"[Private] I have read your post and I wanted to write a brief comment but your template doesn't have a clickable link for the comment form. Anyway, I just wanted to say that I agree with your views on how to spot fake online FX brokers. I'm still baffled though why some previous victims of other scams keep on falling for the same trap (I have studied the chatroom dialogues at PinoyMoneyTalk and other Pinoy Forums). Why don't they seem to learn their lessons? Is it plain greed or plain stupidity? I cannot seem to figure out anything in between."
Posted on my message board in one of the social networks I am affiliated with was this note. The sender is a financial professional who also blogs about the many investment scams in the Philippines particularly the most recent PIPC-Michael Liew Forex Scam which is the subject of my continuing blog-expose.
"Why don't they (referring to Filipino investors) seem to learn their lessons? Is it plain greed or plain stupidity? "
Before I give my "two-cents worth" of opinion on this, let us approach his query from the opposite side and re-hash the questions to try to get a clearer picture of the situation.
How were these scammers able to do the same scam over and over again and in the same place at that? How were these con artists able to dupe more investors repeatedly when all that they did every time were to merely relocate to other offices and hire a new staff?
In my own opinion, these con artists, armed with years of experience in plying their trade all over the globe, knew their target market here by heart. For one, they knew that they can easily pass off as legitimate enterprises within the local business communities here since the regulatory authorities are drowned in a culture of corruption and bribery is a way of life. For another, they knew damn well that the market is simply big and is still growing! Despite years of their plundering activities, they knew they have not yet tapped the full potential of the already established "have money to invest sector"of the Philippine society - the old rich.
On top of this, they are quick to recognize that there is this emerging sector or the evolving "new rich" - successful newbies or business owners who are fast accumulating new found riches - and, there are also the OFW's whose years of hard work abroad are now showcased via sizable savings ready to be tapped for investments.
The marketing savvy of of these con artists are truly amazing. Yet, they have not changed their proven marketing approach at all through these years. The game plan is to undertake mass recruitment by way of offering easy-to-land high paying marketing jobs. They target people with connections to the well-heeled sector of the community to join their marketing staff. Business patronage is simply established via personal cognizance. A rich uncle or two, a well off neighbor, or long time business associate with excess money to invest, they all easily fall prey to a well prepared marketing presentation made by a relative,a trusted neighbor or a long time business associate. The norm of "throwing caution to the wind" when a new business is offered is easily forgotten. The personalized marketing approach swings the tide to their favor. And decision making is now influenced by local culture which dictates them not to offend the relative, the neighbor, or the business associate by turning down their offer. Often the personal assurances of the 'related' marketing staff become the sole factor for the decision to make the investments.
This marketing approach was so successful in the past because there was a dearth for high profile jobs available for the ever growing workforce and so these con artists were able to grow their businesses without a hitch. However, with the entry of and proliferation of high paying call center jobs in the country in the last three years, recruitment slowed down for these con artists. Their businesses suffered a slack. Obligations to pay up clients were rising faster than the generation of new investments. Finally, rather than to wait for the scam to blowup in their faces, they flew the coop bringing with them the whole caboodle of money invested with them.
Going back to my blogger friend's posted question, the victims of the latest PIPC-Michael Liew Forex scam as well as the investors in the Franc-Swiss capers (the latest forex investment scams to hit the Philippine scene) can not be deemed stupid. They were new victims of an old scam. My friend may argue this with me and say "if this is not plain stupidity then what is?" Well, I believe, if you have been duped before and allowed yourself to be duped again then that is plain stupidity. However, more than 90% of the PIPC and Franc-Swiss scam victims were not the same investors conned by the fake forex brokers in the last decade that they have been active in the country. They were mostly relatively new investors. I would moderate my call and term this as simple ignorance.
Again,my blogger friend may argue with me and say that this is plain stupidity since all the other scams that transpired in the last two decades have been well publicized in both print and broadcast media! Ahh, but here again is were the marketing savvy of the con artists shines out. They knew that there is a high chance that their targeted new victims never heard or read about forex scams in the country or if they did, there is a greater chance that they may not recall them at all. It is quite hard to recall a news item of no interest to you at all at that time, and which happened one or two years ago. These new victims may have been too busy building up their riches to even pay attention to news items of no direct bearing to them at that point. And, if there were those who could recall, these are easily overturned by personal assurances by the marketing staff who happen to be their relatives or close associates. A perfect staging ground for a scam indeed!
It is not plain stupidity that Filipino investors fell prey once more to investment scams. It is plain ignorance and total indifference to what is going on around them. To avoid recurrence of such incidents therefore, every one (investors, regulatory authorities and legislators alike) must be continually vigilant.
As for the greed, I should say investment decisions are often accompanied by a certain amount of greed.