What to do when a loved one is caught in an investment scam

In light of the surge in investment scams, the Financial Markets Authority (FMA) recently asked clinical psychologist Nigel Latta to share some tips on how to help those who may have fallen victim to these scams. 

It’s important to note that scams are becoming more and more sophisticated, and even the most astute and savvy amongst us can be affected. So, here’s what you can do to assist a loved one, according to Latta.

Empathy above all

For many, being scammed isn’t just about losing money. It’s a breach of trust that can result in intense feelings of shame, guilt, and self-blame. 

Comments like “You should have known better?” or “How could you fall for that?” only amplify their trauma. So, it’s crucial to approach the situation with sensitivity, refraining from making them feel more at fault than they already do.

Patience is key

Acknowledging the fact of being duped is a tough pill to swallow: denial is a common psychological defense mechanism against painful truths. It might take time for the person in question to come to terms with the reality. 

Approach the conversation with patience, giving them time to process the information and making clear you’re there to support them. 

Encourage them to stop all communication with the scammer

Continued interaction with scammers often leads to more deception. They might convince the victim that “one more payment” will resolve everything. That’s why it’s paramount to encourage the victim to cut off all contact with the alleged scammer. 

Also, direct your friend or family member to get in touch with their bank as soon as possible, which could potentially mitigate further financial damages.

Alert the Financial Markets Authority

Even if the odds of retrieving lost funds are slim, reporting the scam aids authorities in tracking patterns, understanding new scam techniques, and potentially preventing others from becoming victims. 

To report an investment scam, contact the FMA directly at 0800 434 566 or via email at questions@fma.govt.nz. Encourage the individual to provide as much detail as possible about their interactions with the scammer to help in the investigation.

We’re here to help

Staying vigilant and informed is crucial. If you or a loved one have concerns or doubts about a potential investment, please reach out. We’re here to help.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.