Harms and risks of get-rich-quick schemes

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Metro Manila (CNN Philippines) — It is easy to fall into the trap of get-rich-quick schemes. Even smart people - those who are educated, financially literate, and wealthy - become easy targets. With the pandemic and the economic slowdown, people can impulsively make irrational decisions as scam artists take advantage of their emotional vulnerability to make ends meet.

1. Don’t let your guard down.

The first rule on investments is that if you do not understand how the instrument works, don't sink your funds into it. A simple check for whether you truly understand an investment is if you can explain in simpler terms how your investment works and how it gains value.

On the other hand, even if you think you know a lot about an investment opportunity, don’t let your guard down. Research from the University of Exeter reveals that overconfidence makes people vulnerable to scams.

Step away from the computer or put down your smartphones for a while if you are inclined to send money when the email or message appeals to your emotions.

2. Don’t easily trust authority.

Scam artists can send emails and ads that appear to be from public officials, celebrities, and trusted organizations. Don’t hesitate to turn them away and ask for their identification if they contact you via phone or visit your office or home. Make sure to contact the company or organization to make sure you are dealing with a legitimate source.

However, the Securities and Exchange Commission (SEC) warns the public that an SEC registration does not automatically mean one is authorized to sell investment instruments. Only investment houses and financing companies with quasi-banking (QB) license and with SEC-registered securities may offer to sell the same to more than 19 investors. In addition, only SEC-registered persons, including brokers, dealers, and salesmen, may offer or sell SEC-registered securities to the public. Do not also be tricked by offers of promissory notes or post-dated checks that will be issued in your favor to allegedly ensure the payment of earnings and the reimbursement of your investments.

3. Report ads with misleading information.

Online “investment” scams continue to proliferate in the digital advertising space despite stern warnings from government authorities worldwide. In the Philippines, the Department of Finance (DOF) and law enforcement agencies and regulators have called on companies, like Google and Facebook, to combat false investment advertising.

You can also help fight malicious advertising. If you encounter a suspicious Google ad, report here: https://support.google.com/google-ads/troubleshooter/4578507

You can also verify investment claims and report suspicious activity with government authorities.

For reports of potentially fraudulent investment claims, you can contact the Securities and Exchange Commission at (02) 8818-5704.

Report suspicious messages to the NBI Anti-Fraud Division at (02) 8525-4093 or e-mail at afad@nbi.gov.ph. You may also send a message through the NBI’s website at www.nbi.gov.ph or their official Facebook account.

You may also report these incidents to the PNP Anti-Crime Group (PNP-ACG) through its website at www.pnpacg.ph, through hotline number at (02) 8723-0401, or through email at acg@pnp.gov.ph.

4. Back down from a questionable commitment.

Many fraud victims find themselves spending more money because they feel their time and investment would go to waste if they don’t follow through with the process. Even if you have already shelled out money, if all pieces of evidence point to a scheme being illegitimate, it is time to stop and seek help from the government when necessary.

5. Go for safe and secure investments.

The safest investments are those that are guaranteed by the government. In these uncertain times, there can be no safer investment than government bonds. They not only yield guaranteed returns while protecting the principal; they also help finance the country’s development needs.

Government bonds are a safe, secure, and patriotic way to invest. To make investing in these instruments convenient, the government has partnered with banks to open online facilities for buying bonds. Go to https://www.treasury.gov.ph/premyobonds/ to see how you can buy the latest issue of government retail bonds. Premyo bonds offer safe returns while providing you the opportunity to win prizes during their quarterly draws. You may also download the mobile app Bonds.PH to purchase retail government bonds.

During these times, people can make irrational decisions driven by emotions. It is natural to get attracted to financial gain. But if something seems too good to be true, it probably is. Protect your hard-earned money. Watch out for red flags and do some digging.

The government is also pursuing reforms to make investing in legitimate opportunities easier and simpler. The Duterte administration's proposed Passive Income and Financial Intermediaries Taxation Act (PIFITA) will simplify the tax regime for bonds and stocks by reducing the number of tax rates on financial transactions from 80 to 36. Once enacted, PIFITA will make it easier for everyday Filipino investors to put their money in safe and secure investment opportunities.

To learn more about how to invest safely, you may check out the investor’s education and information website of the Securities and Exchange Commission (SEC).