A few weeks ago I posted about scam warning. Between then and now, the SEC has issued no less than seven advisories urging people not to invest in other scams.

At the risk of repeating myself, I’m not going to go into every single one of them to tell you why they’re scams. Instead, I’ll go over common the red flags that scream “SCAM!”. As always, if you’re offered an opportunity that seems too good to be true, it probably is; check against this list to make sure.

1. The company does not have license to offer and/or sell securities from the SEC.

Some scammers are getting smarter and registering their company to the SEC, which gives them the appearance of legitimacy. Here’s the thing – just because a corporation is registered with the SEC, it doesn’t mean they can take money from the public for investments.

SEC registration as an investment taker and SEC registration as a company are two different things. So if you ask them for SEC registration and they show you that they’re registered as a company, ask to see their registration that authorizes them to take investments. If they don’t show you anything, or they do show you something that looks completely fake, get out of there.

If you want to be extra sure, you can also do some research of your own by checking all the entities registered to take investments with the SEC here.

2. You’re promised “no risk” and “high returns”.

According to the US SEC, “promises of high returns, with little or no risk, are classic warning signs of fraud.” For reference, as of last week, the top UITFs in the country gave just over 10% returns year-on-year (August 7, 2014 to August 7, 2015). One of the scams the Philippine SEC issued an advisory against promised 150% returns within 30 to 45 days. 150% in such a short time might sound really good, but the only guarantee there is that you’ll lose 100% of your money to a scam.

There’s no such thing as a free lunch, and there’s no such thing as a risk-free investment. I understand that it’s easy to be tempted by what seems to be a slam-dunk opportunity, but you have to keep both eyes open to avoid being scammed by unscrupulous individuals. Know the risks involved; if they keep saying there’s “no risk”, it’s most likely a scam.

3. You don’t know what you’re investing in.

If you can’t name exactly what you’re putting your money in, it’s a huge red flag. Look at it this way; when you buy a mutual fund, you know you’re buying shares of an SEC-registered company. When you put P1,200 in Grandtime Automobile, for example, what are you putting your money in? Scammers deceive people by focusing on huge unrealistic gains instead of the “product” that you’re supposed to be selling. If, after talking to them, you still don’t know exactly what investment opportunity is, it’s a red flag.

Albert Einstein once said, “If you can’t explain it simply, you don’t understand it well enough.” And as I’ve always said, if you don’t understand something, don’t put your hard-earned money in it, because it’s likely that you’ll lose it.

4. The focus is on recruitment, and not on the product.

Legitimate MLM schemes focus on selling a product to make money. Think Avon and Tupperware; these are MLM programs with tangible products. If what you’re being recruited to is more focused on recruiting others rather than actually selling a product, then it’s a red flag. Because in that scenario, what’s for sale is you. (And the people you’re supposed to recruit.)

If the focus is much more on recruitment (and there’s an entry fee), this can also explain why some people are getting paid. When someone says “It’s legit; look, I got my money already!”, it’s more than likely that the money came from entry fees from new recruits, according to the US SEC, instead of product sales. And when that’s the case, the drive to get new recruits is strong because that’s the only source of money for the scam. Check out the Direct Selling Association of of the Philippines for a list of legitimate multi-level marketing companies.

5. There’s pressure to spend money right now.

It’s human nature to not want to miss out on anything. Scammers prey on this instinct by insisting that the opportunity they’re offering you is limited, and if you don’t buy in right now, you’ll never have the chance again.

Legitimate businesses will give you some time to think about whether you want to make an investment or not. Scams will insist you pay money now, and will try to blind you with outrageous promises just so they can get you to pay without thinking too hard about it. If you’re feeling pressure or being forced to buy or invest, it’s a red flag; make sure you have the time to step back and do your research before you make a decision.

Investing is one of the best ways to secure your financial future; however, you should always make sure that the opportunities you invest in are legitimate. Educating yourself on the different investment vehicles and their opportunities will ensure that you invest your money wisely.

If you think you’ve encountered a scam, report to the Enforcement and Investor Protection Department at (02) 584-6337 or call the police if it’s an emergency situation.

It almost feels like every week there’s a new scam that the SEC has to warn Filipinos about. Online investment scams are becoming more common these days as more Filipinos log on to the internet and use it in their day-to-day lives.

This week, the SEC issued an advisory warning people against Success200, telling investors to “exercise self-restraint from investing their money into such investment scheme,” which is a nice, polite way of saying “don’t put your money in this scheme.”

