5 Mins with the FMA | Scams

In this episode of 5 Minutes with the FMA, host Chris Daniels is joined by Regulatory Services Advisor Elizabeth Asmerom Esfahan to unpack the latest trends in investment scams targeting New Zealanders.

Elizabeth sheds light on the evolving tactics scammers are using from fake comparison websites to impersonation via text and messaging apps. They discuss AI, where deepfake videos and automated scam networks are making fraud more convincing than ever.

Learn why scams are no longer small-time operations but large-scale international businesses and how the financial industry and individuals alike can push back. From protecting your company’s online presence to doing personal due diligence before investing, this episode is packed with insights on staying safe in a shifting digital landscape.

Transcript

Chris

Kia ora everyone. Welcome to another 5 minutes with the FMA. I'm Chris Daniels. And today we're taking a look at investment schemes. I'm joined by Elizabeth Asmerom Esfahan. She's one of the regulatory services advisors at the FMA. What are some of the trends we're seeing in schemes?

Elizabeth

So we continue seeing a lot of impersonations of New Zealand financial service providers and we see them coming in three ways. So the first one is imposter websites, where scammers put up a fake website with fake investment offers and use the credentials of a registered New Zealand Company. And we've recently seen a re-emergence of term deposit rates comparison websites where people think that they can see rates comparison. But actually they have to provide their personal information first. Once they provide their personal information, they get contacted by someone who claims to be a financial advisor or a representative of a financial institution, and they offer them an attractive investment offer, usually providing a very credible product disclosure statement using the branding of a well-known financial institution. And we've seen that this scam is so sophisticated and credible that a lot of people have lost considerable amounts of money. And now lately we've seen a lot of impersonations happening through text messages where people are being contacted by someone claiming to represent a New Zealand bank or investment firm, and they're encouraged to join a WhatsApp group where they think they will learn about investing. But actually they're being encouraged to invest in a fake platform.

Chris

There's a lot of discussion at the moment about the role of AI online, what sort of role has AI been playing in scams?

Elizabeth

So we've seen that investment scams are becoming increasingly sophisticated, making it harder for people to understand if they're dealing with a scam. So we've seen that scammers are embracing AI and using it to their advantage to quickly put out a lot of websites, emails, documents, fake online profiles and we've seen scammers embrace AI and use it to their advantage to quickly scale up their scams and reach a wider audience. Scammers use AI to quickly put out hundreds and thousands of emails. Websites, social media advertisements to reach their victims. We've seen AIs in the impersonation of individuals, well known public figures, and even politicians where scammers use AI to create deep fake videos mimicking the behaviour and the voice of a person. And because AI is becoming smarter, we've also seen these deep fakes becoming increasingly realistic. And it's just making it harder for people to see that they're not dealing with the real person.

Chris

In these deep fake images or videos they will be encouraging investments and so who is actually running these kind of scams? Is it small time local criminals or is it a much wider sort of network?

Elizabeth

So there's the myth of a scammer being this loan figure, operating from a dark placement, but in reality scams are large operations run by organised crime and it's a big business and lucrative and we've seen that in the numbers as well. In 2024 it was estimated that New Zealand has lost about 195 million due to scams. And because scams are turned into large scale operations, we've seen that they've become more resilient and harder to dismantle.

Chris

What sort of role is there for the financial services industry here in New Zealand for financial advisors, financial advice providers, for instance?

Elizabeth

Well, as mentioned scams are operated by a big network and we need our own network to take down this network. We recommend anyone who is interested in investing to do the cheques to ask questions, to talk to a trusted friend or a financial advisor if they have any doubts. And we think that this is where the industry can really play a big role in the fight against scams. We think the industry can be that sounding board for anyone who has a doubt about their investments.

Chris

And how should a financial advice provider for instance, go about reporting a suspicious investment or a scam and what sort of information should they share?

Elizabeth

So we want to hear anything they have about scams or near misses or about businesses who might be providing financial services but aren't licenced or registered to operate in New Zealand. General information, we're looking for our website links or social media pages. How the victim came across this scam, whether there are any financial losses? And if the victim is New Zealand based, any information the industry can provide to us will be helpful. We've seen in a lot of cases that information provided by the industry to us was the missing piece of the puzzle for us to take action.

Chris

And is there other things that an business can do about their own information that might be helpful?

Elizabeth

Yeah. So as mentioned before, scammers like to impersonate New Zealand companies because that gives them more credibility. So what the industry can do to help to avoid this is to make sure that your company registration details are up to date and that your website is up to date as well.

Chris

And what are some of the things perhaps that we could do as individuals to keep ourselves safe from these kind of scams?

Elizabeth

So it's important to realise that scammers don't discriminate. Anyone can be a target of a scam and anyone can be a victim of a scam. The best way to protect yourself from an investment scam is to do a reality check. Scammers like to use different kind of pressure methods or manipulation to get you to act fast without thinking it over. So always take the time when you get an investment offer, ask questions, make sure you understand who you're actually dealing with. Make sure you understand what you're investing in and understand what the risks are before you give your personal information and money away. And in general, be very cautious if you get an investment offer out of the blue, or if there are any promises of high returns for little to no risk because it's likely a scam. And if you want more resources on how to protect yourself. You can check out our website, it has a lot of information on scams.

Chris

Fantastic. That's great. Elizabeth, our website is www.fma.govt.nz. Thanks very much for your time today, Elizabeth. That's another 5 minutes with the FMA see you next time.