How to avoid investment scams according to financial expert

05/29/2015 | 1:39 0 Posted in Business and Finance

05/29/2015 – Manila | Fraudsters and scammers are always eyeing for your hard-earned money. They are highly trained and prepared to make you decide right away. They equipped with sweet promises and can sell dreams anytime of the day to gullible, greedy, and excited people like you.

According to financial planner Edmund Lao, the best way to beat scammers is to stay away from them.

“When offered an investment scheme, evaluate carefully. Even if you are talking to someone you trust, you must evaluate the offer carefully,” Lao noted.

Lao added that when the return is too high or too good to be true, the program is scam. He also noted that if the recruiter is rushing you to join today and not tomorrow, it’s another indicator that the program is not legal.

Lao also added that legit financial companies have only a maximum margin of 30% income and anything higher than this is unbelievable. Even stock market does not surge as high as 20% in just one day.

On the other hand, the Department of Trade and Industry (DTI) in association with Direct Selling Association of the Philippines (DSAP) and World Federation of Direct Selling Association (WFDSA) released an “Eight Point Test” in order to identify if the program is scam or not.

The Eight Point Test

Is there a product?
Are commissions paid on the sale of the products and not on registration/entry fees?
Is the intent to sell a product and not a position?
Is there no correlation between the number of recruits and compensation?
If the recruitment will be stopped today, will the participants still make money?
Is there a reasonable product return policy?
Do products have fair market value?
Is there a compelling reason to buy?

If the answer in all points is YES, then the program is legit.

Most members of scam programs argue that their program is legal because it is SEC or DTI registered, but being registered does not make the program stay.

The reason why most registered scam programs before were not legally inflicted is because of lack of collective complaints submitted to the court of justice, or no formal complaint has been passed to the court of law, according to Atty. Panfilo Villafuerte.

The best way to avoid scam programs according to Lao is to run away from them, like what Mayweather did during a fight with Pacquiao where he won and defeated the latter by running away.

“If someone is earning from recruiting people, he is then an accessory of scamming”, Villafuerte added.

/Fanny Jalacjac/ Assisted Press Manila