What is Success200? The company is essentially a scheme that asks investors to put in anywhere from P1,800 (low-end) to P36,000 (high-end), with a promised return of P10,000 to P200,000 upon payout exit, respectively. That’s a “guaranteed” ROI of 455.56%, which is unrealistically high and should already set off the warning bells in your head.

On their website, Success200 state that they are a “iuly [note: the typo is theirs, not mine – I assume they meant “duly”] registered domestic corporation with the Securities and Exchange Commission with SEC Registration No. CS201509200 issued May 12, 2015.” But just because a company is registered with the SEC, it doesn’t automatically mean they are authorized to take investments from customers. The SEC itself says in the advisory that the company has not obtained permission to solicit investments, as required under Section 8.1 of the Securities Regulation Code.

Because they have no license to take money for investments, you should not give them your money.

In their defense, Success200 state on their site that they are not an investment company; instead, they claim that they are simply in the multi-level marketing industry. But what are they marketing? The product is supposedly “pure agaricus capsules”, but to earn anything from the scheme, each participant HAS to recruit two other people. In addition to that, each person has to put in money.

Of course, some multi-level marketing opportunities can be legitimate. But if it looks like a pyramid scam, well, you know what they say; if it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck. And if the SEC is warning you away from certain investments, then they have good reason to do so.

Don’t lose your money to scams like this. Many victims of scams aren’t rich; they’re regular working-class people who were duped by fraudsters. Just because someone on an internet forum said that they earned money from one of these schemes doesn’t mean it’s reliable. And just because they have one form of SEC registration doesn’t mean they’re actually allowed to take your money as investments.

If you come across an opportunity like Success200 that’s too good to be true, it probably is. Protect yourself by consulting this handy slideshow on how to detect an investment scam, and doing more research on your own, before putting your hard-earned money in anything. And for investments you can make for just P5,000, you can read this MoneyMax.ph article on the topic.

Read the SEC advisory here.

On May 18, the Philippines Securities and Exchange Commission issued an alert concerning the firm Hyper Program International and its affiliates, warning investors to stay clear. But what are the reasons for the worries surrounding Hyper Program International (HPI)?

It helps to know some background information about the company. The firm began in Quezon City in 2014 as a direct marketing operation selling collagen-based cosmetic products. This includes face masks that claim to revitalize the skin, collagen soap, a drug called Gluta Colla-C and Collagen Coffee.

Its founding statement promised investors that HPI would be “creating business to build people and change life and to provide infinite growth and possibilities to its members.” HPI claims to use a common direct marketing strategy to sell its products. Using social media networks on sites such as Facebook, HPI recruits investors to join its Rewards System and then claims to pay them a bonus due to their customer loyalty.

According to the SEC, this had entailed promising returns of between 35 and 40 percent within 40-45 days. As the SEC also reports, investors in HPI are paid their bonus if they then recruit other investors. Investors are also rewarded, in theory, if they recruit customers to purchase the collagen products marketed by HPI.

However, the Commission warns investors that HPI has not been issued with a securities license, making any investment potentially illegal. The SEC warning notes that the firm may be in breach of Sections 8(8.1) and 12 of the Securities Regulation Code. The penalty for participating in an unlicensed securities operation can be between P50,000 and P5,000,000 – and a 7 year prison term can also result from prosecution.

Unregulated securities scams can result in investors losing all of their capital, which is why the SEC attempt to issue licenses to officially approved firms. Because HPI has been refused a license, anyone thinking about making an investment in the firm would be advised to think twice. It seems likely that the company has an unsound business model that seeks to exploit online investors.

Direct marketing is a common source of employment in the Philippines, with around 4 million people involved in the sector across the archipelago. However, there is sometimes a small difference between a genuine marketing network where all sellers are rewarded for their work, and a pyramid scheme which only enriches a few criminals at the head of the organization.

The SEC clearly suspects that HPI has been acting as a pyramid scheme, where investors are rewarded solely for recruiting others (who pay for the privilege), instead of for their sales activity. That’s why the Philippines SEC issued its strongly worded warning to anyone thinking about making an investment in HPI which, on the surface claims to be a forward-thinking, dynamic sales operation. Anyone still considering investing or offering investment opportunities with this companies has been warned and may face prosecution if they take part.

You can view the warning of the SEC at their website or click HERE