No one likes to be scammed, but it’s a sad fact that every day people fall for the same kinds of fraudulent financial practices. Loan scams are especially dangerous, because victims get the double whammy of paying not just for a lump sum but the interest as well. Take a moment to be aware of these scam tactics so you can steer clear of them:
Predatory lending. This is where you’re convinced or enticed to take on a loan that carries unfair or usurious rates. Loans sharks typically target people who are ineligible for loans from institutions like banks, the SSS, and Pag-IBIG. They advertise aggressively—posters, stickers on bus seats, leaflets, and online—and accept those with bad credit history or none at all. But once you’re in, they’ll slap you with double-digit interest rates and weeks, sometimes days to pay up. Agree to a 15-20% monthly interest rate and in a year you’ll be paying the sharks double what you owe them. Avoid these lenders like the plague.
Car and home loan scams. You know the feeling of buying a second-hand phone or TV and finding out that it's a dud? Imagine how much worse you'll feel if you bought a car or a house! So before applying for a car or housing loan, first be sure you're getting your money's worth.
When buying second-hand vehicles, check the car's OR/CR registration and trace previous owners to know its history. Ignore a deal that seems too good to be true—because it often is. And when in doubt, contact the seller’s given landline numbers to ensure that the numbers are working and ask to meet in person so you can know the seller and inspect and test-drive the vehicle.
As for houses, inspect the land titles directly with the Land Registration Administration; always make sure you’re dealing with a certified real estate agent from a respectable firm; and only do your transactions such as submission of check or payments at the developer’s business office. Keep in mind that you should also never sign a blank document; if certain information isn’t applicable to you, indicate “N/A” to avoid anyone inserting information in the blank fields after you’ve signed the document.
Credit card theft. Credit cards make shopping so much easier. Unfortunately, it also makes it easier for thieves to take what you got. If they get their hands on your credit card, they can run your account to the ground and leave you to take care of the interest. To mitigate this risk, keep an eye on your card when merchants handle it. Have no more than two credit cards—one local and one international card will suffice for your needs. And always keep a copy of your card number and PIN for identification purposes.
If you find out you're being charged fraudulently, contact your issuer immediately and have them cancel your card. You may have to directly contact your issuing branch to do this. After the card is frozen, you’ll want to write a letter of dispute to your bank in order to cancel any charges you didn't make.
Identity theft. One of the most insidious financial frauds in our vastly interconnected world, this involves stealing personal details from victims and making purchases and loans in their names. One recent modus operandi is stealing your identity for a fraudulent SSS or Pag-IBIG loan.
Mitigate identity theft by keeping your personal details secured. Shred or destroy documents you don’t need that contain sensitive information about you. Do not to give out birthdays, addresses, your ID numbers, and contact information on websites like Facebook.
“Sangla-Tira (Pawn-and-dwell)” scams. A popular trend, this is where a homeowner allows a lender to live in their house rent-free for a period of time in exchange for a sum of money. The lender may choose to dwell in the house or rent it out to a third-party for additional income. While this sounds like a straight-forward business, the very nature of this transaction opens it up to all kinds of fraud. The house may not be legally or fully owned in the first place, leaving the lender open to eviction and no small amount of embarrassment. The homeowner may even produce a fake title. Worst of all, the lender may arrive at the house only to find another tenant (who made a similar binding agreement) currently in residence.
If you’re the lender in a “sangla-tira” agreement, always inspect the premises before signing. An IOU helps, but the most powerful document you can have is an undated deed of sale to the house. If the homeowner reneges on their agreement, you can at least obtain their property—assuming it was legally theirs to begin with!
If you know of or if you’ve been a victim of a financial scam, please sound out in the comments below and tell others about it. Remember, an educated mind is a scammer’s worst enemy.