THE Securities and Exchange Commission (SEC) has warned the public to be cautious when dealing with online-based advertising companies offering “paid-to-click” programs, saying these may be Ponzi schemes.
In an advisory posted to its website on Wednesday, the SEC cautioned against online-based advertising firms that use the PTC method, where people are asked to pay an upfront fee or buy products, in exchange for a share in its profits.
The SEC said that some of these programs may actually be investment scams, or the so-called Ponzi scheme where earlier investors are paid with fake profits made by recruiting more investors into the network.
With this, the commission asked the public to flag investment scams that promise high returns for a minimal investment, and by asking one to do trivial tasks such as clicking on a certain number of online ads each day.
“Any investment opportunity that sounds too good to be true, probably is or in most cases, a scam,” the SEC said.
The commission said that required upfront payments through bank deposits or Bitcoins should also be a red flag for investors, questioning the need to pay membership fees or buy products just for the opportunity to click on ads.
An investment should also be able to prove that it generates revenues through real products or services.
“If the PTC program has no revenue from customers other than its own members, any returns you receive are likely from other investors’ buy-in fees,” the commission said.
Investors should also check the legitimacy of a company’s business address, such as verifying if there are actual operations at the location.
The SEC also said that having withdrawal problems from the investment may imply that the company does not have enough money coming in from new investors to cover withdrawal requests.
In separate advisories, the commission also warned the public against three websites, namely Blazing Traders, Trader.Online, and Coin-option.com. The commission noted that none of these entities are registered with the commission, and are not authorized to solicit investments from the public.
The SEC found Coin-option.com to be enticing the public to invest in products involving cryptocurrencies, mostly Bitcoin, through social media platforms.
Meanwhile, Blazing Traders and Trader.Online are websites that offer investment opportunities in forex, binary options, and contract for differences (CFDs).
Binary options and CFDs are described as financial products that exposes investors to price movements in securities, without actually owning the underlying assets like a currency, commodity, or stock.
Based on a report by the Straits Times cited by the SEC, binary options was flagged as a risky investment by the European Securities and Markets Authority. The marketing, distribution, and sale of binary options to retail investors was then prohibited, while restrictions were placed on CFDs.
The commission also found a report about a former employee of an Israel-based binary options trading firm to be targeting investors in Australia, New Zealand, Singapore, Malaysia, America, and Canada. The said person was supposedly involved in an entity that defrauded people.
Those found to be salesmen, brokers, dealers, or agents of the three websites may be prosecuted and held criminally liable by the commission. They face fines of up to P5 million, up to 21 years imprisonment, or both. — Arra B. Francia