10 December 2020

Sophisticated gold scam targets Kiwi investors

Offshore scammers used radio ads and an 0800 number to dupe Kiwi investors earlier this year, and while one woman was warned off by her local bank, it’s feared others may have actually lost money.

In April, the Financial Markets Authority (FMA) issued a public warning about “MetalsWise” – an entity which had been touting investments in precious metals, placing advertisements on a popular music radio station, and using a toll-free 0800 phone number to get potential victims to call.

Warning signs included MetalsWise not being on New Zealand’s Financial Service Provider Register, and the website being just two months old and hosted in the US, despite saying they were in the UK.

But the UK’s Financial Conduct Authority said they weren’t authorised to operate there either, so the FMA issued a public warning about MetalsWise and posted it on its website and Facebook.

Two weeks later, Oamaru retiree Mary* emailed the FMA. She said she’d been in contact with MetalsWise by email and phone, speaking with a man who called himself Jack Dawson.

“[He] had an American accent but said he was in London. This was the first red flag for me,” she says. A second man she spoke with also had an American accent. Mary says both men were very friendly, and “not in a hurry for [payment] for a start”.

She was told she could start buying gold and silver without any upfront payment, so she agreed to invest $10,000 on credit. She says they soon “let me see the results of [my] investing, online” –showing an unrealistically high profit within weeks.

But it was then they started pressuring for payment – before the end of the month – so Mary went down to her local bank, with the intention of sending $10,000 to an account in Spain.

Fortunately, bank staff became suspicious when she told them about MetalsWise, and suggested she get financial advice before investing. A financial adviser’s office then suggested she contact the FMA, at which point she was told of the warning already posted about MetalsWise.

FMA Investor Capability Manager Gillian Boyes says the case not only shows the lengths scammers will do to appear legitimate, but also the importance of doing basic checks before you invest.

“Before you invest with anyone, two basic internet checks are essential,” says Boyes. “First see if they’re on the Financial Service Providers Register, which they should be. If their register entry shows they’re licensed by the FMA, that provides additional protections.

“Then do a search of the FMA’s ‘warnings and alerts’ list, and if they’re on that, avoid them at all costs. Even then, still be cautious. Check out our tips.

“Luckily in this case, bank staff smelled a rat and were able to intervene. But I am concerned others may have actually sent money to MetalsWise, given their widespread advertising.”

Indeed, someone who knows full well that others were interested is a scrap metal company with a very similar name: Metal Wise NZ Limited, in Rangiora.

Not long after the FMA’s first warning about MetalsWise (the scam), the scammers changed their website name and logo to “MetalWise” – with no S.

But even before then, Metal Wise NZ Limited in Rangiora had been receiving unusual phone calls.

“The calls were people who had heard some advertisement on the radio,” says Metal Wise NZ Ltd Director Jennifer Hughes. “I just told them they had the wrong business.”

She’s since had to spend time addressing the scam by alerting customers. “The minute FMA advised me, I issued a statement to all our customers and also on social media”, sharing the link to the FMA’s warning about the MetalsWise scam.

Jennifer says while she may not have lost money directly, there is still a risk of harm to the reputation of her business. “It’s made me help my customers more too… so they don’t get burnt.” 

See our webpage on investing in gold and other commodities

* Mary is not her real name, and the image is for illustrative purposes only.