Understanding investment scams
Scammers often target affluent English-speaking countries, making New Zealanders prime targets for overseas fraudsters looking to exploit vulnerabilities and aspirations.
While we benefit from the convenience of internet banking, it also allows fraudsters to reach potential victims with ease, often operating from different continents.
Setting up a professional-looking website, registering a phone number, renting a virtual address, or even impersonating well-known public figures to appear legitimate, has become alarmingly simple.
Investment scams have grown more sophisticated, with scammers who are smart, charming, and persuasive. Their websites appear credible, and they may even provide online accounts displaying fake trade details. This sophistication makes it challenging to distinguish scams from genuine investments, highlighting the importance of vigilance.
Anyone can fall victim to a scam. It's not only the vulnerable who are targeted; experienced investors often find themselves prime targets too.
If you think you’ve been the target of an investment scam you can contact Netsafe for advice and guidance. Our helpline is free, confidential and available 7 days a week.
Investment scams: red flags to watch out for
How to spot an investment scam
- Celebrity endorsements: Investments promoted or endorsed by “celebrities” are likely scams.
- High returns promises: Be cautious of promises of high returns with little to no risk. If it sounds too good to be true, it probably is.
- Cold calls: In New Zealand, it's illegal to sell financial products via cold calls. If you receive an unexpected call about an investment opportunity, hang up immediately. Don’t engage with the caller, as they will use persuasive tactics to gain access to your money.
- Accounts using deep fakes: Deep fakes (/online-abuse-and-harassment/understanding-deep-fakes)are photos, videos, or other media that have been edited with the aid of AI. Scammers use these to create convincing fake profiles.
The Financial Market Authority (FMA) says an 'investment' is likely a scam if:
- You are contacted by someone you don't know about an investment opportunity.
- Promised very high returns with little risk – these promises are too good to be true.
- Provided with little information in writing – legitimate investments always have explanatory documents.
- The offer is supposedly known only to a select few – a common ploy to make you feel special.
- Asked to keep the investment secret – this is to prevent authorities from hearing about it.
- Not given the details of who is behind the offer or a physical address – legitimate businesses provide names and full addresses.
- Promised access to 'secret' overseas banking markets with very high returns – such markets do not exist.
Tips to protect yourself from investment scams
- Investigate before investing: Always research thoroughly before making any investment.
- Use 'checknetsafe.nz': Run the company’s website address through our anti-scam site(https://checknetsafe.nz/) to see if it's authentic.
- Verify the legal name: Find out the legal name of the business you are dealing with.
- Verify public figures: If you've been contacted by an account using the name and/or image of a public figure, search the platform for the celebrity's name to see if that's their genuine or only account. Look for a 'tick' or other verification on the account. This is usually a good way to check if the account is real, but keep in mind that some platforms allow you to obtain the 'tick' without proving who you are.
- Regulation check: Ensure the business or individual is regulated by the FMA.
- International regulation: If the business is not based in New Zealand, determine who regulates them.
- Warning lists: Check the regulators' warning lists at iosco.org(https://www.iosco.org/v2/investor_protection/?subsection=investor_alerts_portal).
- Post-scam vigilance: If you have lost money to a scam, you are highly likely to be targeted again – stay alert.
What to do if you are scammed
- Cease all communication: Stop all contact with the suspected scammer immediately.
- Document everything: Keep records of all communications, transactions, and any evidence of the scam. Read our guide on how to record digital evidence(/online-abuse-and-harassment/how-to-record-digital-evidence) to learn how to collect this.
- Report the scam:
- Contact your bank: Inform your bank to prevent further unauthorized transactions and to potentially recover lost funds.
- Seek support: Consider contacting support groups or counselling services if you experience emotional distress due to the scam.
Report to Netsafe
If you think you’ve been targeted by an investment scam, inform your friends and family to help them avoid falling victim.
You can contact Netsafe seven days a week for free, confidential and non-judgmental advice about an online issue impacting you or someone you know.
Whilst we cannot investigate or track scammers, we can provide advice on steps you can take to stay safe and what to do if you think you’ve been scammed.
(https://report.netsafe.org.nz/hc/en-au/requests/new)Email [email protected] 
(mailto:[email protected])Text 'Netsafe' to 4282 
(sms:4282?body=Netsafe)Call 0508 638 723 8am-8pm weekdays, 9am-5pm weekends 
(tel:0508638723)