How to Spot and Avoid Investment Scams

Many Filipinos, OFWs in particular, lose hundreds and thousands of money to investment scams every year – and that is to be expected, especially of uninformed individuals. After all, who doesn’t like to hear that they would earn a significant amount of return with little to almost no risk of investment?

The OFWs and their families are most at risk for this type of fraudulent activities because they are the ones who are earning a huge amount of money which is remitted back home to pay bills and be kept in their savings. However, with the easy accessibility of connections through the internet, it’s very important for OFWs and their families to be properly informed on how to spot and avoid investment scams. Here’s how:

4 Ways to Protect Yourself from Investment Scams

Aside from hearing specific types of scams brought into light in the news, every individual needs to be personally vigilant about the “red flags” when going for an investment. But to be able to identify legitimate investment opportunities, you need to scrutinize fact from fraud.

1.      Don’t believe all the reviews you read online.

Most of the time, when you log on to social media, you would find a variety of promotional ads which encourage you to sign up for a particular type of “online business” or investment. Sometimes, you would even find a couple of your friends engaging in the topic or sharing links about it. And just because everyone’s talking about it doesn’t mean that it’s a good investment. At this point, you need to be critical and look for other unbiased sources which are not in any way involved to the group or person offering the investment.

Do some basic research about the company, the group or people running it, and their mode of operations. Also, when you do your research, don’t just look for sugary testimonials or success stories. You should also look for comments which expose any misleading processes in the investment scheme or any malicious activities associated with the group or individual(s) offering the investment.

And lastly, always check if the company or group in question is duly authorized and licensed by the Securities and Exchange Commission (SEC) to offer and undertake investment operations.

2.      Review this checklist of the classic red flags of investment scams.

You don’t need to know a lot about a certain type of scam because they come and go over the years. However, there are certain features or general characteristics of investments which would tell you what’s legitimate from those that are only a sham. Here are some of the red flags that you need to watch out for when exploring an investment opportunity:

  • Get-rich quick schemes
  • Immediate, large returns with little to almost zero risk
  • Heavily backed by too-good-to-be-true testimonials from mostly members and/or investors
  • Time-pressured offers and seemingly very simple investment mechanisms
  • Open house demonstrations with free lunch, snacks, or other freebies to sell an investment
  • A process which is misleading, confusing, or are built on “secrets”, “special connections”, and “insider tips or information”.

3.      Ask about the mechanism of the return of investment.

The selling point and the biggest giveaway to know an investment scam is the promise of huge returns in a short span of time with little to no risk.

Always think – there is no such thing!

Legitimate investments do not operate by making their investors rich overnight, or in a matter of few days, weeks, and even months. Genuine investments need time to grow the money invested.

Therefore, when engaging a salesperson in a conversation, be sure to ask how the company is going to use the money to create income for investors. Are they selling a product or a type of service? Or are they simply banking on the money invested by recruits to pay off their previous investors?

If the process leaves you asking more questions, then you might be in a situation where you should not be involving yourself anymore.

4.      Do a quick background check on the person offering you a sale.

Most of the investment programs offered on social media are based on relational or network ties. Even if you personally know the person offering you a sale, that shouldn’t be enough a reason to trust him/her with your money, especially if it’s a significant amount to begin with.

Look into the person’s qualifications in the business, and do not just simply agree to release any amount of money based on the individual’s personality or seemingly trustworthy act. Does the person carry sufficient training and a license to sell a product? Are they affiliated with a financial or investment company? What is this person’s background in the industry? Does he or she have any notable achievements or conflicts with previous investors?

If you are serious about taking up any kind of investment offer, it’s highly advisable that you personally go to the person’s office to discuss your concerns in detail and to check for legal documentation to make sure that you are dealing with a legitimate company, and not just an individual presenting him/herself as an authorized company agent or representative.


You may have encountered this kind of investment offers in the past, and whether or not you have gained success in this venture, it’s very important to raise people’s awareness regarding malicious individuals and schemes that operate to steal money from other people by duping them. Share this post with your friends to help them avoid being victimized by investment scams.

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