Like a pack of sharks who smell blood, the scammers are already circling.
A decade or so ago during the Global Financial Crisis, investment fraud and other consumer scams were rampant. As any crisis spurs a degree of fear among at least some of the population, it’s no surprise the scammers are back in force to prey on people’s uncertainties, fears, and lack of knowledge in some areas.
Figures show that internationally this is already a major problem. Google is reportedly blocking 18 million coronavirus scam emails every single day, while what seems like every financial regulator across the developed world have issued warnings about an assorted array of scams.
To help you keep an eye out for the sharks, here is a collection of six corona-inspired traps to avoid.
Fraudsters take advantage of fear around big headline news, like the coronavirus, to steal money from unsuspecting consumers.
This could be as simple as so-called 'phishing' attacks, via text message and e-mail with messages that appear legitimate — perhaps with a prompt such as “Click here to get your stimulus money” or “update your Netflix payment details”. However, the links are malicious. If the links are clicked, con artists can access a computer or phone and steal personal information such as IRD numbers and bank account data. They can then steal identities, money, or both.
These types of attacks are always underway but ramp up during times of chaos.
While stealing your personal information is usually the top priority (to access personal accounts or build a false online presence), other scams are coming in all varieties, shapes and sizes. Some ask for donations to help fight the virus, are claiming to sell vaccines or cures, downloadable false mapping apps, or great investment opportunities.
Stay vigilant – keep your wits about you.
The best example of this occurring already is with many people’s travel plans. Plenty of Kiwi’s have paid for winter holiday’s they either now can’t take or that have been cancelled by the travel providers. While some travel providers are offering to hold the sums paid in credit, this might not meet individual needs. Other providers are charging hefty cancellation fees, in some cases up to 25% of the purchase price.
In some of these situations, there may be breaches of the ‘unfair contract’ provisions in the Fair Trading Act. For instance, fine print terms and conditions will generally be considered unfair if they put customers (you) at an unfair disadvantage by creating a significant imbalance between the rights and obligations of the company and you - the customer.
There are several things you can do, which might include:
Most often, if you pay any sum to a business and they go bust before they’ve provided you a service or product, you are in a tough position, and have probably lost most or all the funds you paid. This could occur in any number of situations, including:
We strongly suggest getting sound legal advice before entering any contracts – especially if they involve building a home or another significant project. If you must pay a deposit of some kind, try to keep it small – 10% - and ensure you get a receipt! Thoroughly check out the trader you are dealing with before paying any deposit and ensure the size of the deposit is in-line with industry averages.
For internet purchases, stick to reputable sites with timely delivery. Pay by credit or debit card, then, if you don’t get what you paid for, you can apply to your card provider (usually a bank) for a chargeback.
Gift cards can be useful, but always ensure they are valid at multiple companies. If you have got any gift cards and vouchers sitting around, what better time to use them than now?
Investment scams never went away, and now they’re being taken up a notch.
The Global Financial Crisis (GFC) saw investors flock to finance companies, fake term deposits, international share offers, syndicate real estate deals, and scams involving gold and other precious metals.
These sort of schemes are back in force – perhaps you’ll receive an offer from exclusive offshore stock brokers who promise you great deals on cheap shares if you act quickly enough, maybe even something that might tug on your heart strings, such as a health business or medical lab? Of course, this is a scam, and the reason they might be overseas is because once you have sent money out of NZ its usually impossible to get it back or hold the criminals to account. The reason there’s time pressure is so you don’t get a chance to cross-check it with someone reputable – like us!
Always keep in mind:
Investment-related scams are not just targeting those with plenty of money to invest. There are plenty of offshore based online “training courses” which are often focussed on a younger audience. In case you have not seen them, they advertise freely on social media including YouTube and Instagram. Such courses are most often advertised by a quick video of someone on an exotic beach location, perhaps with a laptop, who claims to be earning megabucks in passive income, and 'for a small price they’ll show you how you too can be rolling in easy money'. The people in the video’s seem young, happy, and instead of being at the beach may have a flashy car or be filming from a mansion (the car and mansion are rented for the video shoot, of course!)
This is nothing more than a modern get rich quick scheme.
Always keep in mind:
Over recent years, a spike in NZ house prices has led to many family members – and even friends – helping each other with home ownership. There are several ways this can occur, including as a loan, an outright gift (which doesn’t have to be repaid), or commonly, a guarantee that parents will honour the obligations of a loan if a child fails to meet the conditions.
In each of the situations above, documentation should be completed to ensure everyone is clear on what’s being agreed to, and that everyone is protected should the situation change. We can assist starting this process, though usually a good lawyer is needed to complete some of the documentation – and most importantly to ensure you understand all the benefits and risks of whatever you’re doing!
Let’s recap the top six financial traps for you to avoid:
Keep above in mind, and you’ll have the best chance of avoiding the sharks out there!