Safeguarding Your Finances: A Comprehensive Guide to Scam Prevention

Safeguarding Your Finances: A Comprehensive Guide to Scam Prevention

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How to avoid modern scams

Every year, millions of dollars are being lost to scammers by individuals in New Zealand. Like everyone in the digital age, New Zealanders face the persistent menace of scams that result in substantial financial losses each year. And it’s not just “older people”.  Nine out of 10 New Zealanders have been targeted by a scam in the last 12 months. Recently one of New Zealand’s top media commentators was left sobbing after handing over control of his mother’s bank account to a scammer.

In this comprehensive guide, we'll explore how you can use scam prevention to empower you with knowledge and strategies to protect your hard-earned money.

What to Look Out For

Scams come in various forms, and scammers employ multiple tactics to deceive their victims. You must be vigilant and recognise the warning signs to shield yourself from potential scams. Here are some key indicators Netsafe says should raise red flags:

Unsolicited Contact

Be cautious of any contact that comes out of the blue, especially if the person claims to represent a legitimate organisation like a bank, embassy, or internet provider. New Zealand is seeing a massive uptick in text messages scams this year.

Tech Troubles

Scammers often exploit technical issues, such as problems with your phone, laptop, or internet connection, as a ruse to gain your trust and offer to "fix" these issues.

Password Requests

Legitimate organisations will never ask for your passwords. It's a clear sign of a scam if someone requests your account passwords.

Verification Requests

Scammers may attempt to trick you into verifying your account or personal details. Do not respond or click on links in such communications, even if they appear authentic.

Off-Platform Transactions

Avoid making payments outside of trusted online trading or booking platforms. Scammers may try to lure you into conducting transactions through unconventional means.

Upfront Payments

Be cautious if someone offers money or prizes in exchange for an upfront payment, often disguised as a "processing" fee. Scammers on Facebook Marketplace will ask for payment first then disappear leaving you out of pocket.

Online Relationships

Scammers often pose as friends or partners you've met online to extort money. Romance scams use our own emotions against us. Only send money to individuals you have met in person.

Unusual Payment Methods

Scammers prefer untraceable payment methods like pre-loaded debit cards, gift cards, Bitcoin, iTunes cards, or money transfer systems.

Remote Access Requests

Never grant remote access to your device unless you have actively sought out the service being offered.

Pressure to Act Quickly

Scammers may use high-pressure tactics to force quick decisions, whether to avoid imagined consequences or to seize apparent opportunities. If you’re feeling under pressure, that’s a red flag you need to disengage.

How Common Scams in New Zealand Work (And How to Avoid Them)

To navigate the landscape of scams effectively, it's crucial to be aware of the most prevalent scams in New Zealand. While scams can take numerous forms, some of the most frequently reported ones include:

Dating and Romance Scams

How They Work:

Scammers utilise online dating platforms to establish relationships with individuals seeking love. Sometimes known as catfishing. After earning the victim's trust, scammers request money for various fictitious reasons, gradually escalating their demands.

How to Avoid Them:

  • Be cautious of vague or unrelated messages on dating sites.
  • Stick to communicating through the dating platform to bypass potential security risks.
  • Never provide financial assistance to someone you've only met online.

Investment Scams

How They Work:

Fraudsters entice victims with promises of high returns on investments, often using trending opportunities like cryptocurrencies. They employ persuasive tactics backed by convincing paperwork and websites.

Learn more: investment scams in New Zealand

How to Avoid Them:

  • Take your time to evaluate investment opportunities; legitimate financial advisers and institutions won't pressure you.
  • Research potential investments, starting with the Financial Markets Authority's list of scams targeting New Zealanders.

Transfer Scams

How They Work:

Scammers send unsolicited letters or emails claiming to represent an estate or finance company. Victims, typically sharing the same last name as a deceased individual, are asked to pay "legal fees" in exchange for a share of an inheritance. The infamous "Nigerian prince" scam falls into this category. Other times scammers will send a text saying something like: “Hey, Mum. I lost my phone, and I’m in trouble. I need some money.” can you quickly transfer me some money?” Here they try to get worried parents to fork out money before thinking too clearly.

How to Avoid Them:

  • Never respond to unsolicited emails or click on "unsubscribe" links in spam emails.
  • Refuse to transfer money to unknown individuals.

Phishing Scams

How They Work:

Phishing scams involve scammers posing as trusted entities, such as banks, to trick victims into revealing personal information. These often come via text or email, with recipients directed to fake websites to "resolve" account issues.

How to Avoid Them:

  • Avoid clicking links or replying to suspicious emails.
  • Use the "Report spam" or "Report phishing" feature, if available, and delete the message.
  • Block the sender's email address or profile.

Online Trading Scams

How They Work:

Scammers target online sellers or buyers, particularly in transactions involving high-value items like cars. They may pretend to pay via PayPal and request additional money for "shipping."

How to Avoid Them:

  • Exercise caution when dealing with overseas traders online.
  • Avoid wiring money through services like Western Union.
  • Complete transactions within the trusted platform to maintain security.

Computer-Hacking Scams

How They Work:

Scammers use various methods, including malware-laden links in emails and deceptive online adverts, to compromise devices and extract personal information. Fake gift cards and survey scams are prevalent on social media.

