Some of the most common get-rich-quick scams are easily spotted. “Investment schemes” are the most popular and seemingly simple scam. These so-called “investment schemes” invite you to put in a small amount of money, often with very flexible terms, with the promise of regular payouts and large returns.
These scams can be found all over the internet, from the well-meaning Facebook group, to slick websites and videos. Here’s how to spot them.
1. Pyramid schemes
Pyramid schemes involve recruiting lots of people and offering a tiered payout scheme according to how many people you've recruited. They use slick websites with hard-sell videos, they flash really rich users of their sites as "successes," and gloat that they have secrets to get people rich.
They sometimes make up new crypto-currencies, or promise huge returns after a certain time period.
These schemes often offer actual returns to users to get them hooked at the start and pull them in for more investment. After a while, the returns start getting smaller and smaller, or disappear entirely.
Bottom line: If it's too good to be true, it probably is.
2. Small-scale investment schemes
These most often involve a Facebook group with someone promising regular returns. Sometimes these users offer to gamble the user's funds and return profits, sometimes they say they will invest the funds through bitcoin or other currencies.
Usually, this is a mini-ponzi scheme where they may return the funds, but will most likely end up pocketing the money and running away with it. These schemes are usually advertised and transacted over social networks and private messages. Once they have your money, the cuplrits disappear, leaving you no real way to catch them.
Remember that nobody can guarantee a large return, and it is illegal for anyone to accept investments without a license.
Bottom line: don't trust an unverified account or an unlicensed group.
3. Nawalang paluwagan
Paluwagan or Rotating Savings is a system of saving or lending money that is very popular among small communities in the Philippines. Basically, all members of the paluwagan will add a fixed amount of money into a pot - say, Php 50 each. The entire pot will be received by one of the members. Then everyone adds money again, and a different member receives the pot.
What makes this work is that people know and trust each other, and they trust the person holding the pot
But it has its risks too – what if people don't pay up? What if the collector runs off with your money?
Because it's a familiar system, people are more inclined to trust it, which is what makes it more prone to abuse. And on the internet, it’s easier for someone to run away with your money.
Bottom line: only send money to people and groups that you personally know and trust
We encourage you to exercise caution in joining any investment scheme that promises big returns, or seems too good to be true.
