'Easy money' to financial ruin: Don't fall prey to investment scams

Jessica Fenol, ABS-CBN News

Posted at Jan 31 2020 07:13 AM | Updated as of Jan 31 2020 11:09 AM

Peso bills from an ATM. Alec Corpuz, ABS-CBN News/File

MANILA - Gretchen (not her real name) still lives in fear a decade after her parents and their team of recruits lost a combined P100 million in an investment scam that promised "easy money."

Gretchen was in her early 20's when her mother, a retired office worker, built a "downline" of team of recruits to the scheme after she earned P2 million a month from an initial P1 million investment. Her father quit his hospital job to join the business. Together the family lost P8 million.

Although the masterminds have been convicted, Gretchen and her family up to this day parry anger from fellow victims who were tricked into the scheme.

"May trauma na kami sa easy money. Natutunan namin na pag madali mo nakuha ang pera, madali din mawawala 'yun," said Gretchen, now 34.

(We were traumatized by easy money. We learned that you can easily lose money that you've acquired easily)

"Ang naaalala kong feeling 'yung takot. Kasi maraming downlines sila Mama. We had death threats. Pinaghiwahiwalay kaming magkakakapatid ng tirahan. Pati ang Mama at Papa naghiwalay din ng tirahan," she added.

(What I remember is the feeling of fear. My mom has many recruits. We had death threats. Me and my siblings lived in different homes even my parents lived separately).

Gretchen, now an overseas Filipino worker, said her family learned not to trust easily after that incident. 

The Bangko Sentral ng Pilipinas, government agencies and private companies recently issued warnings to the public on signs of investment scams.

“Instruments promising guaranteed high returns are scams. There is no such thing. Their normal Modus Operandi is to attract you with a high initial coupon payment to build your confidence. Returns cannot be guaranteed,” Security Bank Corp first vice president and chief investment officer Noel Reyes told ABS-CBN News.

Engineer Ren (not his real name) lost P100,000 4 years ago, after falling prey to an aquafarm investment scam that promised returns of up to 40 percent in 6 months.

The business owners flew to Singapore, where he is based, to get the papers signed. The company went bankrupt shortly after.

"Nagkaroon lang sila ng mismanagement kaya hindi naging matagumpay 'yung investment, and at the same time, problem na rin sa breeding, low quality, low income, hanggang sa naging negative na sila.

(It was mismanagement that's why it did not succeed and at the same time, the problem is breeding low quality, low income until they went bankrupt)

"Think twice, thrice, research more before signing again and diversify. Wag ilagay sa isang basket lang (Don't put everything in one basket), explore more options and read more," he said. 


Returns on investment scams are "too good to be true," the Securities and Exchange Commission said in a statement to ABS-CBN News. Earnings are also "unrealistically high and guaranteed."

A 30 percent monthly return or those promising at least 4 times the investment amount but without a clear business plan can be considered a scam since it will not be able to sustain the payout scheme, the SEC said. 

No person or entity can sell or distribute securities and investment contracts without a registration with the SEC, the regulator said. A legitimate investment company should have both a SEC registration and a permit to sell securities. 

In most cases, fraudsters will claim that they are registered. To verify, investors can visit the SEC website to see if a broker, dealer or salesperson is licensed.

The most common scams in the country are ponzi or pyramid schemes that focus on recruitment and boiler room operations or those who use "high pressure" tactics to sell their products that are sometimes billed as "once in a lifetime."

Consumers should be “vigilant and discerning” on social media since fraudsters now know who to target and how to appeal to emotions, said Oscar Visaya, country manager of cybersecurity firm Palo Alto.

Be wary of posting personal information and real-time locations on social media since such data can be used by swindlers, he said. 

Companies especially small enterprises should also invest in security tools to be “at par” with criminals who use machine learning and other modern tools to deceive people, he said.


Investors should choose “reputable” institutions governed by regulatory bodies because these companies "will not allow their names to get ruined,” Security Bank's Reyes said.

If an investor has excess cash that won’t be needed for a few months, it can be placed in a money market fund or short-term fund, Reyes said.

For those who are eyeing long term investments, they can choose bond funds with higher returns, he said. When investing in equities, it is best to choose companies with consistent track records, Reyes said. 

Reyes also advised investors to consider government bonds. A retail bond yields 4.375 percent at maturity compared to deposit rates of 2 to 2.5 percent for 1 to 3 months, Reyes said. 

Consumers who think they are being conned can reach the SEC Enforcement and Investor Protection Department at (02) 8818-6337 or 8818-6047 or through [email protected] 

The SEC has other information and education programs to help Filipino investors protect themselves from fraudsters.