How to Avoid Them:

  • Refrain from clicking unusual links in emails or social media messages.
  • Don't engage with questionable online advertisements; perform a web search before clicking.
  • Keep your internet browser, operating system, and antivirus software updated.

Computer "Service" Calls

How They Work:

Scammers pose as tech support agents from reputable companies and claim that victims' computers have issues. They aim to gain remote access to devices and extract sensitive data.

How to Avoid Them:

  • Hang up immediately if someone calls claiming your computer has a virus; legitimate companies won't initiate contact this way.
  • If in doubt, contact a local computer repair company.

Identity Theft – A Close Relation of Scam

How They Work:

While it’s not necessarily a scam, identity theft is also on the rise. Sometimes this could be due to your own carelessness being seized upon by crooks: maybe you were thoughtless with your post or were using weak passwords online.

However, it is now more common that identity theft might not even have much to do with you at all! New Zealand’s biggest data breach saw the scarcely believable number of over a million past-and-present drivers’ licences stolen. The breach illustrated part of the issue: we must keep proving who we are due to AML/CFT requirements, which means a wide array of companies and agencies hold deeply personal information about us, including copies of our identification and proof of address. Your identifying information might be held by law firms, lenders, real estate agents, accountants, insurers, financial advisers, and so on. This information is now the target of criminals, who can steal our identity then use it to run up debt in our name, or worse.

How to Avoid Them:

  • Keep your mail safe.  
  • Carefully check your banking and credit card account statements.
  • Create difficult logins and passwords.
  • Destroy (e.g., shred) any important documents instead of throwing them in the bin or recycling.
  • Ask providers you’ve worked with in the past to delete information they hold on file about you, then obtain written confirmation they’ve done it. This helps minimise your digital footprint – the number of places and quantity of your personal information online.
  • Check your credit score regularly. If there’s anything on it you don’t recognise, for instance a new loan in your name you didn’t apply for, then you know someone is impersonating you. The good news is then you can go about setting the record straight.
By arming yourself with knowledge and a healthy dose of skepticism, you can reduce your vulnerability to scams and help protect your finances. Stay alert and remember that staying informed is your best defence against scammers.

What to Do if You Get Scammed

If you fall victim to a scam, it's essential to take immediate action to minimise damage and increase the chances of recovering your losses. Here are steps to follow if you get scammed:

  • Cease Communication: Immediately halt all interaction with the scammer.
  • Document Everything: Gather all relevant details, including messages, emails, and payment receipts.
  • Report the Scam: Inform the appropriate authorities and report the scam. In New Zealand, you can report scams to Netsafe, or if theft is involved, to the Police.
  • Inform Your Bank: If the scam involves financial transactions, notify your bank or financial institution to secure your accounts and investigate possible chargebacks.
  • Change Passwords: Update the passwords for all your online accounts, especially if you shared them with the scammer.
  • Seek Legal Advice: In certain situations, consulting legal counsel may be necessary, particularly if significant financial losses occur.
  • Get Support: Victim support has guides to follow and helplines to call. Getting scammed can be an emotional roller coaster, it’s important to talk to someone as you go through the process.

Tips and Tricks to Spot a Scam:

  • Preventing scams starts with recognising them before you become a victim. Here are some tips and tricks to help you spot a scam:
  • Be Skeptical: Approach unsolicited offers and communications with doubt. If something appears too good to be true, it likely is.
  • Get scam alerts on Facebook: Stay informed about scams by following Scamwatch Facebook page for daily scam alerts.
  • Verify Legitimacy: When contacted by an organisation, independently confirm their legitimacy using official contact information, not the information provided by the sender.
  • Do Your Research: If uncertain about an offer, conduct online research using keywords related to the potential scam. Look for reviews or warnings from others who may have encountered the same scam.
  • Beware of Phishing: Stay vigilant against phishing attempts, where scammers impersonate legitimate organisations to steal your information. Always verify the sender's authenticity.
  • Trust Your Instincts: If something feels off, trust your intuition, and seek advice from a trusted friend or family member.

How to Protect Your Information:

  • Password Management: Utilise strong, unique passwords for each online account and consider employing a password manager for security. Bitwarden does a great job and is free.
  • Use Two-Factor Authentication (2FA): Activate 2FA for your online accounts to enhance security. Google Authenticator, Bitwarden and numerous others are available for free.
  • Privacy Settings: Review and adjust privacy settings on your social media profiles to limit public access to personal information.
  • Email Security: Exercise caution when opening email attachments or clicking on links, especially from unfamiliar senders.
  • Guard Personal Information: Never disclose sensitive personal information, such as passwords or financial details, online or over the phone.
  • Regularly Update Devices: Keep your computer, smartphone, and other devices up to date with the latest security patches and updates.
  • Secure Your Banking: Routinely monitor your bank accounts for unusual or unauthorised transactions. Set up alerts for account activity.

The Bottomline: Stay Vigilant

Safeguarding against scams necessitates vigilance, awareness, and informed decision-making. By recognising warning signs, identifying common scams, understanding appropriate actions when scammed, and implementing preventive measures, you can protect your financial well-being and personal information in today's digital world.

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