Philippine investment scams turn retail fronts into traps

By Alexandria Grace C. Magno, Reporter

ON A HUMID afternoon in Manila, Trisha C. Valisno remembers sitting in a small storefront she once believed would fund her future. The shelves were neatly arranged. Staff greeted walk-in clients. A business permit was posted on the wall. Friends shared screenshots of payouts in group chats.

It felt like a safe bet.

“I was really looking for ways to make my money grow,” Ms. Valisno, a user-generated content creator on TikTok, said in an Instagram message. In her 20s at the time, she wanted a larger sum to invest in property. A friend introduced her to Lushapple.ph, describing it as a retail venture that generated steady profits. Investors were told they could earn as much as 40% in returns.

The company had what appeared to be proper documentation. It showed a Department of Trade and Industry (DTI) registration online and rented a physical space where clients could see the products it claimed to sell.

“I thought it was legitimate because they had a DTI permit. They even posted it,” Ms. Valisno said. “I didn’t know that wasn’t enough.”

By the time the Securities and Exchange Commission (SEC) issued an advisory in 2023 warning that Lushapple.ph was not licensed to sell securities and appeared to operate like a pyramid scheme, many investors had already committed money.

Ms. Valisno, who lost P200,000 (around $3,500), said early payouts helped build confidence. Some members got returns and posted about them online. A few showed off cars and vacations.

“Once you’re hooked on the profits, you don’t withdraw,” she said. “You add more.”

That cycle is common in schemes that blend retail activity with investment promises. Initial payouts, often funded by newer deposits, create a sense of legitimacy. Investors reinvest gains instead of cashing out.

Red flags only became clear when payouts slowed. Messages in group chats turned anxious. Some said the owner’s bank account had been frozen due to large transfers. Then the SEC advisory circulated more widely.

“I’d already invested before I saw it wasn’t registered,” Ms. Valisno said. “It was too late.”

Her experience reflects a broader evolution in Philippine scams. Fraud is no longer confined to anonymous text blasts or obvious get-rich-quick pitches. Increasingly, schemes present themselves as ordinary businesses — retail stores, online sellers, trading groups — with polished branding and physical offices.

The shift has made scams harder to spot.

A 2025 State of Scams report by the Global Anti-Scam Alliance, BioCatch and ScamAdviser found that 31% of 1,000 surveyed Filipinos had lost money to scams. Investment fraud was the most common type. In many cases, victims were drawn in by promises of high returns and testimonials shared on social media.

Payment methods have also changed. While wire transfers remain common across Southeast Asia, digital wallets are widely used in the Philippines. Funds can move instantly, and recovery is often difficult once money is withdrawn or transferred through multiple accounts.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said scams persist because they exploit economic vulnerability and gaps in digital trust.

“Many Filipinos, especially microentrepreneurs and low-income households, remain credit-constrained,” he said in a Viber message. When access to formal loans is limited or slow, offers of fast returns or easy financing become attractive, he pointed out.

‘NEGATIVE SPILLOVERS’
Periods of inflation, weak job growth or rising household debt can heighten that vulnerability. Scammers position themselves as an alternative to traditional banks, promising speed and flexibility.

At the same time, the rapid expansion of social media and online payment platforms has outpaced consumer awareness. Fake investment pages can be created and removed quickly. Encrypted messaging apps allow organizers to coordinate privately. Regulators face limits in tracking operators who can shift identities and accounts with ease.

“If unchecked, these scams erode public trust in legitimate financial institutions, discourage investment, and siphon money from productive use,” Mr. Rivera said. “They also create negative spillovers for the digital economy, as consumers become more hesitant to transact online.”

Filipinos are vulnerable to investment scams when financial pressure meets promises of fast, high returns, according to BDO Securities Corp. President John Tristan D. Reyes.

He said a “get-rich-quick” mindset often takes hold when income growth feels slow. Fear of missing out also plays a role, especially when friends or relatives claim to have earned large profits, making schemes appear credible.

“Put together, it’s easy to see why people still get drawn into these scams,” he said via Viber.

Weak consumer protection and financial exclusion add to the problem, he added. Informal work, informal lending and cash-based transactions make informal investment schemes seem familiar and less suspicious.

“The baka-sakali (taking a chance) mindset and herd behavior make people more willing to take risks,” Mr. Reyes said. He added that authorities should strengthen enforcement, so perpetrators are held accountable.

He said scams do more than wipe out savings. They strain household budgets, push families into debt, and damage trust in financial institutions. That loss of trust can drive people back to cash-only transactions, limiting spending and slowing economic activity.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said financial education and cybersecurity must keep pace with evolving tactics.

“These initiatives need to evolve since cybercriminals also reinvent themselves to bait unsuspecting victims with too-good-to-be-true propositions,” he said via Viber.

He added that stronger cybersecurity measures would help sustain confidence in e-wallets, digital payments and online commerce.

The SEC has shifted its enforcement strategy. Instead of relying mainly on SIM-card registration rules, it is working with digital platforms to take down fraudulent websites directly.

The agency has worked with platforms such as TikTok and plans similar action with Facebook, Viber and Facebook Messenger.

The SEC also launched iMessage, an upgraded online ticketing system that lets users track complaints in real time. Still, some victims hesitate to report scams, citing doubts about follow-through or lengthy processes.

The SEC has stepped up advisories and enforcement actions, but officials acknowledge the challenge.

For scammers, legitimacy is part of the pitch. Renting office space, posting permits and showcasing customer feedback can create a powerful narrative. In communities where word-of-mouth matters, a trusted friend’s endorsement may carry more weight than a regulator’s warning.

Ms. Valisno said that was the case for her. The woman who introduced the opportunity was known to her circle. The storefront existed. Early investors appeared to benefit.

“It didn’t look like a scam,” she said.

The lesson, she said, was harsh. Checking regulatory registration before investing is critical. High guaranteed returns are a warning sign. And once funds are transferred, recovery is uncertain.

As the Philippine economy digitizes and more transactions move online, the stakes grow. The same platforms that expand access to finance also widen the reach of fraud.

For Ms. Valisno, the loss reshaped how she views opportunity. She still wants her money to grow. But she now asks more questions.

“I just wish I had known what to check,” she said.