How to avoid financial scams during Covid-19 pandemic

Jessica Satherley
How to avoid financial scams during Covid-19 pandemic
Both consumers and investors should be vigilant during this pandemic.

Regulators are warning consumers and investors of a spike in scams amidst the Covid-19 pandemic.

"Globally there will be an increase in financial crime during Covid-19, because in times of hardship people resort to methods that they usually wouldn't," says Westpac Senior Manager of Financial Crime, Bradley Sawden.

During a time of uncertainty and panic, scammers can exacerbate the turmoil by targeting people via fake online stores, phishing emails and telephone scams. 

The Financial Markets Authority (FMA) has listed several fraudulent investment opportunities within the following industries, which they’ve already seen abroad: 

  •      Goods or industries experiencing strong demand, such as sanitary products 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. 

Consumers should be aware of common techniques used by scammers such as: 

  •      Phishing emails, claiming to be from health authorities and organisations like the WHO, banks or insurers, trying to trick people into sending sensitive information, or opening attachments with malware.
  •      Netflix phishing email, claiming that someone’s subscription has lapsed, but instead steals credit card and banking details when the victims enter their information.
  •      Telephone scams, pretending to be from health authorities, claiming that a relative has fallen sick and requesting payments for medical treatment.
  •      Covid-19 infection map, claiming to track the progress of the virus worldwide, but when installed on a device, it hacks into passwords and other sensitive information.
  •      Text messages, themed around Covid-19 might include a link to direct people to health testing facilities, but this link may install malware on your device that steals personal information and banking details.
  •      Door knocking, targeting vulnerable people at home in self-isolation, posing as health organisations offering free ‘Coronavirus tests’, but then asking for a cash payments or bank transfers.  Now that New Zealand is going into lock-down, be extra aware of door knockers. 

INTERPOL has also warned of global scams such as fake online stores selling medical supplies in high demand. 

“With surgical masks and other medical supplies in high demand yet difficult to find in retails stores as a result of the Covid-19 pandemic, fake shops, websites, social media accounts and email addresses claiming to sell these items have sprung up online. 

“But instead of receiving the promised masks and supplies, unsuspecting victims have seen their money disappear into the hands of the criminals involved,” INTERPOL says. 

The agency recommends that anyone buying supplies online should verify that it is a legitimate company that they are dealing with and check online reviews of a company before purchasing. 

The FMA has highlighted the warning signs of an investment scam: 

  •      Unsolicited offers / ‘cold’ calls or emails.  It is illegal to sell financial products this way in New Zealand. 
  •      High returns with low or no risk.  In finance, high return investments almost always carry a higher risk. 
  •      Unlicensed providers.  In New Zealand, the FMA licenses business wanting to sell most types of investments. 
  •      ‘Exclusive’ or ‘limited time only’ offers.  This is often a ploy to make you feel special. 
  •      Offshore and/or online-only businesses. Overseas financial services businesses are not regulated by the FMA. 
  •      Little or no information in writing.  Legitimate investments must have documents explaining the investment in plain English. 

If you experience any of the behaviour that fits the descriptions above, you should not hand over any money and you should report them to the FMA. 

Complaints can be made by phone to 0800 434 566 (or +64 3 962 2698) or email questions@fma.govt.nz 

Related links:

10 Questions about your KiwiSaver and COVID-19

Inland Revenue tax relief amidst COVID-19: What's on offer

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