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Common Myths Propagated By Scammers to “Legitimize” Pyramiding in the Philippines

Scams in the Philippines

Recently, there’s been a huge increase in the number of people victimized by pyramiding, Ponzi, and investment scams. At this day and age, it is still surprising to find that so many people are fooled by these scams especially so that the modus operandi of these scams had already been exposed years ago to the public. We are supposed to know better.

Despite efforts from the government as well as from various non-government organizations (NGOs) and other concerned citizens, such as yours truly, in trying to spread information about legitimate MLMs and those illegal ones, still, too many people fall into the trap of investing in these scams.

In this article, I’ll be outlining some of the most common myths or misinformation being used by these illegal scams in order to persuade unsuspecting people to invest in their illegal business.

1. DOUBLE YOUR MONEY

The offer of high return of investment is probably the most enticing offer coming from these scammers. The earning figures they will promise you are so high its hard to resist. “Invest P10,000.00 and you’ll earn P100,000.00!” – something to that effect. But just think about this, even the best legitimate investment firms will not even offer a “double your money scheme”. You go to a bank and even the best bank can only offer you a max of 5% interest. Better still, invest your money  in mutual funds (stock funds or equity funds) and yet on average, they can only give a high of 51% return of investment – as you can see here and here (based of course on current market trends – as all legit investment firms rely on).

Illicit investment firms will however depend on illegal market trends such as these “double your money” schemes. Look, if these double-your-money schemes employed by these scams truly work, such scheme would have long been adapted by governments all over the world to solve poverty. But no! Experience will show us that these scams only work to benefit the few (hence the concept of a pyramid). Only those on top the pyramid will get rich. Experience will show us that pyramiding will only work in the first few years of its life span. Once its market is saturated it will collapse leaving all those at the bottom of the pyramid to feel the brunt of the collapse. This is something that has been explained over and over to the public yet for some reason people are still being duped into investing in these scams. There’s even a point when I was thinking, if you were duped by a scam you must have deserved it! I mean, at this age, you have all the resources to find out whether a certain company is bogus or not.

2. THEY DO NOT NEED TO REGISTER THEIR BUSINESS 

This is mostly propagated by online pyramiding scams. They will say that they have a “modern” and not “traditional” business hence no need to register; that their business is online and there’s no physical transaction hence no need to register; that their scope is international hence they are not under Philippine laws; that they are registered elsewhere in some country hence no need to register here.

For the gullible, these are reason enough to invest. But our law is clear, before you can do business here, you need to register. Why register? Because you need to be regulated. You need to put up an office where you or your officers can be found. You need to be accountable so that the public may be protected. You need to pay taxes. You need to comply with the law as a sign of good faith. If you don’t register, that only means you do not want to be regulated. Why? Because you know your business is shady.

3. THE SEC (SECURITIES AND EXCHANGE COMMISSION) / GOVERNMENT IS NOT DOING THEIR JOB ANYWAY

This is in relation to No. 2. These scammers would say that there is no need to register because it is not important anyway. They will go on to say that even registered companies scam people anyway like Upwarm or like Aman Futures. Indeed these companies were really registered but still, they scammed people.

Such argument is misleading. Registration is needed to comply with legal requirements. It does not mean that once you are registered, you are no longer capable of scamming people. In fact, registration will apprise people of what business you’re supposed to engage in. Hence, they will know if you are allowed to take investments from the public. It will be easier to come after registered companies as opposed to unregistered ones when matters go to court.

Just because some registered companies were able to scam people does not render the entire process of registering companies useless.

4. IF YOU QUESTION THEIR BUSINESS SCHEME, YOU ARE A “NEGATRON” OR YOU ARE SICK WITH “CRAB MENTALITY”

Sometimes, even the simplest of inquiry would make these scammers go hostile against you. If you question their dubious methods, they will label you as a negative person; that because of your negativity, you will not succeed in life; that you are just jealous, etc. They’ll do that instead of answering your questions.

This is an indication that they are just trying to scam you. Because really, if their business is legit, they will be open to all sorts of inquiry just so they can uphold their business.

And sometimes, if they can’t convince you to join, they will still label you as a negatron. Perhaps hoping that by calling you names, you might join them – (believe me, that will work on some people). But c’mon. Just because you do not want to join them does not mean you are a negatron. Some people just want to succeed the hard and legitimate way. Unlike these scammers who want to juice on people’s gullibility.

They will also say “ang mga naninira sa amin ay inggit lang kasi nilalangaw ang mlm nila” or “ganun talaga ang puno pag hitik sa bunga ay binabato” – these statements assume that every critic is a frustrated networker which is totally not the case.

5. THEY ARE THERE TO HELP THE PEOPLE (MAKAMASA)

Some of these scams have really very affordable entry fees. In fact, they will claim that there business model is pro-poor (masa) that’s why their membership fee is cheap. They will even say “Hindi lang si Henry Sy ang may karapatang yumaman” – statements like those. But one thing should not escape us, that the small fees you and others are paying, if accumulated, will only enrich the very few who are at the top of the pyramid. So in reality, it’s not them who are helping the poor, but rather, it’s the poor making these rich scammers richer.

6. NO RECRUITING

They say that your money will work for you. This is true if they are a legit investment firm or brokerage. But these scams are not. Once you invested your money and then you’ll notice that you are not earning, they will then tell you that you will have to recruit after all. They will even have the temerity to tell you that “hindi mo naman pala alam kung ano ang pinapasok mo“. If they have no products or if their products are not marketable, then their only source of income is recruitment (and that’s why their business is a scam, by the way). Hence, for you to recoup your losses, you will have to recruit others too. Take note also that most of these scams have no refund policies, so once you parted with your money, good luck getting it back.

