Do you have savings as an older adult? Do you possess a home or other real estate? Then, keep an eye out for con artists who try to defraud you of your money.
Because they frequently have money and other assets, older individuals are prime targets for investment fraud. Investment fraud can have terrible, long-lasting ramifications. Seniors, their families, and caregivers should be aware of typical scams, how to stop them, and where to turn for assistance or to report them.
List of Philippine Investment Scams:
Ponzi Scam
- This particular swindle was invented by “Charles Ponzi” of Boston, Massachusetts.
- Ponzi introduced a scheme in the early 1900s that promised investors a 50% return on their investment in postal coupons. He was able to pay his early funders, but when he couldn’t pay later investors, the scam collapsed.
- This program guarantees substantial financial gains in the form of dividends that cannot be obtained through conventional investment strategies.
- Instead of investing victim funds, the operator, however, pays “dividends” to initial investors using money from future incoming investors.
- This plan typically collapses when the owner leaves with all of the money or when enough new investors are unable to be found to support the payment of ongoing “dividends.”
Pyramid Schemes
- Similar to Ponzi scams, pyramid schemes pay out funds to earlier victims to give the appearance of legitimacy.
- However, in pyramid schemes, the victims are encouraged to bring in more victims by being paid recruitment commissions.
- In more detail, pyramid schemes—also known as “franchise fraud” or “chain referral schemes”—are investment and marketing scams in which a person is allowed to own a distributorship or franchise to market a specific product.
- “Not by the sale of the product, but by the sale of new distributorships” is where the true profit is made.
- The emphasis on franchising in this plan as opposed to selling the actual goods eventually results in a point where the pool of possible investors is depleted and the pyramid collapses.
- Every pyramid scam starts with the common claim that new participants can recover their initial investments by persuading two or more prospects to commit the same amount. Promoters neglect to inform potential participants that since some individuals withdraw, while others recoup their initial contributions and subsequently withdraw, it is mathematically impossible for everyone to succeed.
Online Paluwagan
- Online paluwagan, also known as onpal, is frequently used to defraud Filipinos.
- Onpal operates similarly to the conventional, offline paluwagan. According to their payout schedules, members pool their money and alternate receiving payments. Onpal, however, makes extensive use of Facebook to entice investors and manage the paluwagan. Payments are sent and received by cash deposits, wire transfers, or remittance transactions.
- Onpal functions much like a Ponzi scam. People that solicit others to join an online paluwagan offer substantial profits of 10% to 75% within a brief window of one day to 90 days. Many members of onpal said they never received their investments returned.
Bitcoin Investment Schemes
- Online investment frauds target the public’s ignorance of cryptocurrencies like Bitcoin in the Philippines.
- Virtual currencies are alluring to invest in due to their speedy price gains, and con artists are eager to take advantage of this.
- The Bangko Sentral ng Pilipinas (BSP) cautions the public that investing in cryptocurrencies, even with a strategy, is high-risk and speculative and might result in significant losses.
- Virtual currencies are not backed by actual businesses, products, or services like stocks are.
Fake Lending Companies
Investors are duped into giving their money to a microlending or loan company in exchange for profits of up to 48% per month or 12% per week. Scammers lead their victims to believe they are operating a reliable internet loan company.
Along with promising inflated ROIs, online financing fraudsters also pay investors their early returns before eventually disappearing.
Government impersonation fraud
To get people to buy unlawful stock offers, dishonest actors pose as registered securities authorities or investment advisors. To defraud investors, impersonators will even go so far as to falsify official documents and credentials from reputable businesses.
The real-world con:
Ten foreign persons involved in an international investment impersonation scam were charged with conspiracy by the Department of Justice [*].
The con artists created the appearance of legitimate investment possibilities while assuming the identity of workers of numerous Philippine investment businesses. Over six years, victims’ losses totaled more than $6 million.
Cold Calls
- A scammer phones you and provides financial or investment advice while posing as a stockbroker or portfolio manager.
- They may extol the minimal risk and quick returns of their service, or they may nudge you toward investing in foreign businesses. The proposition will seem genuine, and the con artist may have the means to support it.
- They might keep contacting you back because they are persistent.
- The con artist may assert that they are legitimately linked with a legitimate business or that they are exempt from the requirements for an Australian Financial Services license.
- These cold calls typically offer investments in the form of share, mortgage, or real estate high-return schemes, options trading, or foreign exchange trading. The con artist will not have a license for Australian Financial Services and will be working from abroad.
Promotion and Hot Tips
- The con artist urges you to purchase stock in a firm they believe will soon increase in value.
- Either email or a forum post will be used to reach out to you.
- The message will emphasize that you must take immediate action and will appear to be an insider tip.
- To profit greatly from the sale of shares they have already purchased, the con artist is trying to drive up the price of the stock. The share price will then drop significantly.
- You will end up with significant losses or shares that are practically worthless if you invest.
SuperAnnuation
- Provide early access to your super fund on your behalf, frequently in exchange for a fee or through a self-managed super fund.
- The offer could be made by a genuine financial advisor or a con artist posing as one.
- To get your money out of the scammer’s hands sooner, they may encourage you to believe a lie. Then, posing as your financial advisor, they may trick your superannuation business into paying your super benefits directly to them.
- Once they have your money, the con artist may deduct significant ‘fees’ from the money they have released for you or simply disappear with it.
Please read: CYBERSECURITY REMAINS A HIGH PRIORITY
Conclusion
Even though there are several forms of investment scams, you can spot potential financial fraud by looking out for a few basic red signals. Proceed with caution if you see one or more of these with any investment offer; your money could be at risk.
