KEY POINTS:
When a Sovereign Home Loans letter arrived last week, my fraud radar went into overdrive. I found that someone, using my mother's maiden surname, had taken out a mortgage on our property. Fortunately it turned out not to be fraud, but human error. Sovereign did hold a mortgage over a house in the same street, just not ours as it said on the statement.
The experience reminded me that it's worth keeping abreast of the latest scams to avoid becoming a victim. The fraudsters become more devious every year.
Most internet users have heard of "phishing" attacks but many don't realise that they don't even need to click on the fake links in these emails to have their bank accounts plundered.
With phishing, you receive an email, purportedly from a bank or some other organisation. If you click on the link in the email, it takes you to a fake lookalike website where you are asked to enter your PIN and other confidential information - allowing the fraudsters to empty your bank account or buy goods in your name. Kiwibank and Trade Me have been among those targeted this year.
Instead of creating a fake website, some fraudsters attach a small piece of software to their spam emails called "malware", which records keystrokes as you type. When you next log into your bank online, the malware relays your passwords to the fraudster.
Just opening the email is enough for the software to install itself on your computer's hard drive, says Martin Cocker, executive director of internet NZ.
Phishing isn't the only risk; two online auction frauds have become increasingly prevalent this year, says Cocker.
In one, unsuspecting buyers pay for artwork but never receive it. The other, slightly more complex, involves the sale of a car or other expensive items. Typically, says Cocker, the buyer, who is the fraudster in this case, transfers more than the total cost of the car to the seller's bank account and then asks for the overpayment back. The seller repays the amount, usually a few thousand dollars, without realising that the buyer has cancelled the initial payment. The Commerce Commission warns people to be especially wary of overseas-based buyers, whose cheques may take weeks to clear.
Nigerian or "advanced fee" frauds remain popular. Looking in my spam folder, I find that I've received at least one a day for the past month. How they work is someone - who usually appears to have a poor grasp of written English - claims to have millions of dollars or other currency in an account, which he/she is willing to share with you - providing you pay an upfront fee for the money to be transferred. You, and a bunch of other suckers, pay the fee to a foreign account and that's the last you ever hear of it.
Such emails start like this one that I received this week: "Yaw Osafo-Maafo is my name and former Ghanaian minister of finance.i want you to be my bussiness partner."
Also in my spam folder was an email purporting to be from Shell Oil Plc announcing that I had won $800,000. To claim my "prize", I of course needed to hand over my bank account details - which I assume would then have been plundered in one way or another.
One hard and fast rule is never, ever reply to an email or unsolicited phone call saying you've won money or that a large sum of money needs to be transferred to your bank account.
These are always frauds.
Everyone who uses the internet also needs to be wary of putting too many personal details on publicly accessible websites such as Facebook, says Cocker.
Fraudsters can gather an awful lot of information about you on the internet or by diving into your rubbish bin or letterbox. The object is often to steal your identity and open credit cards and other accounts in your name - something that happened to me a few years back.
The BBC Watchdog programme (similar to our Fair Go) demonstrated just how easy it is to get internet users' personal details last month. A fictitious Facebook user called "Amba Friend" contacted 100 people at random.
Despite not knowing her, 35 of those replied to the friend request, giving the Watchdog researchers access to any personal details they shared on the site.
Not all frauds are internet-based. People may be defrauded by someone in their church, family or social circle. The Securities Commission is warning against cold callers who have fake investment deals. They claim that the investments are trading on a foreign exchange, which may not even exist.
Commission director of market supervision John Mulry recommends people hang up on such calls.
Even worse, there have been instances lately of the same people who bought worthless shares being contacted by the fraudsters offering to buy their shares - but only once they've paid a fee to "unlock" their holdings.
* Diana Clement is an Auckland-based personal finance and investment writer
Internet advice
* To avoid becoming a victim of these or other frauds, take a look at the 15 bullet points on the Scamwatch homepage: www.scamwatch.govt.nz
* To choose investments that suit your needs and goals, try the Securities Commission's new website: www.looklearninvest.org.nz
