How to spot an investment scam

Investing is a common way for New Zealanders to build long-term financial security. However, if you’re considering investing, it’s important to be aware that there are lots of investment scams out there intended to deceive. Scams are fraudulent techniques designed to trick you into giving away your money, login credentials, payment card details, or personal information. To help you safeguard your funds, this article explores some common investment scams and how to spot the red flags.

Fake investment opportunities

Be cautious when looking for investment opportunities online. You might see ads or websites comparing investment rates or claiming celebrity endorsements. These sites often ask for your personal information, promising to connect you with great investment offers. However, these websites are often run by scammers. Their real goal is to collect your personal details and then present you with fake investment opportunities to get you to part with your money. Always be wary and verify the legitimacy of any investment offer before sharing your information.

High-pressure tactics

Scammers often use high-pressure tactics like saying “today is the last day for this exclusive ‘once-in-a-lifetime’ investment opportunity” to get people to commit. The urgency in their offers can be a telltale sign of trouble. Another tactic often used by scammers is secrecy. If they’re telling you not to discuss the opportunity with anyone, it’s a huge red flag. A legitimate investment provider would never want to stop you from seeking independent advice.

It’s important to pause and think before you act. Authentic investment opportunities provide you with the time to carry out your own due diligence. So, pause and consult experts like qualified financial professionals, seasoned advisers, and experienced investors. Take time to do your own research before making any decisions.

Guaranteed returns

Be cautious of offers promoting unrealistic returns. Legitimate investments typically have ups and downs along the way. It requires time and patience to generate returns – which can never be guaranteed. If an investment opportunity promises a world of high gains, low risk, and it sounds too good to be true, it probably is.

Credentials are key

Before committing any money to an investment, take the time to check the credentials of the provider offering the investment. Genuine investment operators are registered and licensed. The Financial Markets Authority (FMA) website can help you confirm the authenticity of investment providers. You can search for the names of investment providers on that website. Type the operator’s name into the search bar or filter by subject (e.g., ‘managed investment schemes’ or ‘market operator’). If you can’t find the provider on the FMA website, they’re unlikely to be a genuine operator.

Ways to check if the investment is a scam

As scammers continue refining their techniques and become increasingly sophisticated, it’s more important than ever to remain alert and cautious. Below are some ways to check if an investment is real or not. Scammers are constantly changing, and new ones pop up all the time so the below is a guide only. Always do your own research and check with a trusted adviser if you’re unsure.

• Try Netsafe’s anti-scam site to check if a company’s website or link is legitimate.
• Ask to see the Product Disclosure Statement (PDS) for the investment.  In New Zealand, most genuine investment opportunities are required to provide a disclosure document of some kind. When someone can’t or won’t provide clear information and supporting documents, that’s a major red flag for a possible scam.
• Look the investment provider up on the FMA’s investment scams warning and alerts page.

Anyone can fall victim to a scam. Whether you’re an experienced investor or someone just starting out, scammers have strategies designed to catch you off guard. If you’re looking at making an investment, take your time to do research. Stop and think before you act. Visit bnz.co.nz/latestscams to see recent scam examples that are active in the community. If you’re unsure or have concerns, talk to a registered financial adviser or your bank. And if you think you’ve been scammed, contact your bank immediately. If you’re a BNZ customer, contact us on 0800 735 901 or if you’re overseas, call +64 4 473 5901.

Any views expressed in this article are the personal views the author and do not necessarily represent the views of BNZ, or its related entities. This article is solely for information purposes. It’s not financial or other professional advice, and it’s not intended to be a complete summary of how scams operate in New Zealand. If you need help, please contact BNZ or your financial adviser.

No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article. References to third party websites are provided for your convenience only. BNZ accepts no responsibility for the availability or content of such websites.

BNZ Investment Services Limited, a wholly owned subsidiary of Harbour Asset Management Limited, is the Issuer and Manager of the BNZ KiwiSaver Scheme and YouWealth. Download a copy of the Product Disclosure Statements:

• BNZ KiwiSaver Scheme Product Disclosure Statement (PDF 1.1MB)
• YouWealth Product Disclosure Statement (PDF 1.4MB)

Investments in the BNZ KiwiSaver Scheme and YouWealth are not bank deposits or other liabilities of Bank of New Zealand (BNZ) or any other member of the National Australia Bank Limited group. They are subject to investment risk, including possible delays in repayment. You could get back less than the total contributed. No person (including the New Zealand Government) guarantees (either fully or in part) the performance or returns of the BNZ KiwiSaver Scheme or YouWealth, or the repayment of amounts contributed. National Australia Bank Limited, the ultimate owner of BNZ, is not a registered bank in New Zealand but a licensed bank in Australia and is not authorised to offer the products and services mentioned on this webpage to customers in New Zealand.

BNZ Investment Services Limited (BNZISL) uses the BNZ brand under licence from Bank of New Zealand, whose ultimate parent company is National Australia Bank Limited. No member of the FirstCape group (including BNZISL) is a member of the NAB group of companies (NAB Group). No member of the NAB Group (including Bank of New Zealand) guarantees, or supports, the performance of any member of FirstCape group’s obligations to any party.