SPOTTING COLD-CALLING INVESTMENT OFFERS AND ‘BIG-WIN’ SCAMS Article by Marise James STAPLES RODWAY TARANAKI email@example.com
What should you do if somebody contacts you with what seems like a great opportunity to make money? It could be an investment opportunity or a share market tip based on ‘secret’ information. It could be expert advice on how to unlock superannuation funds early. It could even be special gambling software that promises to pick winners every time.
TAY CALM, BREATHE AND DON’T commit to anything. It is important that you give yourself time to research the details and seek advice. You may have discovered the perfect broker (is there such a thing?) but, if your first contact about this fantastic opportunity came via a call out of the blue from someone you have never heard of, you may also be the victim of an international scam that could cost you a lot of money. The Financial Markets Authority (FMA) recently announced that it is receiving an increasing number of complaints about dubious offers that involve transferring funds overseas. FMA’s Director of Compliance Elaine Campbell is warning consumers to stay away from cold call “big win” scams where investors are asked to transfer funds to overseas or unknown locations. Look out for the following signs to avoid becoming a victim of cold call investment scammers: Requests to transfer funds overseas quickly to the account of a firm or person Claims you must act now or miss out on a big pay-out Discouraging or prohibiting you from seeking independent professional advice Offers involving software or a “trading system” where consumers must buy a licence or software to participate And then take these four steps to protect yourself from the potential scam: 1. Check the company out on the website. Many will have authentic looking sites, but you should delve deeper. Does it provide a New Zealand web address? Look for the names of individuals connected to the company and conduct a Google search on them. 2. Visit the Financial Service Providers website (www.business.govt.nz/fsp) or the FMA website (fma.govt.nz) to see whether the offer is made by a
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legitimate financial services provider. You can also phone the FMA Helpline on 0800 434 567. 3. Check the FMA’s list of unauthorised firms also available on their website. The FMA publishes names of firms and people it has identified as operating without registration or authorisation in New Zealand, or who are not complying with New Zealand’s financial services laws. There is also a similar international list on the FMA’s website, provided by the International Organisation of Securities Commissions (IOSCO). 4. Seek independent financial advice before making any investment decisions. Most importantly, don’t rely on the advice of the person trying to sell you the investment. Unfortunately, should you fall victim to one of these scams, Mrs Campbell says that the FMA generally can’t help consumers recover funds once they’ve been transferred offshore. It is also very unlikely that the police will be able to help either. Examples we have seen include hot tips to invest in oil, mineral and futures options that promise returns within six months and then ask for more money due to unexpected funding problems; share trading schemes in offshore markets with significant unauthorised trades initially in blue chip shares, but then venturing into high risk speculative trades, resulting in total loss of capital. Our advice is that if it seems too good to be true, it probably is too good to be true. Use your instinct and common sense and if you come across an offer that you’d like a second opinion on, have a chat with your usual Staples Rodway contact to assist you with your decision.
Published on Aug 21, 2015
Published on Aug 21, 2015
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