They Never Learn or Filipinos Are Financially Illiterate and Desperate

From the Inquirer we read the following:

https://newsinfo.inquirer.net/1150371/they-never-learn-victims-of-p120-m-scam-in-pampanga-seek-nbi-help

At least 30 people duped into putting hard-earned money into a P120-million investment scam in Pampanga province are now seeking help from the National Bureau of Investigation (NBI) to run after the still unidentified woman who lured them into the scheme. 

The victims claimed they have invested from P1.2 million to P16.5 million since 2016 and were paid interest rates of 5 to 10 percent or higher when they were able to bring new investors. 

However, the interest payments stopped coming last July. 

They said they trusted the suspect because she is either a co-employer in a water district or a relative. 

Vigilio said the scam is believed to be bigger because many overseas Filipino workers also put in their money into it in exchange for big interest returns.

There is a sucker born every minute and that is true for men from all walks of life not just Filipinos. But it seems Filipinos simply keep getting the money sucked right on out of them from scam after scam after scam.  Whether it's investing in a pyramid scam in hopes of receiving an incredulous monthly return or an MLM scam selling overpriced goods no one wants or needs in hopes of getting rich quick.

There are also more subtle scams too. Scams that Filipinos put themselves into.  They sell everything. Every house is a sari-sari store. Imagine a friend gives you some food he made.  Perhaps he gives you two chocolate chip cookies.  You eat one and it's very delicious. So you get the bright idea to sell that second one. Then you praise the talents of your chef friend, have your neighbours and friends place orders for cookies, and you buy from him to sell to them.

But wait!  You are selling cookies because you are poor. You have no money to buy the cookies with and all your orders are not prepaid. What do you do?  Enter MF Cash!

http://www.mymfcash.com

MF Cash is one of many online lenders. The process is very simple. You download the app, fill out all the forms, apply for the loan, and bada-boom-bada-bing the money is in the bank. Or at Palawan or wherever.

Suppose you borrow P3,500.  That's not too much. You can buy a lot of cookies with that money. You get approved for the loan but instead of P3,500 you get half of that because there are a lot of fees. Allow this MF Cash customer explain:

This app has low interest rate but has other big charges. For a loan amount of p3,500, you will only receive p1,925. They will charge you a Quick Review Fee of p315, then a Platform Service Fee of p441, then another p315 for Account Management, then Payment Channel Fee of p472.50, and lastly, the interest of p31.50 

https://play.google.com/store/apps/details?id=com.wdjk.mcvay&hl=en&showAllReviews=true

Now that is just messed up. But hey you now have P1,925 in hand so you can still buy quite a few cookies to sell.  You will be able to make a profit and pay off your loan in no time. Of course that doesn't happen at all. Buying cookies from your chef friend and selling them to your friends and neighbours is not a sustainable business. Of necessity you have defaulted on your loan. Here is what happens after you default.

Now you are in a panic because of this message and messages from your confused friends telling you they received disparaging texts about you calling you a scammer who won't pay their loan. Your mom calls you and says they threatened her with jail because you did not pay your loan! What the heck is going on you ask.  How did they get my contacts information?

This is where both financial and computer illiteracy clash. What happens is when you download this app you give them access to all the information on your phone. That is why the one friend who is not in your contacts but whom you did call also received a message from MF Cash. That is called metadata. 

Many Filipinos are in debt.

https://www.rappler.com/business/industries/209-banking-and-financial-services/124948-filipinos-debt-asia-manulife-survey

A third of respondents cited daily living expenses as the main factor contributing to their debt, indicating that investors' ability to save regularly may rely on the use of credit to pay for daily living expenses. 

Apart from daily living expenses, a large share of the debt is driven by outlays for children's education, medical expenses, and discretionary expenses, the survey showed.

And many Filipinos do not use banks.

https://cnnphilippines.com/business/2018/07/11/2017-financial-inclusion-survey-bsp.html

Around 77% of Filipino adults do not have bank accounts, according to the latest survey by the Bangko Sentral ng Pilipinas (BSP). 

In its 2017 Financial Inclusion Survey (FIS), the central bank announced that only an estimated 15.8 million adult Filipinos, or 22.6 percent, have bank accounts, while an approximate 52.8 million, or 77.4 percent, remain unbanked. Ownership of a bank account that can be used to save and receive money, as well as pay bills, is a basic indicator of financial inclusion. 

For those who do not have bank accounts, 60 percent of them cited not having enough money as a reason, while 21 percent did not not cite any reason at all. Meanwhile, 18 percent of the respondents said they do not have documentary requirements to open an account. 

Other reasons cited for not having a bank account are: high cost of opening a bank account (10 percent), lack of knowledge on how to open an account (9 percent), joblessness (8 percent) and lack of awareness (8 percent).

These two facts complement each other. Filipinos struggle to get by from day to day and they don't have enough money to open a bank account. Why open a bank account if you have no money? The Philippines is basically a cash economy anyway. I have to pay all my bills in cash and these bills require payment within a week of receiving them! Imagine being a poor person living from day to day and you get an electric bill that is much higher than you expected and it's due in 7 days. What will you do? Seek out a loan of course.

There are plenty of ways to get a loan.  You can use the aforementioned online apps or you can use the perennially popular 5-6 loan which is offered by the Indians. I don't really want to go into all the types of loans here. What I want to make clear is that despite every administration touting economic growth Filipinos, aside from those at the top such as all the political families who run this joint, remain poor and desperate.

https://www.gmanetwork.com/news/money/content/58476/arroyo-7-5-gdp-growth-fastest-in-2-decades/story/

https://www.rappler.com/business/economy-watch/136536-president-aquino-economy-legacy

https://www.dbm.gov.ph/index.php/secretary-s-corner/press-releases/list-of-press-releases/1341-duterte-admin-posts-high-growth-in-2017-2018

What is all this economic growth to the millions who live in dire poverty and from hand to mouth? I know plenty of people who are not living in shanties and don't have a brood of children but they are still struggling to succeed. They resort to various schemes whether it's online jobs or selling clothes and food or even outright scams. Poverty is a serious issue in the Philippines and oftentimes it is silent and creeping and can put a person deep in debt.

There are a lot of other factors involved too.  Low wages, lack of jobs, the expense of getting job (NBI clearance, X-rays, etc.) that might just be temporary (ENDO), a devalued currency, the need to provide for family members. The last item is what burdens everyone. Mom needs money so she can eat and she is depending on you because that is the culture here. She has not worked all her life and saved up. Or maybe she has worked all her life but has not been able to save up! Now it falls on the children to support their parents and maybe even a sibling who refuses to get a job.

I have no solutions and this blog is not about offering solutions. Who can solve the Philippines? If you are reading this and you are  a Filipino and you are thinking about getting a loan so your mom can buy food for the month...DON'T DO IT!