How gov't can fight investment scams


Posted at Nov 29 2014 10:25 AM | Updated as of Nov 29 2014 06:25 PM

MANILA – In the last 20 years, more than P80 billion have been lost to investment scams in the country, which begs the question: Is government equipped with the right policies and enforcement procedures to prevent scams from flourishing?

The major investment scams in the last 20 years include Bancap in 1994 (P900 million); Multitel (P25 billion) and Mateo Management Group in 2002 (P4.3 billion); Tibayan Group in 2003 (P2 billion); Francswiss (P1 billion); Performance Investment Products Corp ($250 million) in 2007; and Legacy Group (P30 billion) and Royal Manchester Five Trading Corp. (P2 billion) in 2008; and Aman Futures Group in 2012 (P12 billion).

Financial adviser Salve Duplito said despite the prevalence of investment scams in the country, there has been no news on whether investors got their money back or even whether the government fined these companies violating consumer laws.

“This clearly shows one thing: the current system for protecting consumers from scams is not working well,” Duplito told ANC’s “On The Money.”

The government’s scam-busting system must be improved, Duplito stressed.

She also said that Philippine courts are too clogged and unable to prosecute scammers speedily.

“There is very little deterrent for unscrupulous individuals who want to use Filipinos financial ignorance against them,” she said.

To prevent scams to succeed, Duplito suggests that government should have its version of the US Federal Trade Commission, which has the mandate and the powers to investigate and prosecute, except for banking institutions, clearly reside in one institution.

Although a number of government agencies in the country are monitoring financial fraud, Duplito believes their “efforts are scattered and information sharing is weak.”

The US Federal Trade Commission has solved a number of investments scams which involve last-dollar scams, mortgage relief scams, debt relief and credit repair, credit reporting, debt collection, credit cards, auto lending, and payday lending.

“In our country, we as a society, and even regulators, are drawn towards the big crimes and dismiss seemingly small ones. A peso lost from a family in a minor con is just as insidious an painful as one from a sensational scam,” Duplito said.

“We need a massive sea change in creating a safer financial environment for our people where busting scams or better yet, stopping them before the happen is a priority,” she added.

Duplito also said that there is no price is too big to pay for this, “whether we have to merge institutions, close down others, or hire those who really have the expertise,” noting that political will is key to implement this system.