01 May 2024

No rest for the scammed: Recovery room fraudsters prey on past victims

No rest for the scammed: Recovery room fraudsters preying on past victims

How falling victim to one scam spawned a cycle of ‘recovery room’ crime attempts

Graeme was the unfortunate victim of an international share investment scam, losing more than $20,000. You’d think that would be as bad as it would get.  

But it turns out there’s a particularly cruel kind of scam operating where victims are targeted again – this time with the false hope of assistance in getting some of their lost money back.  

Graeme, who has prior investment experience and owns shares directly in several companies, lost his money in a sophisticated share scam, which began with a $5000 investment in shares in a Scandinavian company.  

He’d been emailed with the share investment offer and was eventually convinced by the professionalism of its corporate website, the authentic looking documentation, procedures and people he spoke to. 

“It was very well set up – I found out later everything online was fake - the directors’ faces, the offices, everything,” he says. “We had some spare cash – and I’d filled out a questionnaire, about how much I had to invest and that I was looking at shares.”  

Later, after a series of supposed corporate events, Graeme’s shares were transferred to a new Chinese firm. Pressure then came from the fake brokers to invest more money, leading him to purchase another $20,000 of shares.

It was when the pressure kept building to buy even more shares that Graeme’s suspicions were confirmed. He realised he’d been scammed and cut off contact with the phony brokers.  

“I had to suck it up and move on,” he said. 

But Graeme’s plan to learn his lesson, and to now stick only to locally based share brokers hasn’t put an end to the scam attempts. As his details were passed on to a new group of crooks – this time trying to steal his money in what’s known as ‘recovery scams.’

He is now being regularly contacted by phone and email with a variety of different offers to help him recover his lost money. He has little doubt that it’s linked to the original scammers – these recovery offers contain accurate details of how many shares he originally bought, and how much money he’s already lost.  

Recovery scams can take different forms – Graeme has since been asked to take part in a class action legal claim against the company he had originally bought shares in. The scammers say that if he pays a fee to help fund the class action, then he’ll be able to receive a share in any potential payout.

Other approaches come from a so-called US government agency, supposedly working alongside a law firm to help retrieve money lost to scammers. “If you’re approached by anyone from offshore, don’t proceed, work though a local – if you are investing in shares, go through a local [licensed] provider,” says Graeme. “No one from overseas will try to get your money back - it’s bad money after bad money, don’t enter into any negotiations to pay anyone to retrieve money.” 

A recovery scam is a form of ‘advance fee’ scam, where money is requested before funds can be returned. Targets of these scams are those who have already been a victim of a scam. 

The victim is approached with an offer of help in recovering funds lost in the original scam. The scammer might be posing as an authority or with some kind of official agency, then make promises about getting lost funds back, before asking for a fee or payment to proceed.  

It could be agreeing to pay money to contract a recovery agent who will help try to get your money back. An invitation to join up to a class action lawsuit to recover stolen funds is another common tactic.  

A recent FMA warning was made about people posing as workers for the UK’s Financial Conduct Authority.  

Recovery scam using name of UK Authority

Some tips and advice to help avoid falling prey to recovery scam:

  • If you’ve already fallen victim to a scam, be particularly alert. A recovery scam attempt might come from the same people behind the original scam, or they might be acting on your personal information that’s been passed on or sold to other criminals.
  • Be very wary about sharing any personal information about experiences as a victim of a scam and be careful who you approach looking to get your money back. A social media post sharing details of being a victim can attract the attention of recovery scammers and lead to being re-targeted.
  • Be suspicious of cold calls of any kind and be especially wary of unsolicited calls or messages from people claiming to be from government agencies.
  • Discontinue any contact with the potential scammer – you could also directly contact the agency that the person is claiming to work for, and check if it’s authentic.  
  • If you think you have been contacted by people working as part of a recovery scam, contact the FMA to let us know the details. 

If you suspect you have been targeted by an investment or financial scam, please contact us.

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