Multiple agencies are urging Kiwis to "be vigilant" after a man lost $160,000 in an online trade portal scam.
The man, who Financial Services Complaints Limited (FSCL) refers to as Jack, had just come into some money when he was emailed by an "investment firm".
It promised customers would be able to access a "self-directed investment account that enabled them to trade stocks".
Interested in what he saw, Jack clicked the website's link — doing a bit of research to see if it was legitimate.
He "read previous client's reviews and success and was happy with what he read, so approached the firm to make further enquiries," FSCL said.
After signing up, the man was given access to a "purported online trading portal", offering him the opportunity to trade dummy shares.
"He was amazed with the success he was having with the shares he was given to play around with," FSCL said.
Feeling positive about his experience so far, Jack authorised the payment of $160,000 into his trade account. The firm was based in the USA, so he had to transfer funds through an online transfer service.
It wasn't until three months later that Jack realised he was the victim of a scam.
The trading account was actually a "demo account" where no real-world trades could be made.
He immediately contacted the money transfer service, wanting his money returned.
"The money transfer service contacted the intermediary bank and requested a recall from the investment fund's bank.
"Unfortunately, all the funds had already been withdrawn from the account."
He made a complaint to the FSCL, saying the transfer company hadn't done enough to get his funds back, but this complaint was unsuccessful.
"Although we felt very sorry for Jack, this was a very sophisticated fraud. Once the money has been transferred to the overseas scammer's account and the scammer has withdrawn the money, it is usually impossible to recover that money," FSCL's financial ombudsman Susan Taylor said.
"Money transfer services have some protections in place, as the sender of the money, the consumer is best placed to make sure the person they are dealing with is who they say they are and that their business is a legitimate business.
"We often see the scammers proactively reach out to consumers first, which is usually an automatic red flag. If you did not request contact from the specific firm, tread very carefully. Investing money overseas with a company you have never dealt with personally before carries large risks," she said.
'Be vigilant'
Taylor is urging Kiwis to “be vigilant” around fraud, with a steady number of complaints about financial scams coming in.
"With online transactions part of everyday life for most New Zealanders, scams are becoming more technologically sophisticated with fraudsters constantly designing new ways of scamming their victims," she said.
"If something seems too good to be true, it probably is."
The advice comes as fraud awareness week kicks off, with organisations encouraging Kiwis to learn how scammers operate.
"Consumers also need to be aware that recovery of fraudulent transactions on credit cards or from online money transfer services is often difficult with very limited chances of success," Taylor said.
"They shouldn't rely on being able to get a refund in place of carefully considering the trustworthiness of those they deal with online."
The Ministry of Business, Innovation and Employment (MBIE) said $198 million had been lost to scams in the last year.
MBIE's Fraud Awareness Week spokesperson Ian Caplin said scammers are especially targeting "those with savings or investments who are looking to earn a little bit more from their money".
"It's important to remember real investments don't just come out of the blue. If it seems too good to be true, then it probably is," he said.
"If you receive unsolicited investment offers via email or through a 'cold call', ignore it. It's illegal to sell financial products through these methods in New Zealand."
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