Rise in cold call scams costs Kiwis millions

Close-up financial chart on LCD display. Stock photo.

The Financial Markets Authority (FMA) is warning about a rise in cold call scams that are costing New Zealanders millions of dollars.

It says the offers all have something in common - they're illegal, and a sure-fire loser.

Cold-call or "boiler room" scams typically involve bogus stockbrokers, usually based overseas, cold calling people to pressure them into buying shares that promise high returns.

The FMA says that in reality, the shares are either worthless or non-existent. The scams sometimes involve foreign exchange deals, binary options or sports betting.

"These crimes are much more prevalent in New Zealand than people realise and scams really can happen to anyone," says FMA's director of external communications and investor capability, Paul Gregory.

Experienced investors are being scammed, as well as novice investors.

In one case, an experienced New Zealand investor lost US$39,750 (NZ$60,000) after being tricked into thinking he was buying shares in Alibaba before its sharemarket listing.

The man, who is a chartered accountant, has given an interview in which he tells of how he was conned.

The FMA says New Zealanders lose about $6 million a year in investment scams.

Bronwyn Groot, from BNZ's financial crime and security team, says she knows of one case in which half a million dollars was lost.

"These scams take fraud to a new level - they are incredibly slick operations that target informed, high-value investors."

She says one red flag with these sorts of scams is that they often involve a pressured sale. She warns that urgent sales tactics should automatically set off alarm bells.

"If you're not sure, do your homework. Check out the broker, call your bank or the FMA and see if this is a known scam."

If you receive a call about a financial offer, hang up. Never give your financial details to someone you do not know.

Only deal with registered and licensed financial providers. If they are registered in New Zealand you have more protection if something goes wrong.

Do your own research when making any investment. Is the company legitimate? Does the investment sound too good to be true? If you're still not sure, talk to an adviser.

The FMA has a list of scams on its website and more advice on how to avoid scams.

Newshub.