I once got caught out on a scam test and it taught me a valuable lesson. I had ordered a book from overseas and received a legitimate message saying it would arrive the next day.
Then, the same day, another email arrived, apparently from NZ Post, saying there had been a delivery delay. Why wasn't my book going to arrive on time?
Instinctively I clicked. My screen showed me a sad face. The email was a hoax designed to get me to do exactly what I did.
While it was only a test, it showed me how easily I could be fooled if I wasn’t paying attention. An actual event in my life coinciding with a scam email, leading me to lower my guard. Now I stop, I double check, before I click.
The investment space is rife with scams. The stories of loss are often heart-rending, with life savings gone, and little hope of recovery. Perhaps there has been some naivety but equally many of these scams are very sophisticated with fake websites, supporting documents and a real person to talk to.
It's easy enough to say that if an offer is too good to be true then it likely is. But if you're not an experienced investor, how easily can you make that judgement? Add in some perceived urgency — "you need to invest today because the offer expires tonight" — and the problem is compounded.
Scam victims come from all walks of life. This includes overconfident investors, particularly those who are older, successful and used to making their own financial decisions.
Confidence can sometimes work against us. It's thought that only a small percentage of scam victims report the theft, which is understandable given the embarrassment involved.
Often those who have been scammed will say the bank should have known that the payment was suspicious. It’s not that easy, but banks definitely have a protective role to play.
The recent introduction of account name matching is one positive step — technology that helps verify that the account name matches the account number before a payment is made. But ultimately, it's up to each of us to take extra care.
Consumer Protection has a Scam Watch page on their website. The Financial Markets Authority (FMA) has a scam alerts section listing organisations where extreme care is needed. These are worth checking if you're unsure.
You should never feel pressured to rush into any kind of deal (that's a tactic to get you to stop thinking rationally).
Take a breath. If in doubt don’t click the link or jump at the opportunity. Find alternative means of investigation and confirmation. An extra few minutes can be time very well spent.
■ Stephen McFarlane (stephen@centralwealth.nz) is a Certified Financial PlannerCM and a Director of Timaru financial planning business Central Wealth Limited.
