Recently we had a strange review appear on our Facebook page. It was not regarding our people, nor our services – but it was just specific enough to seem passably legitimate to the uninitiated.

The reviewer, allegedly from Delaware, thanked a Mrs Lilian Wilson for growing his $1000 investment into $12,000 in just one week. He said. “I advice [sic] the entire public to invest with Mrs Lilian Wilson.” He was even kind enough to leave her WhatsApp number and a Gmail address. What a guy!

This is, of course, a scam. It was reported right away and we’re currently waiting for Facebook to action the removal. We don’t have a Mrs Lilian Wilson on our payroll, and we don’t deal in the kind of get-rich-quick schemes she seems to purvey. Our clients and regular followers would know this already – but would a new visitor to our page be caught out?

Investment fraud is reportedly on the rise, be it through schemes like our unlikely reviewer or something more sophisticated (Tinder Swindler, anyone?)

As recently as last week there was an article on a man in Northland losing his savings in a cold-calling scam disguised as crypto investment. Fake crypto platforms are the scam du jour for some fraudsters in our current digital age – and a lot of it is through social media platforms. Scammers posing as offshoots of trusted companies like Tesla, Amazon or even Facebook itself have cropped up advertising non-existent cryptocurrencies from these companies.

Around the same time Facebook was legitimately announcing the Meta rebrand, an advertisement was reportedly doing the rounds featuring a photo of Zuckerberg himself offering a new Meta cryptocurrency. Other iterations have since popped up, often using the new Meta infinity symbol. To be clear – Meta does not currently offer any cryptocurrency.[i]

Just take a moment to think on the irony of that one… Scammers using Facebook advertising and the Meta symbol to trick people, on Facebook, into clicking on their dubious links. This is despite the combination of AI and old-fashioned human moderation used to moderate advertisements on the platform.

Alternatively, some scammers are reaching further afield to tug on the heartstrings of the vulnerable through dating apps. The aptly named “pig-butchering” technique – referring to how the target is “fattened up” before being butchered – is both financially and emotionally brutal. Typically, scammers will avoid asking directly for money, instead grooming their targets to get them interested in crypto and other assets. The scammers can funnel their victims to fake investment websites, ultimately getting them to deposit money on these websites which they cannot get back.[ii]

Moving away from cryptocurrency, there’s still the old school quick money scams floating around too. Ones that prey on the very human desire to have power and autonomy (particularly over your financial situation). These tend to fall under the same lines as our review-happy friend, where a small buy in is promised huge returns in an unbelievably swift time frame.

You might even see initial “returns” from these; with a classic Ponzi scheme, the money contributed by later investors is used to pay artificially high dividends to the original investors. The fraudulent scheme depends on new investors to keep repaying existing ones[iii]. A local example you may recall would be Warren Pickett and Waipawa Finance , or nationally the even more infamous Ross Asset Management. This was the biggest Ponzi scheme to ever happen in NZ when it unfolded in 2012 – more than 1200 people were scammed out of an estimated $115m. It was only uncovered when investors complained to the Financial Markets Authority that they had been unable to withdraw funds several months after requesting them.

There’s a golden rule associated with any offer that comes your way – if it seems too good to be true, it probably is.

Investing is not a competition. Investing is not even a skill. It’s a discipline. This is revealed with the passing of time, not short-term spurts of speculation. Guessing the market on the daily gives you no better odds than flipping a coin. On a monthly basis, 63% are positive. On a 12-month basis, 75% are positive. One a five-year basis, 88% are positive. 95% of 10-year periods and 100% of 20-year periods.[iv]

Essentially, it boils down to the proven fact that time will win over any guess… so if someone’s offering you easy immediate rewards and little to no downside, it should give you pause.  Tighten your laces and run a mile.

If you would like to take more legitimate steps towards getting your financial house in order, call the trusted professionals for a chat about your situation and goals. And by “the professionals”, I am most definitely not talking about WhatsApp numbers left in random dark corners of the internet.

·                     Nick Stewart is a Financial Adviser and CEO at Stewart Group, a Hawke's Bay-based CEFEX certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver solutions. 

·                     The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from an Authorised Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

[i] https://mashable.com/article/facebook-cryptocurrency-ad-scams

[ii] https://www.ndtv.com/business/pig-butchering-crypto-scam-know-about-this-scam-where-fraudsters-use-romance-as-a-hook-to-lure-people-into-bogus-investments-2778656

[iii] https://www.mbie.govt.nz/dmsdocument/2903-ponzi-discussion-paper-pdf#:~:text=A%20Ponzi%20scheme%20is%20a,This%20attracts%20new%20investors.

[iv] https://www.stewartgroup.co.nz/we-love-to-write/2021/2/13/be-wary-of-financial-advertisers