I was greatly saddened when I heard the news about the Aman Future Group scam which victimized many people in towns and provinces in the Visayas and Mindanao. More than 15,000 people, mostly farmers, market vendors, government employees and teachers, were victimized with estimated 12 billion pesos of money involved. I even heard that one of the victims committed suicide because all his hard-earned money were invested in the scam. I guess many of the victims put their savings, retirement funds, child education funds or even loaned money, into the scam believing that their money will double or triple in a span of just few weeks or months. Many of them have little or no education about investing that is why they were easily lured to get into the scam which is considered one of the biggest financial scams in Philippine history. It is hard to imagine how individuals and families victimized by the scam are going on with their lives now. There may be children who may postpone college because their parents invested all their savings or education fund in the scam. There may be destroyed family relations because there were those who introduced relatives into the system. There may be retirees who are now having a hard time thinking where to get money for their retirement; should they work again? I am also afraid that more and more people will hesitate to invest in real and legitimate investment instruments because of their phobia to scams like this.
In reality, there are legitimate investment products like stocks, mutual fund, UITF, bonds and unit-linked insurance. However,unlike scams they do not guarantee returns and they don’t promise to double or triple your money in a short period of time like few weeks or months. These legitimate investment products are not so popular among Filipinos maybe because they don’t give that much return (e.g. twice or triple the money) or it takes time to earn money. Financial scams or Ponzi schemes become popular because they promise guaranteed returns in a short span of time. They spice up the greediness inside people’s heart – the burning love for money. They use the lack of financial education among Filipinos to pursue their evil deeds. They even cling to politicians and influential people to promote their business and protect themselves. I have this feeling that the victims may never get their money back or it may be difficult for them to do so; worst case scenario the people involved or behind this scam will be able to use legal loopholes and other strategies just to evade persecution. As of posting time, the people behind the scam are hiding from authorities to evade prosecution.
Financial education is really important to every Filipino. If all the victims are financially educated, they will not fall down with these “get rich quick” scams that are killing the trust of other Filipinos to legitimate investment channels. The problem is financial education is rarely taught in school and there are very few financial educators in the country. With the news about the scam spreading, other potential Filipino investors are afraid to invest their money; they will just be comfortable saving their money in the bank that will just give them less than 1% interest income with 20% withholding tax. Money in the bank loses value through time due to inflation or the rise in the general level of prices of goods and services in an economy over a period of time. The average inflation rate in the Philippines is about 6% which is way higher than the current bank interest rate.
How To Avoid Investment Scams
PesosandSense.com published a blog post on how to avoid investment scams like Aman Future scam. PinoyMoneyTalk also published a similar post which aims to educate the public on distinguishing scams from legitimate investments. I wish many Filipinos will be able to read these articles so that these Ponzi schemes will not happen again in the future.
One advice is to perform a background check about the company through research. Use Google Search. Know the people behind the company and learn how they run the business. There may be reviews online which can give you a hint if the company is too good to be true. There may also be stories of people who were previously or currently scammed by the company or the people behind it. Study the different schemes of investment scams (Ponzi schemes) and look for patterns or similarities to the company you ought to invest.
Ask a professional in the investment industry or financial sector if the company is a legitimate investment company or not. You can find them through blogs and social media sites like FB and Twitter. Investment professionals can warn you ahead of the irregularities of an investment company before you invest your hard-earned money to them.
Check if the investment company is registered through the Securities and Exchange Commission, the government agency that regulates securities firms in the country. If the company is not yet registered with the SEC, it’s a red flag already to you to be careful before you invest to the company. According to the news, the Aman Futures Group is not registered to the SEC.
If the company promises and even guarantees high returns on your investment in a short period of time, think twice because the company is either a scam or something illegal. Remember that investment products could only project future returns but could not guarantee these returns. In investing, you may lose your capital or investment if you do not know what you are doing. Also, investing is for the long term, you will wait until your money will appreciate (increase in value) or earn dividends. If a certain company told you that it can turn your 100,000 pesos to 200,000 or 150,000 in few weeks or months – just run with your money!
Do not invest in something that you don’t know or completely understand. You have the right as the investor to learn where the company invests your money. Don’t be blinded to testimonials of friends, relatives and influential people who became rich because of the investment company. They will certainly lure you to the scam because of the referral bonus that they get. Use your brain not your emotions. Don’t let greed consumes you but sound reasoning.
“Walang maloloko kung walang paloloko.”
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This is very helpful….
thanks Ray!
Nice doing business with you.
Godbless!
Thank you for trusting Sun Life Financial and me as your Advisor. God Bless 🙂