A weekend police survey in Hamilton discovered only two beggars were actually homeless and the others were bringing props and even dogs to help them appear poor.
The survey found only two of the 15 beggars were homeless.
The remaining 13 had brought duvet covers, cardboard signs and even sickly looking pets to give the impression they were living on the streets.
The city's business community has called for change after beggars have been harassing or intimidating residents, according to TVNZ.
The general manager of Hamilton Central Business Association Sandy Turner said a new campaign was aimed at helping the homeless while it was only a "moderate" problem.
"People feel intimidated if they see people that look vulnerable on the streets or perhaps even a little bit scary or uncomfortable on the streets," she told One News.
"We don't want to get to the point that Auckland has got to where you're literally stepping over people in the street."
The campaign will roll out posters and information around the city with information telling residents giving to beggars may not be helping.
The campaign aims to educate public "about the challenges with giving money and the best ways to support people to get the appropriate help".
Turner said not giving to beggars directly doesn't mean you are ignoring them as facilities were readily available for the most vulnerable.
"We have hot meals available every day. We have emergency housing, long-term permanent housing options available," she said.
"We can support that person immediately, so you don't have to feel that you're ignoring the problem as a caring citizen."