Have you been offered investment or ‘wealth creation’ software that uses state-of-the-art analysis and promises phenomenal returns? Or perhaps you’ve been invited to attend a seminar where you’ll learn how to become a millionaire in a few years? These claims are almost always too good to be true and that ‘opportunity of a lifetime’ may even turn out to be a scam.
Investment software or education packages
Providers of investment or education software may promise to make you an investment expert in no time at all – with little or no training. They’re usually promoted as legitimate financial wealth products or services.
Marketing material looks professional, referring to sophisticated analytical tools and cutting-edge technology that can predict how a trade or bet will perform. You’ll almost always be promised very high returns with very little risk.
The reality is:
- You usually have to make a big upfront payment to get the software and there will be ongoing fees and charges.
- Software often isn’t delivered or doesn’t work.
- Money disappears from accounts without any trades or bets being placed.
- The company aggressively demands more money and can’t be contacted about problems or refunds.
- You’re more likely to become a victim of fraud because these online platforms may not be regulated by the FMA, making fraudulent behaviour much easier.
|
We’ve received a number of complaints from investors about the following high-risk products. We recommend you be wary of them.
- FX trading for profit through companies based overseas. These companies are not regulated in New Zealand making it very difficult to recover your money if you experience problems with them.
- Education software providers. These companies try to get around financial market rules by saying they’re only providing an education service. We recently ‘ordered’ one New Zealand-based ‘foreign exchange educator’ to change its marketing materials on the basis they were misleading or deceptive.
- Binary options. Winnings may be withheld and trades may be manipulated without your knowledge.
- Sports betting schemes. Often won’t mention sport anywhere on their marketing material. It’s not until investors have purchased the software they realise it’s actually sports betting.
|
Seminars
Seminars are usually promoted as an ‘exclusive’ event with motivational speakers who will share their secrets to financial success. You’ll typically be promised high returns with little or no risk – turning you into a millionaire in a few years.
The reality is:
- Most of the motivational speakers are unlicensed so you’ve no way of knowing if they are financial experts or just slick salesmen.
- They are usually high risk. If returns seem too good to be true, speak to a financial adviser before you commit to anything.
- The fees are high. You may get your first event free but you’re likely to be pressured into buying more investment courses, books or training tools.
Seminars are often used as a way of encouraging investors to buy or invest in property. Speakers at these seminars may claim to be investment experts but this isn’t always the case.
As a property investor you are exposed to risks for a longer time so it’s important to understand the risks before you invest. Never sign up to an investment property on the spot.
To learn more about the risks of investing in property, see our property investment and property syndicates pages.
|
Ways you can reduce your risk
Ask the provider what type of financial service provider licence they hold. If they don’t have one, don’t deal with them. If they say they’re licensed, ask them what type of licence they hold and check our lists of licensed providers to make sure.
Take care when providing copies of your credit card, driver’s licence or other personal data online – particularly if the business is based overseas and not licensed in New Zealand. This puts you at risk of identity theft.
Be wary of someone you don’t know contacting you out of the blue about an investment opportunity. There’s a high chance it will be a scam.
Don’t feel pressured to sign up to an investment on the spot. Take time to consider your options and speak to a financial adviser before you commit if you’re unsure.
Be aware of providers offering ‘training’ and ‘tools’ that they say will help you make easy money. While software packages and training courses can teach you how to make trades or bets, no person or package can ever accurately predict whether a trade or bet will be successful.
Do your research, particularly if you decide to invest in an overseas business not licensed in New Zealand. It’s often impossible for you to recover your money if an overseas investment turns out to be a scam. See steps to protect yourself to learn more.
Learn more about:
