DUPED Scams costing Kiwis up to $500m a year
Kiwis are losing up to $500 million each year to international scammers and the number of reported incidents has risen sharply this year. Experts say the scams are putting a dent in the New Zealand economy and many are driven by organised crime groups and overseas cartels. Losses reported to authorities are believed to be just the tip of the iceberg because many victims are too ashamed to come forward or even tell family members they’ve been duped.
A Herald investigation has now revealed new details about the level of scamming activity in this country, the growing cost to victims and the psychological harm inflicted by the criminals who perpetrate these scams from around the globe.
Cases include:
● A couple whose son stole $2.2m from them and lost it all investing in binary options. Such scams are now being presented as cryptocurrency investments online.
● A father who put $800,000 into an inheritance scam in the hope he would eventually inherit $2m to help his children buy their own homes.
● An elderly woman tricked out of nearly $567,000 in a romance scam by a man she believed was her true love. He claimed he needed money to oversee the completion of a hospital in Ghana for a friend whose family had been killed in a car crash. The scam was detected by the woman’s broker only when she tried to borrow $300,000 more to send overseas.
The number of complaints to cybersecurity watchdog group CERT NZ has spiked during the first three months of this year to 506 — the highest number on record. A new survey, conducted by Research New Zealand, shows 72 per cent of Kiwis have been the target of a
scam either online or by phone.
And though agencies such as Netsafe, police, telecommunications companies and banks are working hard to identify scams, shut down illegal enterprises and protect unsuspecting Kiwis, their task is a difficult one.
Most of the money is funnelled out of the country and the growing level of sophistication means the scams are often very difficult for victims to recognise.
Bronwyn Groot, manager fraud education at the Commission for Financial Capability, has spent two decades in fraud investigation work for the banking sector but now advocates for scam victims.
Groot told the Herald there were three main categories of scams.
● Love and money: The victim sends money to a potential romantic partner, commonly someone they’ve never met who lives abroad.
● Something for nothing: The victim sends money to a stranger overseas but expects to eventually gain something in return such as a lottery win or inheritance.
● Betrayal of trust: These scams most commonly come from a member of the victim’s own family within New Zealand.
Groot detailed some cases she had worked on to illustrate the severity of the problem and how New Zealanders from all walks of life were being taken for a ride.
In one of the most striking, a couple poured about $230,000 into a fake investment scheme, after being duped by a sophisticated website that showed promising returns.
The husband, keen to make a good investment for his family’s financial security, signed up and began pouring money into the scheme over five months after being cold-called.
For authenticity, the scammers had him log on to a website to check the progress of his investment, which showed his shares tracking upwards.
“They were really slick.”
His wife learned by accident about the bogus investment. They were able to recover just $30,000 after the bank cancelled the final electronic money transfer. The rest was lost.
Netsafe chief executive Martin Cocker said some estimates put the cost of cybercrime to the country at $400m to $500m annually.
He said a more co-ordinated, multiagency response was needed given the growing scale of the problem.
Financial crime consultant Nicholas Gilmour said scams would never be stopped because of human greed.
He told the Herald it was all underpinned by the criminal world of money-laundering.
“And it’s faceless to them.”