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Money Expert - Diana Clement - Financial Planning, Career, Investing, Economy, Property - MSN NZ

Famous scams

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Every year thousands of New Zealanders get scammed. Often it's by people using some of the oldest tricks in the book.

Scams, for the record, are dishonest attempts at getting you to part with your money — often thousands of dollars at a time.

The most famous scammer of all times was Charles Ponzi who offered "investments" that promised to double your money in a few months. It worked because new victims were continually recruited and their capital was siphoned off by the person at the top of the pyramid, with some of it used to pay "interest" to keep "investors" recruiting more suckers. Eventually the pyramids collapsed — but not before Ponzi ran off with most of the capital.

Bernard Madoff — the most famous scammer of the 21st century so far — ran such a scheme defrauding investors of US$65 billion ($92 billion).

Nigeria has developed a reputation for being home to people who are pretty spectacularly good at scamming over the Internet. A classic "Nigerian" or "advanced-fee" scam involves someone contacting you saying that they needed to get a large sum of money out of the country and if you can help, you will get a cut of the money. The only trouble is that you need to spend thousands of dollars up front to pay the "fees" for the transfer — which of course never happens.

The six most common scams doing the rounds include:

  1. Dating scams. You meet the man or woman of your dreams online and they ask you for money to come and see you — which of course they never do.
  2. "Ponzi" schemes. It's often friends or others you have an affinity with that recruit you to join the scheme, which they believe they're earning fantastic returns from.
  3. The prize that costs you. You win a lottery or prize, but have to pay a fee in advance to collect your money.
  4. Phishing, where you click on a link that takes you to a fake website, where you're induced to enter your bank login details or credit card numbers. Phishing is used to get access to your bank accounts, or your credit card details to buy goods, or in some cases to hijack your online auction account.
  5. Get rich quick schemes, which offer untold riches, but you have to pay to get the work — which never actually eventuates.
  6. Bogus share tips. Scammers buy a large holding of cheap shares in little-known companies and circulate via e-mail "recommendations" to buy the share. This pushes the price sky-high and the scammer sells their holding. Eventually the price crashes down when the supply of new "investors" dries up.

To spot a scam, ask yourself:

  • Was I cold-called or contacted by an unsolicited e-mail?
  • Do you need to sign up on the spot to qualify?
  • Do you have to hand over money to get the prize?
  • Have you been asked for bank details or personal information?
  • Do you have comprehensive contact details for the organisers?
  • Is the offer too good to be true?

Remember a modicum of commonsense will keep you safe from scams. No investment worth its weight in gold would ever be sold by cold-calling or spam e-mail from someone you've never heard of. Nor would your bank or credit card provider ever call you up or e-mailing you asking for your login information and passwords.

Have your say: Have you been approached by a scammer?

