By Gareth Vaughan
Bronwyn Groot, fraud education manager at the Commission for Financial Capability (CFFC), has a stark message for you.
You will be targeted by fraudsters, or scammers.
Groot joined the CFFC last July after 20 years in banking, including several years working in BNZ’s fraud investigation and security department. And she is in no doubt that the volume of fraudsters is increasing and the sophistication of their schemes is improving.
"You will be targeted, there's no question about it. You will be targeted at some point in time. The big thing you need to do is stop and wait. Stop, wait and think, stop, wait and validate. Is this for real? And instead of thinking 'what could I win here' think what could I lose?' Make sure you talk to someone," Groot told interest.co.nz in a Double Shot interview.
"The scammers, or the fraudsters, will swear you to secrecy, confidentiality all that sort of stuff, but make sure you talk to someone whether it be a friend, a family member, the bank staff, anybody."
"The size of the problem is definitely growing. We don't have any figures that we can throw out there. There hasn't been any large scale research done on this to actually see how big the problem is. But I know, coming across my desk on a daily basis, that people are losing [are] losing hundreds of thousands, if not millions of dollars every day," says Groot.
"When I started this role seven years ago I used to go 'wow' when someone lost $25,000. Sadly now when someone tells me they've lost over $1 million I'm like 'ah gosh, another one'."
She says the volume of victims has increased "hugely" over the past seven years, and she's only seeing the tip of the iceberg.
"People don't report it because they're embarrassed, they're scared, they don't know where to go to report it, and maybe they just don't even know what to do."
"If you have lost money contact your bank straight away. Let them know exactly what happened. You can then go to other agencies, definitely go to the police. There can be no resources put in to help victims if we don't know how big the problem actually is," says Groot.
Much of the victims' money is going to organised crime, she adds.
"We know that a lot of the money is going to organised crime. They're running a really sophisticated business model. They reinvest the money back into their business to have sophisticated websites, sophisticated documents all to lure you into that trap of believing that it's real. The money's being used for drugs, for slavery, human trafficking, all of that sort of stuff. You've also got big fat cats who are spending your money lavishly on a lavish lifestyle," says Groot.
The CFFC has issued what it calls The Little Black Book of Scams, which is designed to help people prepare for and recognise fraud. It details 11 different types of fraud, plus a series of red flags - or things to watch for. One of the key red flags is cold calls given it's illegal to sell financial products in New Zealand off the back of a cold call.
Overseas investment scams are currently commonplace.
"They normally start with a cold call. You get a cold call out of the blue [from] someone who eventually becomes your friend and you decide 'ok I will invest in these shares'. They have a very legitimate looking website that's up, probably even have 24/7 chat available to answer any questions that you may have. The sad reality behind these overseas investment scams is that hundreds of thousands of dollars is going overseas and it's not able to be recouped," says Groot.
Romance scams are also common, Groot says, including via the online scrabble game called words with friends.
"You sign up and you can ask various people for help if you get stuck with words. And I am hearing more and more and more people that are falling into romance scams through words for friends. And they're using a lot of New Zealand based money mules," says Groot.
Her advice to victims is they're not alone.
"They need to realise that they are not alone. They are not going to be the only victim. It's also really difficult in New Zealand to know where to go. We don't have a one stop shop to go to to report scams. So you can either go to CERT, report it through them, you can go to Netsafe, report it through them, but definitely if you have lost money go to the Police," Groot says.
Meanwhile Groot wants people to stop talking of "scams" and instead use the word "fraud." She argues the word fraud removes the stigma associated with being scammed, and might encourage people to talk more openly about the methods used to target them, spread the word to prevent others becoming victims, and focus resources on stopping offenders.
"I think as soon as you hear the word 'scam' straight away you think 'how can they be so stupid, how can they be so gullible.' I hear it all the time. And I think we need to name it, what it actually is. It's not a scam, it's fraud. Someone has gone out of their way to take money from you," says Groot.
"We're constantly blaming the victims. Instead we should be blaming the offenders. They're the ones who are taking the money. Anyone can fall victim to a fraud at any time, you don't have to be silly. It's just the perfect fraud at the perfect time by a highly skilled offender."
It's not just the elderly being conned. Groot is aware of a 21 year-old victim and says a lot of younger people are being targeted by employment scams, make some money quick type frauds.
"Any age group is coming across our desk."
Given many of the fraudsters are operating across international borders, Groot says cross border cooperation from authorities is required to tackle them.
"I believe we can be doing more. Let's share where the money went. Follow the money trail and share that information."
Groot talks of the bank account linked to an overseas investment scam she saw three years ago still being in use in Hong Kong.
"No one has shut it down. There's that sort of information that needs to be shared," says Groot.
*This article was first published in our email for paying subscribers early on Friday morning. See here for more details and how to subscribe.
9 Comments
A good article, something like this wouldn't go amiss being published every month or two. I am currently trying to help my father recover $17K from a low level local fraudster. He was a soft touch as he had moved into a new neighbourhood (out of Auckland into a smaller locality). Part of the problem in recovery is my father, the same sponteneity that saw him want to help someone also means he struggles with the admin required. Plus the additional layer of shame associated with being the victim of a scam.
There is an old saying about how you can't con an honest man. I disagree. The very nature of the crime is that it involves a misreprentation, a lie. These people will got to great lengths to appear plausible, and often have honed their trade over many years. They learn from every failure. The are confidence men and women, never forget that.
My father is the 2nd person close to me conned recently. The similarity in the reaction, and lack of will to recover the money, is marked. They don't want to be thought of as a victim. These were both face to face cons mind you. I will get the bastard though, but we will have to be a little creative with the system to get it. The con man is on the dole, can't see him every not being, so we will go the small claims route and get it garnished out of his benefit. The Police have been a let down in this instance, saying it is a civil matter. I don't mind, the recovery is more likely if pursued in the civil justice system.
A good mates father just got taken for his modest retirement savings over the share trading one outlined in the article. They got access to his computer and cleaned him out via his credit card.
If it seems too good to be true, it probably is. I even consider myself a victim of a business scam, a Franchise system that I figured out was never going to be profitable after 3 months. I saw the same victim behavioiur in fellow franchisees, who were much more exposed and refused to admit to themselves it was a con. Some of them carried on for years before finally admitting defeat, losing lost labour of those years. The company still trades, but not with any of the ten Francises that put up $120K or so. Gave the guy free capital to start up.
The retirement savings must have been very modest if it all fitted onto a credit card. Keep credit card limits lowish if you don't need it.
With most banks you can probably turn off, using the app, online payments and cash withdrawals from credit cards.
I'd only use my bank for share trading.
Revolving credit is not usually associated with a credit card as far as I am aware. Two completely different things. Credit is also not "savings". Perhaps they transferred money from other accounts to the credit card as they had access to the bank account. Generally credit card deductions can be stopped after the fact making them kind of safe.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.