The FMA (FInancial Markets Authority) has issued an investor warning about online 'educational' courses which promise to teach people how to make money trading in crypto, shares, foreign exchange or property.
Some are fronts for scams, with victims thinking they're learning how to trade, but are manipulated into putting real money into fake trading platforms.
Be extra cautious before sending money - you may even be shown fake returns but can't withdraw it without paying more. Even if you pay the extra fees, you will not be able to access your funds.
What are software packages and seminars
Investment software or education packages - Investment or education software providers may promise to make you an 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.
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.
Understanding the risks
Online platforms may not be regulated by the FMA, which makes fraudulent behaviour much easier. Investment software or education package risks include:
having to make a big upfront payment to get the software and ongoing fees and charges
the software often isn’t delivered or doesn’t work
money disappears from accounts without any trades or bets being placed
aggressive demands for more money
the provider can’t be contacted about problems or refunds.
‘Get rich quick’ seminars are usually high risk. If returns seem too good to be true, speak to a financial adviser before you commit to anything. The risks include:
unlicensed motivational speakers mean you’ve no way of knowing if they are financial experts or just slick salesmen
high fees – you may get your first event free but could be pressured into buying more investment courses, books or training tools.
Things to look out for
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.
How to reduce 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 the FMA's lists of licensed providers to make sure- which you can find here https://www.fma.govt.nz/business/licensed-providers/
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. Keep abreast of warnings and alerts published by the FMA. Note from Moneyworks - Think about how you are going to contact the business if they just stop answering your emails or phone calls. How will you get your money back?
