COVID-19 related scams
While many people have been struggling with the impacts of COVID-19, scammers have been busy taking advantage of the crisis. By including COVID-19 in their “pitch” they are more likely to prey on people’s fears and desires.
How common is this problem?
The Financial Markets Authority has seen a 79% increase in investment scams since the pandemic began and issued 36 warnings in the first half of 2021. We’ve outlined the most common COVID-19 investment scams below.
What types of investment scams should I watch out for?
Goods or industries experiencing strong demand, such as entertainment or pharmaceutical companies,
Products supposedly effective against COVID-19, such as vaccines, medications, protective gear or equipment,
So-called "safe haven" assets, including cryptocurrencies or precious metals such as gold, silver or platinum,
Promises of “passive income” or “cash flow” to appeal to people looking for new sources of regular income,
“Pump and dump” of low priced stocks, “pumped” up by fraudsters spreading false information about a company, then “dumped” by them once unsuspecting investors rush in.
While some of these investment opportunities may be real, many are fake. Getting professional finance advice before investing is generally the best approach.
More common general scams to watch out for include?
Social Media Scams: Scammers using social media platforms to identify and/or make contact with possible victims – friending and messaging them, asking questions or making suggestions in post comments, conducting fake surveys. Read Nisha’s encounter with a scammer she met on LinkedIn in May 2021.
Romance Investment Hybrids:
Targeting prospective victims on popular dating apps, winning people’s trust with sophisticated back-stories and accomplices, before convincing victims to transfer money overseas to buy supposed investments. How Jane lost over $100k to a scammer she met on Hinge in early 2021.
Imposter Websites: Using the names, logos, addresses, certifications and other details of legitimate NZ businesses, to fool investors that the website and/or its managers are part of, or associated with, the legitimate business. How a small Christchurch investment company was imitated in late 2020.
How can I protect myself?
Resources available from reputable New Zealand organisations include:
Financial Markets Authority: "Have you been scammed?",
Consumer Protection Scamwatch: “Is this a scam?”,
Netsafe: “Tips to avoid scams”,
CERT NZ: “Phishing”.
This information is offered for educational purposes only. For specific advice on financial scams and how to avoid them, please contact one of the resources listed above.