A woman from Auckland was targeted by an online scammer. Image / 123rf
The Financial Markets Authority warns again of a Starlink “IPO” scam after an Auckland woman was targeted.
“Sarah,” whose name has been changed because she fears retribution, is the latest to come
a scrape with the offshore scammers.
Starlink is in the process of launching a worldwide network of satellites. It is a wholly owned subsidiary of SpaceX, which in turn is owned by Elon Musk. There’s no Starlink or SpaceX initial public offering (IPO) in the works, but scammers are happy to trade Musk’s star power.
Sarah tells the Herald that she knows about Starlink’s product. Her family is one of thousands who live too far out of town for UFB fiber but not rural enough for the Rural Broadband Initiative. Buying a Starlink dish for satellite broadband turned out to be a “fantastic solution”.
Although she doesn’t trade stocks herself, Sarah opened two Sharesies accounts for her children – and she thought the up-and-coming Starlink could make a good addition to her portfolios.
She googled “Starlink shares” and came up with an initial public offering of shares in the company.
Despite global stories of Starlink stock 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 purporting to offer early access to a Starlink IPO – or information above non-existing shareholdings – if you register with personal data.
Sarah indicated her interest by entering her name, email address, phone number and the amount she wanted to invest in a professional looking website. A number of options were offered, with a minimum of $10,000.
Then she received a call from a “Mr. Daniel Maxwell-Stewart” – a friendly man with a British accent who said he worked for an Australia-based equity brokerage firm. The company had a professional looking website with authentic business ID numbers.
There was nothing particularly unusual in the phone calls that followed: a request for formal identification: passport details, credit card and bank statement.
On the subject of matching items
It wasn’t until “Mr Maxwell-Stewart” asked Sarah to verbally confirm that she wanted to proceed with the Starlink stock purchase that she became nervous.
She asked her partner and accountant for advice. Her accountant wondered why “Mr. Maxwell-Stewart” allegedly had access to shares in Starlink’s “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 in which someone was offered shares by a man with an English accent.
There are no plans for an IPO involving SpaceX or Elon Musk’s Starlink subsidiary. Photo / Getty
“I then immediately backed out, I said I have to make a good decision for me and my family, do a little more research because there are scammers,” says Sarah.
She pulled the plug and didn’t lose a dime – unlike a retired man from the NZ Defense Force in Palmerston North, who last year told the Herald he lost $14,000 to a Starlink “IPO” scammer.
The threat of identity theft remains
But Sarah was still exposed for giving the scammers a series of personal details that could be used to identify fraud – like withdrawing money from their bank accounts.
This meant that passport, driver’s license and credit card had to be replaced.
If you find yourself in the same situation, Internal Affairs recommends an organization called IDCare that can help you avoid identity theft and guide you through the process of freezing your credit records.
crackdown?
Can the FMA address the fact that outfit search ads purporting to provide early information about a Starlink “IPO” continue to appear on various high-profile websites?
“The FMA’s powers are limited to the New Zealand coasts and we do not regulate the activities of global search giants or social media platforms,” said an FMA spokesman.
“However, we have worked with CERT in the past [the Government’s Computer Emergency Response Team] to have sites related to investment fraud removed.
“[But] Given these limitations, one of our most effective tools to combat investment scams is to issue regular alerts to discourage people from investing in them, and we have information on our website on how to spot a scam.”
The spokesman added: “This is an issue well known to securities regulators as the UK’s Financial Conduct Authority is working with search engines and social media platforms to raise concerns about advertising fraud or fraudulent schemes.”
Search and social media companies did not immediately respond to requests for comment.
The FMA’s lessons from Sarah’s experience
• The contact told Sarah they had special access to Starlink stock that no one else had—a surefire red flag.
• He asked if Sarah had invested in cryptocurrencies or owned bitcoin as it would “make the transaction easier”. Scammers trying to get paid in crypto are a way to get money without it being easily “reclaimed” by the banking system or triggering an alert.
• Sarah did well to talk to others about her plans, including her partner and her accountant. They gave a broader perspective that helped her think clearly about where she might have been misled.
• The stock brokerage website she was first lured to disappeared. This is common, when a fraudulent website is detected, it changes its name to repeat the scam under a new identity.
• If you have ever been scammed or given information to a scammer, you may be contacted again.
• There has been a record number of complaints about online fraud in recent months. However, the FMA warns scammers not only to use social media and the internet, but also phone calls, emails and in-person approaches.
• The FMA warns New Zealanders to beware of unsolicited communications urging them to buy shares or invest their money in offshore companies. It is illegal in New Zealand to sell financial products through cold calling or other unsolicited contacts.
• Sarah was not subjected to hard selling methods. The man who called her was friendly and professional, never rude or pressuring her. A soft sale (which was also characteristic in the case of the retired NZDF officer) can be just as successful as being repeatedly contacted or cornered.
• Tip: Check out reputable news sources about IPOs. In the case of Starlink, founder Musk has said he would only list it on an exchange “when its cash flow is more predictable.” We don’t know when this might happen, but there will certainly be plenty of news on reputable sites when a Starlink IPO is officially announced.
Be fraudulently secure
• Before investing, check whether a company is not on the FMA’s list of warnings and information. Note, however, that the list is not exhaustive and there is no guarantee that the company or person listed has not changed their name. Sarah checked the page and didn’t see the scammer’s name on it, but was still wary after reading about the type of scams out there.
• Do not take financial advice from anyone who is not listed as a financial adviser on the Financial Service Providers Register.
• Read the FMA’s Guide to Protecting Against Investment Fraud and how to spot one and what to do about it.
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