Online scams thrive as more people use the internet

Published September 29, 2021, 12:05 AM

by Manila Bulletin

Editorial

The ongoing COVID-19 pandemic has forced millions of Filipinos to shelter at home and harness the power of the internet for work, education, entertainment, and shopping for both necessities and “retail therapy.”

With so many people going online for the first time, e-commerce has seen unprecedented growth—so has fraudsters taking advantage of consumers who are not new to the digital world and are less security conscious.

This new breed of online scammers targets is after those seeking investment opportunities as they suddenly find themselves with savings earned from staying at home such as money that would have otherwise been spent on vacations, shopping, dining, and even clothes and accessories.

Also fair game for scammers are the less fortunate who desperately seek alternative means of earning money online because they lost their jobs or because their small businesses are not doing well or had to be shut down.

Data at the Securities and Exchange Commission showed that the watchdog had to issue 126 warnings to the public about 171 subjects engaged in possible investment scams in 2020 from just 50 advisories against 107 subjects in 2019. For this year, it has so far issued 77 advisories against 136 subjects.

The SEC is also actively prosecuting 48 cases against 25 corporations and 187 individuals in local courts for violations of the Securities Regulation Code.

Time and again, the SEC issues warnings to the public: “The public must be wary that any promise of massive rates of return with little or no risk is an indication of a Ponzi scheme where monies from new investors are used in paying fake ‘profits’ to earlier investors and is designed mainly to favor its top recruiters and prior risk takers and is detrimental to subsequent members in case of scarcity of new investors.”

The SEC added that, “It must be clear that entities engaged in such activities likely tend to disappear shortly to the prejudice of their stakeholders.”

But many choose to ignore this warning, dazzled by these get-rich quick schemes. This is more pronounced during the pandemic when people became more aware of the need for financial security and looked for ways to grow their savings while most traditional businesses were struggling or shut down.

Since the scammers have gone digital, their operations are no longer limited to certain cities or provinces as the internet has allowed them to spread further as they are no longer bound by borders.

Most, if not all of them, have been promoting their schemes and recruiting people on social media.
The internet, coupled with the accessibility of money transfer and payment services, has allowed investment scammers to target more people across and even outside the country.

Tell-tale signs of scams include a promise of high or ridiculously high rates of return, a guarantee of payment at no risk, and the investment scheme is difficult to understand and the investor is mostly in the dark how their investments are supposed to earn.

While these will entail good judgment, some signs are easily verifiable such as the fact that the company is not registered with the SEC, it does not have the necessary licenses to sell securities or investment plans, or it has no office so transactions are online and through social media platforms.

 
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