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Don’t Be a Scam Victim

April 21, 2012

June 20, 2010

Don’t be a scam victim!

Written by Edmund Lao / Personal Finance

Sunday, 20 June 2010 20:57

Scam, by definition, is a deceptive business scheme designed to defraud a person or group by gaining their confidence. Scams come in different forms. These are the Ponzi scheme  (named for Charles Ponzi), the Pyramid scam and the Nigerian scam, to name a few.

In the Philippines we had the well-known Multitel (P100-billion pyramid scam) in 2002, the SM Fund in 2007, the Francswiss (P1 scam) in 2007, the PIPC ($250 million) in 2007 and the Royal Manchester Five (P2-billion scam) in 2008. And it is difficult to imagine why, despite the number of scams that have plagued our fellow Pinoys in the past, we keep falling victims to them. Scams come and go, but people never seem to learn. So why is it that con artists never seem to run out of victims? In the first place, there would be no scammers if there were no “prospective clients” apparently willing to be conned.

Why are scammers successful until now? Below are some possible reasons:

1. Lack of financial literacy. In order to be able to thwart schemers, a person must have a basic knowledge of money, and how it works. Filipinos are known to be risk-averse. Evidence of this is the banking industry. Most people want to have their money deposited in the banks for two reasons: they feel their money is safe in the bank, and they want easy access and withdrawal. Both reasons are valid, but the downside is they receive a meager interest in exchange for convenience. When insurance and investment agents approach to help them grow their hard-earned money, more often than not, they reject the agents for fear of risk. But when scammers come and sweet-talk them about high-yield investments, especially if they are told that some showbiz people and big-time politicians are also involved, in the blink of an eye, the prospects forget about their fears and the risk.

2. Greed. This is another area that the scammers take advantage of. They manipulate their prospects’ emotions and tempt them by selling them dreams. Because the prospects lack financial knowledge, the lure of making big money through the investments proposed by the scam artist makes them greedy. In their desire to amass wealth in so short a time, they impulsively and unwittingly “invest” all their life savings only to realize later that they have been conned.

3. Lack of awareness about scams. Many people become victims of scams because they are not aware of the operations of scammers. We must know that there are scammers lurking everywhere, ever on the lookout for victims, for a chance to pounce on people’s weaknesses. In a way, a scam is like a game of chess where players try to outwit each other and wait for their opponents to make mistake. Actually, the mistake arises from a violation of the principles of the game. When we make a decision on the handling of our money, scammers just wait for us to violate the principles governing the growth of money. And when they spot our blunder, they take advantage of it and, before long, they’re laughing all the way to the bank, counting our money.

4. Laziness/get-rich-quick mindset. This is another reason many are scammed. I have encountered many people who, when selling their assets, can’t wait to get hold of the cash; they want to have their money within the shortest time possible. A word of caution for them: Always remember the phrase “Easy come, easy go.” The easier one gets his money, the easier this will be spent. Another phrase worth remembering is “Keeping up with the Joneses.” Some people, in their desire to keep pace with their progressive neighbors, search desperately for ways to make more money. And sometimes, the only solution they see is the get-rich-quick scheme, which, more often than not, leads only to a greater loss…and grief.

5. Lack of discipline. When it comes to money, Pinoys find it hard to control their habits. They cannot seem to avoid spending unwisely on things they do not really need. They lack the will to put their money aside for their future. Maybe it is because of the culture we inherited from our conquerors, the Spaniards (siesta and fiesta) and the Americans (shopping). Because of these bad habits, the Pinoys’ income can barely meet their needs. So when a business proposition is offered to them, they unwittingly join, not knowing the company is illegitimate. A lot of business opportunities flood the e-mail, deceivingly promoting financial literacy. But a careful investigation often reveals the company only promotes consumerism. This is a tricky form of scam. Worse, the company may not have undergone the procedures to make it legal.

Remember: before investing, INVESTigate first.

6. Deceptive training seminars. People, by nature and out of desperation, always want to hear positive things. Scammers, realizing this, put up deceptive training seminars to brainwash new members into believing them. Most of the time, they appear to talk like experts by quoting various authors. Scammers also make the members feel good by their make-believe seminars. An example is they make people believe (with ease) savers are losers while the truth is savers end up with more money than the consumers. Such is the hypnotic power of these organizations.  They also have different ways to invite people to the same scam. They issue challenges to make people join. It is noticeable that scammers play on people’s emotions.

The following are guidelines to thwart prospective scammers:

  • Be careful if the person offering investment hurries you up and does not give you anything in writing. Take time to think things over.
  • If you are offered a high return with little or no effort, and there is no explanation on how your money will be invested, chances are it is a scam.
  • Do not show that you are impressed by their attire and their presentation.
  • Do not provide any personal and financial information, unless you have established that the company is legitimate. Check also if their claims are valid
  • Check with the Securities and Exchange Commission or Department of Trade and Industry about any plan you are considering.
  • Be skeptical. Remember, your hard-earned money is on the line.
  • Always keep in mind: If the offer is too good to be true, it is a scam.

Don’t be a victim of scam!

Edmund Lao is a candidate for Registered Financial Planner (RFP) designation. He is a graduate of

Electrical Engineering from Mapua Institute of Technology. Currently he is a sales engineer in one of the

biggest media companies in the Philippines. He is also an active contributor in,

the country’s premier personal finance web site. Join the 20th RFP Program (July 10 to September 4, 2010).

Visit or inquire at info@rfp-philippines.comThis e-mail address is being

protected from spambots. You need JavaScript enabled to view it /Tel. No. 634-2204.


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