How to Tell if an Investment is a Scam in the Philippines?

how to tell if an investment is a scam philippines

It can be hard to know if an investment is a scam or not. If you are new to investing, you might fall for some old tricks that will end up costing you money. One way to help you figure out which ones are legitimate is to research and ask someone who knows about them.

In this post, we’ll discuss how to detect investment scams in the Philippines. Moneysmart folks believe their money deserves to grow and be invested in the proper marketplace and platform. So let’s get started, shall we?

What is an investment scam?

An investment scam is a transaction that does not live up to expectations or promises. Investment scams have been around for a long time and aim to entice people into giving them money by posing as investments, clubs, funds, presentations, seminars, and contracts. These investment con artists want you to believe in them so that you will part with your money willingly.

How to recognize an investment scam?

There are a few hints you can use to get started. Usually, these scammers promise substantial returns in a short time. If the investment appears too good to be true, you should know it’s most likely false. Check out these eight red flags to help you identify if the investment is real or not.

​​#1 Promises of high returns without the risk involved

There is no such thing as a high return with little or no risk. It implies that any individual or company that suggests this is enticing you to give them your investment fund. Remember, it takes decades for an investment to experience large capital gains, yet low-risk investments are not always assured.

Investments typically gain money over time, which can take years before they can grow exponentially larger. Even if you see gains, any investment should still be considered risky. So, invest what you can afford to lose.

#2 They want to know your financial details

Some investment scammers will ask for financial details. It’s because they want to use your money in fraud schemes or other illegal activities without you knowing it. These requests are red flags that the investment you’re looking at could be fake. It’s best to avoid these outright and if you have to, verify them before you commit.

If they are asking for personal information and bank details, ask the reason behind their intention. While even legit investment companies require people to share their email addresses and other contact details to send newsletters, you shouldn’t share financial information with anyone.

#3 The investment isn’t regulated

Legitimate investments are usually regulated to protect the assets and interests of the people. If the investment company isn’t registered at the Securities and Exchange Commission (SEC), this can be another red flag. The SEC is a financial regulatory body in the Philippines that oversees and regulates investment operations.

The SEC was established through The Securities Regulation Code. This code makes it illegal to market investment without registration with the SEC under Chapter 4, Rule 7 of the Code. If there’s no regulation and monitoring by any agency or body, then you can rule out that it is not a legitimate investment.

#4 You are not informed of all relevant information

There may be certain information regarding the investment opportunity that would benefit or change your investment decision. If the company withholds vital information from you that would affect your investment decision, this could be a red flag you need to watch out for.

It’s easy to verify information on the internet, such as Google search and communities such as Facebook groups, Reddit, and more. You may ask members about the company and if anyone invested their money in the company. Don’t be fooled by a professional-looking website and active social media accounts. Veteran scammers can easily take down their websites and online accounts once they have milked all the investors’ money.

#5 There are initial fees to invest

Investment opportunities for profit should not have an initial fee. There are investment scams that would require an investment fee before, which could result in losing all of your money if you do not withdraw from the investment early.

When a company requests money because it’s confident of growing it quickly, it is often regarded as one of the most visible investment swindles. You don’t earn any returns from that upfront fee even if you still have your cash in your account before the end date, which can also drag you.

#6 You are pressured to act quickly

Is the investment company trying to persuade you to act quickly on their offer? Investment opportunities should provide detailed plans for investors. If they are using aggressive marketing strategies and psychological tactics without disclaimers, these could be red flags. They should give you ample time to decide and not pressure you about the offer.

If the investment opportunity limits your time to decide, you need to think twice again. Remember, that’s your money. No one has the right to dictate and push you how to invest it.

#7 They don’t have an office

The company may look legitimate because they have a website, possibly even photos of an office building that was never theirs, to invest, to begin with. So, how can you verify if the company is legitimate? You may use the SEC’s web portal and Google searches if it’s an actual location.

If you want to go the extra mile, why not visit the location and see for yourself if real employees are working for the investment company. If the place is sketchy, you may want to steer away from the investment company.

#8 Company heads are anonymous

If it’s hard to figure out who’s running the show, walk away. Legitimate operations don’t hide behind anonymous names. They tend to promote the high-profile nature of their projects – this is how they build trust.

If they remain anonymous, then this is a red flag you should take note of. You can use professional social networking sites like LinkedIn to do some background checks about the people behind the investment company.

Final Thoughts

There are numerous types of scams in the world. Still, the most prevalent ones include high returns with little risks involved and pressure from representatives who demand your financial information before providing any further information on the investment.

If you feel pressured to invest quickly or don’t have all relevant information on what you’re investing in, then chances are this is not a legitimate offer which means no matter how good it sounds, do not send money.

The best thing for you to do is research their options thoroughly by asking questions and taking time away from making quick decisions so you can make informed choices. We have written some articles about investments that might help you get started.

Which of these pointers have you encountered before? Let us know in the comments below.