may see it as inconvenient, but when it’s used correctly it makes it significantly harder for a scammer to get into your account. For this level of security, it’s worth taking a few extra seconds to log in.

If it’s available, you can set up two-factor authentication through your account settings. A very good option is to use SMS/text messaging to your cell phone, as your phone is less likely than your email address to fall into the hands of scammers.

4. Don’t click links from unsolicited emails or texts.

New Zealand banks and financial service providers typically avoid using links in texts, so if you are sent a link then that’s an immediate red flag.

You can usually tell a spam email apart from a legitimate email by checking:

  • The email address. If it looks dodgy, it probably is. For example, InvestNow won’t be sending you emails from johnny8356@xen.com
  • Spelling and grammar. Bad grammar is a sure sign of a scammer.

If you want to check the legitimacy of a message, search for the organisation’s contact details online and reach out to them that way. This ensures you don’t inadvertently engage with a scammer by clicking a fake link they’ve sent you.

5. Keep your device updated.

Updating the software and applications on your phone or computer regularly means improving your security settings. Scammers can use sophisticated technology, so it’s worth keeping your defence up to date. If you don’t, it may be easier for scammers to access your device.

6. Validate the offer and the provider.

If you get a compelling email selling you a New Zealand-based financial product or asking you for sensitive information, validate it by:

  • Checking the email address.
  • Google searching the provider – make sure the offer lines up with what’s on their website.
  • Search the New Zealand Companies Register for the business – if it’s not there, it’s likely not legitimate.
  • Search the Disclose Register for the financial offer or scheme. All financial products and managed investment schemes in New Zealand must be on the Disclose Register, and if you can’t find it there, it’s not legitimate.

7. Use a secure WiFi network.

Insecure public networks may allow other people to see your data and steal your passwords.

8. Be suspicious!

Don’t take a “she’ll be right” approach. If something looks too good to be true, then it probably is. Don’t take the risk.

The information and  opinions in this publication are based on sources that InvestNow believes are reliable and accurate. InvestNow makes no representations or warranties of any kind as to the accuracy or completeness of the information contained in this publication and disclaim liability for any loss, damage, cost or expense that may arise from any reliance on the information or any opinions, conclusions or recommendations contained in it, whether that loss or damage is caused by any fault or negligence on the part of InvestNow, or otherwise, except for any statutory liability which cannot be excluded. All opinions reflect InvestNow’s judgment on the date of this publication and are subject to change without notice. This disclaimer extends to any entity that may distribute this publication. The information in this publication is not intended to be financial advice for the purposes of the Financial Markets Conduct Act 2013, as amended by the Financial Services Legislation Amendment Act 2019. In particular, in preparing this document, InvestNow did not take into account the investment objectives, financial situation and particular needs of any particular person. Professional investment advice from an appropriately qualified adviser should be taken before making any investment.