The Financial Markets Authority is issuing a warning as a new hybrid romance-investment scam that has seen millions of dollars in global losses builds traction in New Zealand.
One Kiwi woman lost $118,000 after falling for a man online, who then persuaded her to enter into foreign currency trading through what appeared to be a legitimate third party.
The woman, who did not want to be identified, described how she began talking to a man she'd first connected with over Hinge. They talked for several months.
"I found out we had a lot in common, we read the same books, have the same opinion and shared values. I just thought I had nothing to lose."
But she did lose, $118,000, her confidence and a man she had begun to think of as more than just a friend.
"I know it sounds like a lot of money, but I'm not very greedy. To me money isn't the point. The most disappointing part is the whole experience," she said. "I felt I was being used and cheated by this person."
At first swipe online, the woman says nothing appeared out of the ordinary. The man's location was set to Wellington. It wasn't untill later that she discovered it was all fake...including the photos he'd stolen from an online influencer.
She says it wasn't until the second month that he began encouraging her to look at foreign currency investing. At first she was reluctant.
"I'm not very interested in investing, in profit, I mainly did it to do him a favour. I felt like he spent a lot of time listening to me, talking about my hobbies. Maybe it's time that I can reciprocate."
The fact she was paying a third party, via a seemingly legitimate trading platform gave her security. "After I opened up an account there was a lot of tricks."
These tricks encouraged her to invest more, but it wasn't till she was asked to pay tax to the British government and she found herself no longer able to withdraw money that she realised she'd been scammed.
"I felt a bit stupid in a way, but I can also see why an average person can fall into that trap, because it is just so hard to pick up the twist".
The Financial Markets Authority (FMA) says while romance scams have been around "forever" this type of scam that mixes investment with romance seems to be relatively new.
FMA general counsel Liam Mason says scammers are "forever putting on new clothes and trying new ways to catch people out".
"It seems new to us at least to be linking investment scams with romance scams."
In 2020 the FMA received five reports, the same as was seen in the first six months of this year. Netsafe received 28 reports in a year and at least one bank reported a rise in customers who had fallen victim to it.
The scam appears to have started in East Asia within the last two years, spreading to other countries including Hong Kong, Canada, Australia and now here. But because it originated offshore, police here have no jurisdiction. Meaning those who fall victim have no way of getting justice or their money back.