22 May 2012

Cold-calling share scam

The Ministry of Economic Development has issued the following media release:

'Boiler room' scam threatens to dupe New Zealanders.

New Zealand investors are in danger of being fleeced by a sophisticated new cold-calling share scam.

Fraudsters posing as a legitimate Japanese company, Sumitomo Mitsui Financial Corporation, are cold-calling investors and making lucrative share offers. The scammers get the numbers from publicly available shareholder lists, making their approach all the more plausible.

It's the latest warning from a cross-agency working group, made up of the Ministry of Consumer Affairs, Department of Internal Affairs and Netsafe. The group is dedicated to fighting consumer fraud.

The boiler room scammers persuade their victims to sell underperforming shares in their portfolios. The scammers send legitimate-looking payment instructions, refund documents offering 'protection' if the sale falls through and have created a clone website of the actual company.

This type of fraud − sometimes known as a boiler room scam, referring to the boiler rooms from which the fraudsters typically operate − is usually a slick operation.

"The callers are very clever and persuasive," says Ministry of Consumer Affairs Team Leader Jarrod Rendle. "They make offers that are very hard to resist. Add to that an impressive website and documentation that appears genuine and even the most seasoned investor is at risk of being taken in."

The Financial Markets Authority advises the safest way to buy shares in overseas companies is through a registered New Zealand broker, who is responsible under New Zealand law. Brokers must be registered and you can check a caller's credentials  for free on the Financial Service Providers Register, at www.fspr.govt.nz, or by calling the Financial Markets Authority on 0800 434 556.

The Financial Markets Authority also publishes the names of firms that have tried to scam people in New Zealand, as well as a list of the official-sounding agencies scammers use to try to prove their authenticity. View the Scam section of our website.

More information