Inside Money: Be bothered about conflicts

Most scams are low level, says the Consumer Affairs survey, like pool hustlers and lotto peddlers. Photo / Richard Robinson

"Overall, 15 per cent of New Zealanders say they have been scammed or tricked out of money at some point," this recent survey by the Department of Consumer Affairs reveals.

Mostly this appears to be small-time stuff - card sharks, pool hustlers, Scientologists, Lotto peddlers and the like - with 60 per cent of those self-professed scamees losing less than $1,000. However, a surprising 13 per cent confessed to handing over $20,000 to these dishonest schemers - although, if you were looking for business ideas, the survey provides no detail on which con jobs work best.

This seems to me to indicate an extraordinary high level of gullibility in the community in regards to financial dream schemes. On the other hand, as the survey says, it could be that a large proportion of that 15 per cent lost their money in perfectly legitimate ventures but they just feel ripped off.

Further research is needed to clarify matters, the survey says.

There are a lot of other interesting consumer behaviour observations in this report including the comment that: "Of the New Zealanders who perceived a problem with a transaction, 41 per cent 'just put up with it'."

"By and large, New Zealanders tend to put up with problems they see as minor or inconsequential. The most common reasons for putting up with a problem were 'couldn't be bothered'...," the study says.

Scams and poor business practices depend on such consumer inertia, of course, but perhaps New Zealanders are getting more bothered.

According to the survey, over half sought financial advice on investments or savings during the last year, with the most popular sources of wisdom being bank employees (19 per cent) or friends/family (17 per cent).

Only 7 per cent went to a financial adviser and only 6 per cent asked an accountant for advice on their investments. Across all sources, consumers were mainly happy with what their advisers told them - they may even have acted on that advice.

Proper financial advisers turned out to be the best at disclosing fees (74 per cent did but this really should have been 100 per cent given it is required by law) with only 62 per cent of accountants and 46 per cent of bank employees mentioning how they might be paid for rendering their services.

But all of them were rubbish at declaring their conflicts of interest and that is something that consumers really shouldn't accept anymore.


David Chaplin