Business Sphere

A lot of people have been scammed these days, as in the past. Scams here, scams there, scams everywhere.

Last month, my two friends John and Jenny lost their hard-earned money that they had invested in a finance company which turned out later on to be a “pyramiding” scheme.

A pyramiding scheme is defined by Wikipedia as a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, without any product or service being delivered. In short, pyramid schemes are a form of fraud.

Yesterday Maria, an acquaintance , sought my advice after discovering that she could no longer collect her recently matured pension plan policy amounting to half-a million from a pension plan company.

Maria had purchased her pension plan policy five years ago, and paid on an installment basis every quarter for the five years until she completed her payment. She was attracted to invest as the company promises a very high return, at 30% per year, in a form of a lump sum and monthly pension after maturity.

Since Maria’s has completed her payment and her policy has already matured, she would have entitled for a lump sum and a monthly pension.

However, at present, Maria could only cry. She has been experiencing emotional anguish because she could no longer get  her pension, nor recover her investment. Reason: the pension plan company was a sort of a fly-by-night company without a Securities and Exchange Commission (SEC) registration.

Worse, when Maria went to the company office in a building that was supposed to be its principal office address to claim her pension, the company was no longer there. The company website could not be accessed anymore as it has disappeared without a trace.

That “there’s a sucker born every minute”, a phrase often credited to P.T. Barnum, an American showman, is still true today. For there are and always will be a lot of gullible people in the world, as there are a lot of scammers.

To help you protect your money, it is important to remember at all times that the higher the returns on investments, the greater is the  risk.

So, do not be enticed by the promise of extremely high returns.

In addition, always check the background of the persons who deal with you and the company that they represent. Make sure that the actual investment or product is registered with the SEC.

As always, an ounce of prevention is worth more than a pound of cure. Forewarned is forearmed.