The Dannevirke News is not naming the victim, who is reeling from the scam.
The Dannevirke pensioner was phoned by someone calling himself Andy, telling him he was from the New Zealand Government grants department.
"My brother-in-law was told John Key was releasing funds and he would be entitled to $10,800," the woman said. "Told if he followed the instructions to the letter he would receive the money, he was given a Western Union account and the names of two people, both Indian and a complicated procedure to follow.
"Unfortunately, he didn't have a credit card, nor online banking, but when told to get down to his bank and open a phone account, he did so."
There is no blame being put on staff at the Dannevirke branch of KiwiBank, the woman said.
"They were very, very cautious and my brother-in-law was asked three times if he wanted to carry out the transactions and if he knew this person and he answered yes. so he set up the phone banking and opened his accounts to these bastards. He did what he was told by this Andy and even called him back to confirm he'd carried out their instructions."
When the woman became aware of the scam, alerted by her mother-in-law, she notified the police and shut down all her brother-in-law's bank accounts.
"But the scammers kept on and he had a couple of phone calls, one very nasty and was given a Wellington phone number to call ...
"I rang Spark and Internal Affairs to report the scam as well as the banking fraud department, [who] were very concerned as most of the activity on that account was from New Zealand."
A Norsewood woman had also been targeted by scammers this week through an email and warned locals to be wary.
"Initially the email looked plausible, because the IRD address looks genuine and the amount I was being offered as a supposed IRD refund, $500, wasn't low enough to look suspicious," she said. "However, I was alerted for several reasons, not the least of them being that IRD would never ask for credit card and bank details in an email. I immediately phoned the IRD and Netsafe, who both say this is a scam."
Senior Sergeant Nathan Davis of Tararua Police warned people to never tell anyone their bank account details.
"If what you're being offered sounds too good to be true, it probably isn't genuine.
"If you're ever unsure don't give out any details."