7. THEY HAVE MARKETABLE PRODUCTS AND THEY WILL NEVER RUN OUT OF CUSTOMERS. IF YOU DO NOT EARN, THEN IT’S YOUR FAULT

These scammers will use every word in the dictionary to convince you that their product is marketable. But if you really ask yourself, will you yourself buy any of their products? If the answer is no, it is likely that others will not too. So how will you earn if you can’t sell their products – then you will have to recruit, and that’s the very nature of pyramiding. These scammers will make you believe that their business provides a high return of investments; that if you are not earning, it is your fault (because you are not recruiting); that you are the problem, not the business. I have seen so many people believed this that after investing in these scams and they failed to earn, they just walked away thinking that it was really their fault. They’ve been brainwashed. Meanwhile, the people on top of the pyramid already ran away with their money.

8. PYRAMIDING IS OKAY. IN FACT, IF YOU ARE AN EMPLOYEE, YOU ARE PART OF A PYRAMID

This is misleading. These scammers equate organizational structure to pyramiding. If you are an employee, you are part of an organizational structure with you as part of the base, along with other rank-and-files, and your managers consisting the higher tiers. But that structure is not the pyramiding contemplated by law. The Employer-Employee structure is not illegal. It is not pyramiding. Sure, the structure, if outlined, looks like a pyramid but that’s just how it is. They might even say the Church itself is pyramiding because of its structure.

9. COPS, POLITICIANS, CELEBRITIES ARE JOINING THEM HENCE THEY ARE NOT A SCAM. WHY ELSE WOULD THEY BE ENDORSED BY THESE PERSONALITIES IF THEY ARE A SCAM

This fooled a lot of people. But people should know that most of these politicians and celebrities were invited for free in exchange of their endorsement. These politicians/celebrities were given free accounts because these pyramid scams know that with the influence of these politicians/celebrities, they can entice more people to join these scams. Can’t say the same for cops though. Some of the cops I know who joined these scams paid a fee. So I think they simply do not know that these are scams. Or, it could be that they are willing accomplices to these scams. At any rate, pyramid scams love to invite these people of influence to join them because they know that they can ride their influence to expand their base.

10. THE COMPANY IS NOT SCAMMING. IT’S THE MEMBERS WHO ARE

This is just an attempt to protect the brand. Proponents of a pyramid scam will insist that it is not the company that is scamming but it’s the members; that such members who are scamming people are rogue members. But be aware that if the company itself is not issuing any statement or disclaimer disassociating itself from the member scammers, then most likely, the company is sanctioning the scamming activities. If the company is really legit, it will issue such disclaimers to protect itself.

 


 

About the author

Atty. Howard Chan

Howard Chan has been blogging since 2010. He was a former car wash boy, laborer, service crew, house painter, term paper trafficker, call center agent, virtual assistant, and website manager - all these he did to support his studies. He passed the 2014 Bar Exams and was admitted to the practice of law in April 2015. As a lawyer, he intends to continue his advocacy of fighting injustice.

Note: This is his second profile on this blog. He wrote articles before under the name "UberChan" [now Howard Chan (The Student)]. This second profile is created for the purpose of distinguishing articles he wrote when he was a working student from articles he wrote when he's already a lawyer.

1 comment

  1. Bruce Gorsak

    Hypothetically if … About 2 years ago a girl from the Philippines tracked me down on yahoo via a friend of hers that that knew me from on line. She knew me because she had asked me for money to help her feed her baby. I didn’t give her much but I sure couldn’t see a baby go hungry (which was verified via video chat).

    The second girl contacted me and we became chatting friends. She explained that she was a student in college and we spoke (usually video chat) about career development, school , jobs etc. She had never asked for anything and after some period of time it was in September I asked if school started there at the same time as the USA in September. She said yes but also explained that she was going to take off school because her parents could not finish paying for ½ her last semester so she couldn’t go to school until she earned some money to pay the bill and next semester. I asked how much it was and I seem to recall it being 20 or 25,000 pesos per quarter. I do recall when I checked the exchange it was something under $500 USD. Realizing that is not much to finish education. I offered to pay it. I specifically told her that she didn’t owe me anything … I don’t want nude pictures or any repayment of any sort at all but just to do well in school.

    She agreed and life continued. Then I found out later my wife was having an affair and I was devastated. I didn’t even tell Katie but I posted it because my wife (who is Vietnamese) was telling everyone I was running around so I posted her love lettersI found since I cant defend myself in their language.

    Katie saw what was going on in my face book profile and contacted me. I will never forget se said I am so sorry to hear what is going on …I said tank you and she asked if it was reconcilable, I said no ,,,when I ask my wife if she wanted to fix whatever is broke…she spit on me so Katie responded if she doesn’t want you then I do. She stated that she knew how I treated my wife and she wanted that in her life. I told her that I was wayyyyy older than her and she said yes she knows that and knows I will not change and will always take care of her.

    So on the pretense of supporting my fiancé until she was done with school, she was going to marry me …. I paid for 2 years of her school and living expenses, funerals, birthdays and other stuff she asked for to the time of about $10,000 pesos. I even paid for all the requirement costs and her passport.

    She then started acting funny… I thought just cold feet, but all of a sudden she takes a jon in Singapore as a nanny. Today I was told she is now an internet whore selling pictures and doing cam shows for money. I gave her all that money … planned her a good life in the United States where she wouldn’t even have to work …. just take care of Seth and we could help her family financially and she goes to Singapore instead … leaves me and sells herself on the internet and I am just left … screwed over and broken hearted as a result of her scamming me. Several people have told me already that I was being used from the beginning … she scammed me.

    My cost estimates are estimated maybe more or less , but I have many of the receipts for the transactions

    Is what she did over the internet illegal and you can help me recover or am I just plain out of luck?

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