NZ investors targeted by scammers: Why advisers need to take note

A recent FMA report revealed that more NZ investors are becoming the target of scammers. Industry insiders say advisers would do well to be on their guard.

Tuesday, November 24th 2020, 5:57AM

by Daniel Smith

John Bolton

A recently released report from the FMA has revealed that since the outbreak of Covid there has been a notable rise in financial scams targeting New Zealand investors.

The report revealed that there had been a rise in fraudsters impersonating legitimate New Zealand companies in attempted scams. It also showed that one in five Kiwis had been approached by an investment scammer.

While the FMA’s report was focused on consumers as the targets of scams, there are many that believe that advisers should also be concerned.

One of these is John Bolton, founder and managing director of Squirrel Mortgage Brokers. Bolton says, “I come from a corporate environment, where we are always asking ‘what are the big risks in your business?’. And then you get into 'adviser land' and might think that the main risk is that you stuff up some investment or insurance advice. But the biggest risk in the industry is a company assuming they are too small to be cyber-attacked.”

“Imagine you one day find yourself the victim of a cyber attack. The next day your client’s data is for sale on the dark web. At that point your entire business went up in smoke in less than 24 hours.”

The nature of most digital attacks makes the FMA’s data all the more concerning for advisers. Petra Lucioli, claims manager from Delta Insurance says the data speaks volumes, “Literally 50% of my claims are invoice frauds that have been caused by email breaches.”

“Somebody gets a phishing email with a dodgy link, the link leads them to a website where the fraudster is able to get access to their email credentials.

“The fraudster then gets access to the email account, sits in it for a few weeks, watches what is going on and then they start manipulating the emails, eventually committing an invoice fraud.”

The FMA report proves that more New Zealanders are coming into contact with potential scams. It follows that advisers will also be the target of phishing emails and other malicious digital attacks.

But the best methods of data protection may not be the most high-tech.

Lucioli says that, “The first and most important point is multifactor authentication. Of the invoice fraud claims that I have seen, multifactor authentication would have stopped all of them. Every single one.”

Bolton believes that businesses also need to have measures against human error. “One of the key examples is dumb passwords.

“One of the things that we recommend is for businesses to use a password manager to give really complex passwords. I think everybody should be using them.”

Tags: cyber security FMA fraud John Bolton Petra Lucioli scam