Investors Beware

In recent times we have seen a proliferation in New Zealand of investment scams. These schemes have cost investors many millions of dollars over the years. Here are some scams that have been promoted in New Zealand.

Prize and lottery scams
These scams announce to people that they have won a prize (often for a competition they didn't even enter) and require them to pay to receive the prize. You could be approached through the mail or an unsolicited telephone call. An example requested the recipient to send an amount of money to a London post office box to receive their “Unpaid Cash Prize” of $1,793.95. This letter, like many of these schemes, looked professional and authentic until greater attention was paid to the text of the letter. It had two different amounts to send and the amount being “claimed” was described in both dollars and pound sterling in different parts of the same letter.

Will beneficiary letters or emails
These schemes offer to find out if you are related to anyone in the UK who is deceased and may therefore have a claim on their estate. If you think you are a beneficiary to a UK estate you can contact the Treasury Solicitors office at Queen Anne's Chambers 28 Broadway London SWI.

"Nigerian" scams
The Nigerian scam, as it is commonly called, is an advanced fee type of fraud.
The scam runs like this - you receive a letter (usually by email) allegedly written by a Prince or top officer from a company or a quasi government corporation in an African state (the most common is Nigeria). The letter will offer you an opportunity to share in a million dollar bonanza.

The letter explains that citizens of that country are forbidden to operate foreign bank accounts or send funds out of their country. What they need is access to a foreign account that can be used to transfer money through. The amount of money usually mentioned is upwards of US$10 million. All that's needed are details of your bank account and a few blank pages of letterhead if you're a company. In return you are offered an opportunity to share in the millions.

Sound too good to be true? It is, and should be avoided at all costs! You will be asked to pay a processing fee of tens of thousands of US dollars and that's the last you will see of your money, or the promised share of $30 million.

If you're approached with an offer that seems too good to be true, don’t:
• get sucked in by the hype - take time to think about it and to check out the offer and the company
• get sucked in by statements such as, "this scheme is legal". Statements like this need to be read with care. You need to ask yourself why such a statement is necessary
• believe claims that it is approved by the Ministry of Consumer Affairs or Commerce Commission
• send money away - particularly to only a PO Box number or overseas - until you have checked out the company
• invest money without first seeking independent professional advice.