An Auckland woman was in the sights of an online scammer. Image / 123rf
The Financial Markets Authority is again warning about a Starlink "IPO" scam after an Auckland woman was targeted.
"Sarah", whose name has been changed because she is wary of retribution, is the latest to have a scrape with the offshore fraudsters.
Starlink is partway through launching a worldwide network of satellites. It's a fully owned subsidiary of SpaceX, which is in turn owned by Elon Musk. There is no initial public offering (IPO) of Starlink or SpaceX in the works, but scammers like to trade on Musk's star power.
Sarah tells the Herald she knows about Starlink's product. Her family is one of thousands that live too far outside the city for UFB fibre, yet are not country enough for the Rural Broadband Initiative. Buying a Starlink dish for satellite broadband proved a "fantastic solution" (early adopters have largely given the service positive notices, with a few caveats).
Although she does not trade shares herself, Sarah opened two Sharesies accounts for her children - and she thought the up-and-coming Starlink could make a good edition to their portfolios.
She Googled "Starlink shares" and up popped an offer for an IPO (initial public offering) of shares in the company.
Despite global stories about Starlink share scams, and warnings to the public from the FMA and its peers around the world, search engines and social media platforms continue to host ads for outfits that purport to offer early access to a Starlink IPO - or information about the non-existent share float - if you register with personal details.
Sarah registered her interest by entering her name, email, phone number and how much she was looking to invest into a professional-looking site. A range of options were offered, with a US$10,000 minimum.
She then got a phone call from one "Mr Daniel Maxwell-Stewart" – a friendly man with a British accent, saying he worked for an Australian-based share broking firm. The company had a professional-looking website and authentic business ID numbers.
There wasn't anything particularly unusual in the phone calls that followed: a request for some formal identification: passport details, credit cards and a bank statement.
It was only when "Mr Maxwell-Stewart" asked Sarah to confirm verbally that she wanted to proceed with the Starlink share purchase that she got nervous.
She asked her partner and her accountant for advice. Her accountant wondered by "Mr Maxwell-Stewart"'s purportedly Australian brokerage had access to shares in the Starlink "IPO" before any other broker.
More and more red flags were raised. When she searched the scam alert section of the FMA's website, she found a similar story of someone else being offered shares by a man with an English accent.
"I backed right off then, I said I needed to make a good decision for me and my family, do some more research, because there are scammers," Sarah says.
She pulled the plug, and didn't lose a cent - unlike a retired NZ Defence Force man in Palmerston North, who last year told the Herald he'd lost $14,000 to a Starlink "IPO" scammer.
But Sarah was still exposed because she'd given the scammers a number of personal details that could be used for identity fraud - such as draining money from her bank accounts.
That meant her passport, driver's licence and credit card all had to be replaced.
If you find yourself in the same situation, Internal Affairs recommends an organisation called IDCare, which can help you avoid ID theft, and walk you through the process of freezing your credit record.
Can the FMA take action over the fact that search ads for outfits purporting to offer early information about a Starlink "IPO" continue to run on various high-profile sites?
"The FMA's powers are limited to New Zealand shores and we do not regulate the activities of global search giants or social media platforms," an FMA spokesman said.
"However, in the past, we have worked with CERT [the government's Computer Emergency Response Team] to get websites related to investment scams removed.
"[But] given these limitations, one of our most effective tools to combat investment scams is to regularly issue warnings to deter people from investing in them and we have information on our website about how to spot a scam."
The spokesman added: "This is an issue that securities regulators are aware of, with the UK Financial Conduct Authority engaging with search engines and social media platforms to raise concerns about advertisements for scams or fraudulent schemes."
Search and social media companies did not immediately respond to requests for comment.
• The contact told Sarah that he had special access to Starlink shares, which no one else had – a sure red flag.
• He asked whether Sarah had invested in cryptocurrencies or had bitcoin, since this would "make the transaction easier". Fraudsters trying to get paid in crypto is a way of getting money without it easily being "clawed back" through the banking system or triggering an alert.
• Sarah did well to talk to others about her plans, including her partner and accountant. They gave a wider perspective that helped her think clearly about where she might have been misled.
• The share broking website that she'd first been lured into disappeared. This is common, when an imposter website has been exposed, it will change names to repeat the scam under a new identity.
• If you've been scammed once or given information to a scammer, you might be contacted again.
• There has been a record number of complaints about online scams over recent months. But the FMA warns fraudsters don't just use social media and the web, with phone calls, email and in-person approaches also used.
• The FMA warns New Zealanders to be wary of unsolicited communication asking them to buy shares or put their money into offshore firms. It's illegal in New Zealand to sell financial products through cold-calling or other unsolicited contact.
• Sarah wasn't subjected to any hard-selling techniques. The man who called her was friendly and professional, never rude or putting her under pressure. A soft sell (which was also a hallmark of the case involving the retired NZDF officer) can be just as successful as being contacted repeatedly or pushed into a corner.
• Tip: Check out legitimate news sources about IPOs. In the case of Starlink, founder Musk has said he would only list it on a stock exchange, "When its cash flow is more predictable". We don't know when this might happen, but there is bound to be plenty of news coverage on reputable sites if a Starlink IPO is officially announced.
• Before investing, check a company is not on the FMA's Warnings and alerts list. But note the list is not exhaustive and there is no guarantee that the business or individual listed has not changed their name. Sarah checked the page and didn't see the name of the scammer on it, but was still cautious after reading about the kind of scams that are out there.
• Be wary of taking financial advice from someone who isn't registered as a financial adviser on the Financial Service Providers Register.
• Read the FMA guide to protecting yourself from investment scams and how to spot one and what to do about it.
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