More information about scams

User comments
I found this a lot when I moved to Melbourne and was desperately looking for a good, cheap flat to live in. Looking on a few well-known websites I found a beautiful-looking and exceptionally cheap apartment advertised in the CBD. I emailed the contact and it was "Barbie" apparently from the USA. Her "husband" had died of cancer and she needed friendly, caring tenants as she was abroad on some missionary service. Too good to be true huh? I thought it no harm in investigating. She was prompt and kind until I asked to view the property. I was suddenly told that I could not see the flat until I had paid the first two months rent upfront and "just give me the money now". It was laughable and obviously dodgy so I quickly severed contacts after sending a curt reply. Unfortunately I later found other people (usually vulnerable tourists and backpackers) had been sucked in by similar adverts and paid the money and saw no gorgeous inner-city penthouse...
These are common in Australia - airlines, hotels, rental car companies (to name a few), charge from about 1.5% (Visa & Mastercard) up to about 3% for Amex and Diners. This charge is supposed to compensate the establishment for the credit card charges. The charge can be avoided by paying with cash or direct debit but haven''t tested whether direct debits from Australia work on NZ bank accounts. Of course direct debits will attract bank fees for forex transactions so you get caught both ways. Try traveller cheques - selling banks charge 1%, encashing bank may charge a hefty fee so get used to the fees if you go anywhere near a bank transaction. Just watch the surcharges in NZ now that it will be possible (from next year) for merchants to charge a fee for credit card use.
I was sent an email saying i had won millions of pounds in an online lottery. The sender was asking for not only my name, address and contact numbers but was also asking for my birth date, bank details and things such as where I worked. I don't know of any lottery that gives you an automatic entry without your knowledge or one that requires such extensive personal details. I can only imagine what would have happened if I had clicked on the link. I would say at a guess this had something to do with identity theft. My identity is not worth stealing and nobody should have to go through something like that anyway.
Over the past few years I have been getting emails from Lagos and other African cities stating that my recently deceased engineer relative left millions of dollars which I can access for sending a certain amount as a release fee and also wanting my bank details or payment by Western Union money transfer. I reply that i have no bank account, they have my permission to take the fee out of the first payment and to send the money in US$. So far not one reply back although in the recent emails they are now stating that they cannot take the release fee out of the first payment. So the answer is straight to the rubbish bin.
Even something as silly as face book is being targeted to try and reel people in. I got a private message through my face book account stating that someone in China had died and had no family. I was fortunate enough to have had the same name as that person to recieve their millions of dollars worth of inheritance. As exciting as this sounds, I did not bother to pursue this opportunity to be scammed out of money and I just made a complaint to facebook. One reason I did not go any further was because I was worried that this person might be able to access more of my details through the internet.
This one is actually quit amusing. I have a bach (holiday home) in NZ. Itis advertised through many venures. Someone e mails me and requests a 4 week booking for strange guests eg 5 honeymooncouples who have recently got married, 8 missionairies visting NZ to continue their good work (? in NZ!!) or 6 priests who have recently been ordained.... funny sort of combos ... they then request my credit card details so that they can send me the money' for deposit etc - when I reply and state that I do not want credit card booking and to go to other sources - they always reply that it is urgent and that I will lose the booking etc etc . I once phoned the tel nos given (just for fun) it was in London and answered by a Nigerian sounding guy - so obviously a huge scam couldn't give me any names of guests, refused to go on bona fida site got shirty etc just wanted my credit card details - asif!!!!
Even the most trusted and reputable dating sites are now infiltrated by dating scammers. One girl from India, has three yahoo ID's and in tagged.com and also in C2B. All have different locations and different Id's used for the same person. But, they will never give the accurate residential details, phone numbers and will stop corresponding as soon as you stop entertaining them with gifts and money! (In India, there's a group of men, have these girls on skype all day long chatting and asking for money from overseas LOVERS) The men pretend to be the girls' brother an will warn you not to break his sisters' heart! They also collect your photos and Identification details and use it under different names and locations to scam others. so, be aware of giving your personal details and photos. The dating scammers will not have webcam and mobile phones or landline phones. It's all in words and in chat room sessions that they pretend like they are in LOVE with you(your money).
Firstly, paying cash is the only legal tender! Nobody is entiltled to charge you for that. When we travelled through Australia last month I got charged a few times to using my VISA card. Mobile at one place charged me out of the blue 30 cents on a $ 60.00 account for petrol. A motorcamp $ 2.00 on a $ 25.00 and a private petrol station the the outback $ 1.00. ( I only took for $ 20.00 to reach the next town) The $ 2.00 guy on the motorcamp statet he had to pass the cost on now VISA charged him, being 6%! I so far have not experienced or heart of a similar practise in new Zealand.
Telstra in Australia is trying to charge you an extra $2-20 for paying your account in cash at their registered offices effective from September 14th they did give us a month notice. but in some ways this is also a scam as one should not have to pay extra to pay your bill in cash. Unfortunately their has seemed to be others telco's that have in my book got to greedy and I know of one that failed because it was not looking after its customers and eventually went bust.
If you have to exchange foreign currency as part of your business, you will have been duped many times. Here's how it works. A trader dealer at a seemingly legitimate organisation including banks, will tell you the rate is currently .8109 on the AUD NZD. You say Ok and book the trade. You check later elsewere and find its more like .89 cents. You phone them bank angry and say you told me .8109, they say oh no I can see what happened you must have got the numbers reversed when you wrote it down, our quote was .8910. You think oh silly me and get off the line. They then reduce their profit on the deal before sending the paperwork. 4 times out of 5 custromers won't notice it and the traders are trained to spot when you are paying attention. They make a lot of money this way, and as an industry participant I can tell you they all do this, large companies and small. Unbelievably, its not illegal.

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