Thousands of Filipinos lose money to investment scams every year. After all, who doesn’t want a high level of return for little to no risk?
The tricky thing about spotting investment fraud is that many of them appear legitimate, and are fronted by persuasive individuals. After all, the goal is to make you feel comfortable about handing over your money.
So how do you spot investment fraud and protect yourself from it? To answer this question, here are some ways to identify investment fraud in the Philippines. If you see any of these red flags, be extra cautious and perform more due diligence than usual.
Don't trust online reviews
Just because your friends are talking about it on social media, doesn’t mean it’s a sound investment. Before you decide to invest in anything, don’t feed off everything the company gives you. Be skeptical and look for information from other sources.
Find out more information about the company, the people behind it, and how they operate. When doing an Internet search, don’t just look for success stories. Also look for any cautionary tales of anyone who’s been fooled by the company or its operators.
You should also check if the company is licensed with Securities and Exchange Commission (SEC) to offer investment products.
Remember, investigate before you invest!
Know the classic red flags of investment fraud
Investment scams come and go in different forms. By knowing the general characteristics of scams, it will be easier for you to spot new ones:
- Get-rich-quick schemes
- Guaranteed returns with almost no risk
- Focus on positive testimonials from other members and investors
- Rushing you into investing money right away
- Free lunch, seminar, or coffee in exchange for investment
- A process that relies on “secrets,” “special connections,” and “inside information”
Be extra vigilant and ask more questions if you see any of these signs.
Ask questions about return on investment
One common factor with investment scams is that they promise huge returns over a brief period of time, with very little to no risk.
Remember - there is no such thing!
No genuine investment can make you rich in a matter of days, weeks, or even months. Legitimate investments need time to grow that money.
When talking to a salesperson, ask him how exactly the company is planning to use your money to generate income for its investors. Is the company selling a product or a service? Or are they simply using money from recruits to pay off their old investors?
There should be a clear-cut process that doesn’t involve any secrets or classified information.
Check the salesperson’s background
Even if you personally know the individual who’s selling you a product, you shouldn’t just trust him with your money.
Check that person’s actual qualifications, and don’t just rely on his seeming likeability or trustworthiness. Is she licensed to sell a specific product? Is he affiliated with any financial or investment firms? Did he have previous run-ins with any investors? What are people saying about her?
It’s best if you can meet with your point person in his office so that you can ask for documentation and proof that your money is being invested properly. This also helps you make sure you are dealing with a reputable company, and not an individual presenting themselves as an agent.
Be critical and vigilant
Remember, investment scams come in many forms, and the people behind them will keep coming up with new ways to steal your money. Don’t be afraid to ask questions, and don’t be afraid to say no. Your money - and your financial future - is at stake.
