Think you know how to avoid investment scams? Think again

Stories of investment scams and people being swindled out of their hard-earned money are becoming more frequent. In fact, a prominent Kiwi entertainer was recently scammed out of $100,000 via a seemingly legitimate investment scheme. 

The scam posed as a subsidiary of a well-known investment and insurance company based in New Zealand. It required funds to be wired to an account in Sydney, and after doing so, the victim never saw their money again.  

While they attempted to check the investment company’s authenticity by speaking to someone who posed as a verified company employee, it wasn’t enough to avoid the scam. So, this month we breakdown steps to follow when looking at new investment opportunities.  

It’s important to conduct your own due diligence to understand which opportunities are legitimate, which are too good to be true, and which are fraudulent. This article shouldn’t be read in lieu of financial advice and we always recommend talking to a financial adviser before making any investments.  

These are the top 6 questions we suggest you ask when completing due diligence: 

1. Are they a legitimate company with directors and offices in New Zealand? This information is publicly available on the Companies Office website and will quickly confirm if a company is truly operating in NZ.
   
   
2. Are they on the Financial Markets Authority (FMA) watchlist? This is a list the FMA regularly updates with known investment scams or fraudulent investment companies. 
   
   
3. Are they licensed by the FMA to provide the services they offer? Any company that offers investments in New Zealand require an FMA licence. Before investing with a company, it’s a good idea to check if they are licensed to operate in NZ.
   
   
4. Do they have a real office that you can visit? A company without a local premise in New Zealand could be a sign of a fraudulent business. Vet companies by cross-referencing any employee names or contact details. 
   
   
5. Can you sign up and view the investment opportunity in detail before investing? Understanding an investment opportunity and the risks involved is a key part of due diligence. Not having visibility over investment details could mean something fishy. 
   
   
6. Are the funds going into NZ bank account with an NZ IRD number? New Zealand investment companies should be dealing with New Zealand accounts, so be weary of any international money transfer requirements. 

Southern Cross Partners is an FMA-licenced peer-to-peer investment company. We are 100% NZ owned with no offshore investments or parent company. We have real offices at 16 Selwyn Road in Auckland’s Howick, and we welcome visits from investors whenever you’re in the area.  

Every investment offered at SCP is backed by a New Zealand property over which we hold a first mortgage. We’re audited every year by an independent and local auditor and these results are submitted to the FMA. We have an NZ bank account and IRD number, so you know you’re dealing with a Kiwi company.  

For more information on SCP’s investments, or if you have any questions about due diligence for our investment opportunities, feel free to give us a call on 0800 00 58 43 or pop in for a chat.