Scams Can Happen To You

Hon Heather Roy, Minister of Consumer Affairs
Monday, March 1 2010

Hon Heather Roy speech to launch Fraud Awareness Week 2010; Vodafone, Viaduct Harbour Avenue; Auckland; Monday March 1 2010.

Thank you, Tom, for your introduction - and my thanks to Vodafone for hosting the launch of Fraud Awareness Week 2010.

It's a pleasure to launch New Zealand's fifth - and my second - Fraud Awareness campaign. Thank you all for being here. It's great to see the support from across the public, private and community sectors.

I would rather be standing here today to tell you we're beating the scammers but that - sadly - isn't the case. Despite best efforts here and internationally, we may never completely get rid of the scammers. After all: they spend their time honing their skills and bombarding the globe with dodgy emails and fake lottery letters. But positive initiatives, such as this globally co-ordinated Fraud Awareness Week, help to combat much of their destructive work.

New Zealand is not immune to scams, and education is our best defence. By educating people to recognise the signs and hallmarks of a scam, we can reduce their likelihood of becoming victims.

That's where Fraud Awareness Week comes in; to raise awareness of scams and encourage people to visit the Scamwatch website - where they'll find out how to spot a scam, and report a scam to us. And we promote Scamwatch and Fraud Awareness Week through partner agencies such as yourselves. So thank you.

Scamwatch is an online service provided by the Ministry of Consumer Affairs. It is hosted on the Ministry website at www.consumeraffairs.govt.nz/scamwatch/ and warns New Zealand consumers about specific types of scams.

In the past year, Scamwatch has received more than 2,500 scam reports; this is probably the tip of the iceberg. For every scam reported to Scamwatch, there are likely to be many more that go unreported - either, for example, because people automatically hit the delete key to a phishing email (which is great; they've learnt to spot a scam) or sadly in the cases of a large financial loss, people may be reluctant to share their story for fear of admitting they've been scammed.

Recent research commissioned by the Ministry of Consumer Affairs asked consumers if they believed they had been scammed or tricked out of money ... either from someone tricking them into giving money for something that does not exist, or giving money for something that does not happen. Fifteen percent of those adults interviewed answered yes to this question.

The research also suggests that the likelihood of being scammed or tricked out of money does not differ substantially by education, income or age.

Scamwatch receives a wide variety of reports. By far, the most heavily reported are the fantastical lottery wins from overseas - closely followed by advance-fee-fraud scams, or the 'Nigerian letter' scam. These scams ask you to send money overseas to, for example, unlock an inheritance from a previously unknown second-cousin who died in a plane crash; or to help a banker transfer a few million dollars from a foreign bank account. All they need is for you to send a few hundred dollars for administration costs - and then a few thousand in taxes. You'll never hear from them again ... unless they want more money.

Behind these reports are real victims who have lost money - sometimes their life-savings - to scammers.

One tragic story was reported to Scamwatch just weeks ago: a man approached a Wellington woman on a social networking website, and they began talking online. Over time, they formed a romantic relationship. He seemed compassionate and friendly, telling her about his role as Project Manager for an aid company building a hospital in West Africa.

Over the two months they communicated, the man said nothing untoward - so when he requested a brief loan to ensure his project could be completed on time, the woman obliged. She ended up losing $50,000 and now - broke and heartbroken - must sell her home.

A sad story. But even sadder is that it's not as uncommon as one may think.

Inevitably, we ask: "why do people fall for scams?" Surely everyone knows you can't win a lottery if you haven't bought a ticket. Or that a legitimate dog breeder in Christchurch is unlikely to ask you to pay in advance for a puppy via money transfer to Cameroon.

The Ministry of Consumer Affairs' British counterpart is the Office of Fair Trading. Last year it commissioned research from the University of Exeter to determine the psychology behind the statistics and stories.

The researchers concluded that a mixture of thought-processes and motivations is at work when someone responds to a scam.

Motivationally, people respond because they feel the scam is an unusually good offer. They can envisage what it would be like to have that money and may be more easily persuaded than most people.

Cognitively, those who respond to a scam are often more likely to know the subject the scam is about. The research suggested that people with experience of playing legitimate prize draws and lotteries may be more likely to fall for a lottery scam than those with less knowledge and experience. Feeling they have experience in this area can actually increase their risk of becoming a victim.

Education is the key to preventing people from becoming scam victims. People need to know how to recognise a scam for what it is, and to move away from the attitude that scams happen to 'other people'. Most people know that scams occur, but few believe that they will be the target.

But they can be. There were more than 56,000 visitors to Scamwatch last year - and increase of over 9,000 from the year before. While it is difficult to measure, I'm sure we have stopped some people falling victim to the scammers by consumers being able to recognise the signs of a scam and doing the right thing: not responding. By ignoring them, you fool them into believing you don't exist; then they can't take your money.

Thanks to NetSafe, we have a new important tool in the war on scams - the 'Scam Machine'. NetSafe is an independent non-profit organisation that aims to educate all New Zealanders about safe, secure and responsible use of information and communication technology. You will soon hear more from NetSafe Executive Director Martin Cocker about the new 'Scam Machine'.

I want to finish by thanking all the partner agencies - private, public and community - that help to promote Fraud Awareness Week and Scamwatch:

The Office of the Banking Ombudsman; Consumer NZ; Crimestoppers NZ; the Department of Internal Affairs; IAG New Zealand; Inland Revenue; Microsoft; the Ministry of Economic Development; Netsafe; the New Zealand Bankers Association; TSB; ASB; BNZ; Kiwibank; the Hong Kong and Shanghai Banking Corporation; New Zealand Police; the Office of the Privacy Commissioner; Securities Commission; Sella; the Serious Fraud Office; Symantec; Telecom; Telstra Clear; TradeMe; Visa New Zealand; Western Union; and, of course, Vodafone New Zealand.

You are all helping to raise New Zealanders' awareness about scams and how they operate.

The best test, in my view, is this: if it seems too good to be true, it probably is.

Thank you.

ENDS

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