Steer clear: Spotting illegal investment scams


EVERY year, thousands of investors fall prey to illegal investment-taking activities. This number goes higher and higher, most especially on times like these, when the nation and its citizens suffer from the temporary lockdown and cessation of operations of industries and businesses.

The Securities and Exchange Commission receives numerous complaints regarding investment frauds circulating online now that most people stay indoors and has more time to surf the internet and enjoy social media. Many of these entities who publicly sell and offer investments ride with the advancement and widespread use of technology to target the vulnerable investing public.

Scammers use highly technical language and enticing tactics to lure investors to part with their money. Some investment scams may look like the real deal, but there are red flags one can spot to help steer clear of them.

Guaranteed high returns at no or low risk

Take heed of the saying, “if it’s too good to be true, it must not be true.” Scammers promise an unrealistic return of investment in a very short period of time. A promise of a 30 percent return on an investment after a month already smells fishy. Don’t get swayed with six-digit figures they show you in their fancy, expensive gadgets they claim to have bought from their shady business.

Urgency to invest

Scammers pressure the public with their limited offers or discounts to rush them to sign contracts, without even giving the investor’s time to study, research, and think about the business they are placing their hard-earned money into. Most investment frauds cannot even present documents to prove their legality, like a Secondary License acquired from the SEC that allows them to sell, distribute, and offer securities and investments. Take your time. If in doubt, walk away.

Recruitment as main consideration for income

Beware of the Ponzi scheme and pyramiding schemes. Scammers oblige their investors to recruit and refer new investors and members, known as downlines, in exchange for commissions, incentives, and pairing bonuses. Fraudulent entities push downlines to bring in their friends to quickly enlarge their pyramids. Once recruitment discontinues, the pyramid collapses.

High-earning products

Scammers also use multi-level marketing as a front to hide their illegal investment solicitations. These entities require you to sell unbranded products at a very high cost. These expensive products will be hard to sell and dispose of so you would rather opt to just recruit more people to join your pyramid.

At this time, every Filipino is looking for ways to survive this national emergency. We all look for easy ways to cope with the expenses and bills mounting up as we enter the fourth month of the Covid-19 pandemic. However, the SEC urges everyone to be cautious in dealing with investment entities.

To avoid being scammed, should you be approached with an unsolicited investment opportunity, verify if the entity is registered with the SEC and bears a secondary license to operate as an investment company. You may also visit the SEC website to read the most recent updates and advisories regarding companies proven to be taking investments illegally through (Helen Veryan C. Valdez, Information Officer, SEC–BEO. Approved by Regina May Cajucom-De Guzman, Director, SEC–BEO)


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