The Complete Guide To Avoiding Scams, Cons, And Other Money Pitfalls

The Complete Guide To Avoiding Scams, Cons, And Other Money Pitfalls.  Earning a living is hard. Earning extra income is harder still. But compounding that difficulty is the abundance of scams, cons, and other deceitful ways used to part you with your money.  In this post, we go through the ways to detect and avoid whatever, scam, con or "moneytrap" gets thrown at us.
Everyone wants (sometimes, actually needs) a bigger income. It's hard to earn such extra income, but sometimes it's made even harder by things that pretend to be investments but aren't. (hello pre-selling condos!)

That's particularly true for networking opportunities. Networking is perfectly legitimate, and though I'm no good with it myself, I realize people do make money from it.

However there are mulit-level marketing groups that are really just pyramid scams. By now, hopefully everyone knows how to spot them: you make money mostly (if not solely) from recruiting - or getting "downlines".

But if a friend you know or even trust joins one, and it sounds legit, how can you check and be sure?

Well, the easiest way is to just google it.

For example, if a friend asked you to join USANA or SWA, simply google it and read through a bunch of the results. Most likely you'll eventually get to webpages like these:
Problem solved! They're clearly scams.

But what if there's a new one out there? And no one else has done the research and blogged about it?

Well, there are a few rules of thumb ("Heuristics") to remember:
  1. If it's too good to be true, it's probably a scam.
  2. If it's focus is on recruitment rather than product sales, it's most likely a scam.
  3. There's no such thing as high-yield, low-risk; so it's a scam.
  4. Big returns with quick cycle times are possible (like Forex), but it's also very high-risk. So don't get sucked in until you know what you're doing.
(And if you want something more "official", here's a link to a law blog citing our SEC's suggestion on how to avoid pyramid scams:

However, if you're really curious, how can you actually check for yourself?

Well, one way is to check if they're registered with the SEC, DTI, DSAP, and/or BSP.

Being registered with DTI simply means they registered the name. And if they aren't registered with the SEC, that most likely means it's a single-proprietorship small or medium business. It also means if you lose money with them, there's very little chance that they have assets that can be liquidated to cover your claims. In simple English: It's got a name, but it's a small-time operation. There may be no or little capital. If something goes wrong, you're most likely not getting your money back.

If they are a member of DSAP (Direct Sellers Association of the Philippines) it at least means they actually have products to sell, and that there is decent sales volume (plus, they've met some funding requirements). Good news: It looks legit. Bad news: It's not a guarantee. To explain what I mean: Herbalife and Nu Skin are both members of DSAP, but both are under some scrutiny also. (Nu Skin, Herbalife)

I'm not necessarily declaring them scams, just that DSAP membership isn't a sure sign of legitimacy.

On the other hand, if they're registered with the SEC, there should be some degree of protection. They would have a minimum paid-up capital (i.e. they have real money to do what they say they are doing). It could be anywhere from 250 Thousand to 2 Billion, depending on the industry they belong to.

But just because they're registered with the SEC does not mean they can offer investments. They need a quasi-banking license from BSP for that. (You can search here:

If they're properly registered, that means it's not a scam. But of course plenty of legitimate banks have closed down and left investors/depositors hanging.

So in the end you have to use your good judgement. Of couse, following the advice of SEC and PDIC can't hurt. :)

But that's just for pyramid scams. What about text scams?
  1. You can verify the DTI permit (assuming they gave one; they should have) here:
  2. The heuristics mentioned above still applies.
  3. A simple google search can also produce a definitive verdict.
  4. If they say you won something from some official body (and some have the gall to actually use the BSP for this), google and visit the official site of the supposed prize giver. Look for a page promoting the contest. If there isn't, it's a scam.
What if it's a guy selling or promoting something? How do you know if you're getting conned?
  • Well, this B.S. checklist I found is going to be real helpful:
  • Aside form that, there's no contest, raffle or any other game of chance where you have to shell out money to claim your prize. At worst, you just have to fork out some of your winnings (after claiming them) to pay for taxes.
  • Also, if you "won" a prize, you're supposed to get it even without having to buy other items. If they say you do, then you're getting conned. (hello goodbye Aowa!)

Other Resources:
BSP Fraud Alert (
BSP Advisories (
DSAP pyramid detection guide (

Additionally here are two "red flag" tactics that are often employed to get you to buy or do something that's really not that great:
  • Painting a rosy picture, giving you an offer, and telling you that you only have a limited time to decide (as in right now, if you take time to think about it, they'll offer it to someone else).
  • The person needs to meet you face-to-face, one-on-one, and you're asked/required to spend a certain amount listening to the sales pitch - and then the pitch goes on and on until (1) you agree or (2) they use the tactic above. 

Personally, I believe a good product sells itself. And if they're pressuring you or not giving you time to think, then something's wrong.

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photo credit: Jonathan_W (@whatie) via photopin cc

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