In November last year, the businessman, identified as Ajay, listed a motor and gearbox, headers, clutch and flywheel, aluminium radiator and manual computer including coils and motor harness for sale on Facebook Marketplace on behalf of the company.
On December 5, a man agreed to buy the items for $10,000 and four days later he emailed Ajay to say the payment had been made.
The buyer sent the complainant an email that appeared to show the money had been transferred into his account in what was believed to have been a fake or edited screenshot of a bank transfer.
The buyer, who is unnamed in the decision, also sent a copy of a New Zealand driver’s licence which he said belonged to his partner, though it was later discovered the licence was stolen.
On December 11, a woman claiming to be the buyer’s sister arrived at the company’s premises and collected the items.
The complainant only realised the money had not been deposited when it failed to appear in the account and Ajay later reported the incident to police.
Both of the scammers were using false names and showing the stolen driver’s licence was part of this deception, the IFSO said.
Ajay made an insurance claim on behalf of the business but the insurer declined the claim, saying there was no cover available under the automatic policy extension for theft.
While “theft” was generally excluded under the policy, an extension provided cover for loss caused by theft, provided the loss was “sudden” and “accidental” and the insured property was also covered by one of four other policy extensions.
Because none of these policy extensions applied to the claim, there was no cover under the extension.
The insurer also found the company’s policy had an exclusion that applied to loss caused by a “fraudulent scheme” or “false pretence”.
The exclusion stated that “loss caused by … any … false pretence practised on you” was not covered.
Ajay complained to the Insurance and Financial Services Ombudsman Karen Stevens.
Stevens looked at the police report, which classified the incident as “obtaining by deception (over $1000)” and was headed “FB MP [Facebook Marketplace] Fraud $10,000″.
The IFSO found this was sufficient evidence that the items had been obtained by the buyer under a false pretence, and the insurer could rely on the exclusion to decline the claim.
“This was obviously not welcome news for Ajay, but is a good reminder for businesses to be wary of scams and to make sure they’re verifying payment before handing over any items,” Stevens said.
“Business insurance policies often contain fraud exclusions. This means if someone has been duped into handing over items, the usual cover for lost/stolen items doesn’t apply,” she said.
“Things like Facebook Marketplace scams have increased in the past few years, meaning there’s a real risk to businesses if they aren’t alert and vigilant when selling items.”
Netsafe put a warning about Facebook trading scams on its website in February this year, though it was focused on fake sellers, not fake buyers.
Tips for spotting a Facebook trading scam include:
- Checking the seller’s Facebook page is legitimate by reading reviews and looking out for blue or grey ticks on the page that are given to pages or profiles verified by Facebook;
- If the trader has a Facebook profile that appears new or incomplete this could be a sign the account has been set up for scamming;
- Only pay the seller after inspecting the goods in person and where this is not possible, always request tracked shipping when purchasing online and if there’s any doubts don’t go ahead with the deal.
Netsafe said there were risks when trading on all online platforms but Facebook buy and sell pages were not moderated by Facebook, meaning users were at greater risk.
Natalie Akoorie is the Open Justice deputy editor, based in Waikato and covering crime and justice nationally. Natalie first joined the Herald in 2011 and has been a journalist in New Zealand and overseas for 28 years, recently covering health, social issues, local government, and the regions.
