Personal Finance terms, and fees before choosing a lender.

Factors such as
your credit score and income will also affect your
Lesson 5
eligibility for a personal loan.
CREDIT
1. Choosing a Financial Institution
In today's financial landscape, credit plays a significant
- The most common source of financing for a personal
role in our lives. Understanding the definition, types,
loan is a financial institution. Commercial banks, savings
importance, and how to manage it responsibly is crucial
institutions, and credit unions provide personal loans.
for financial success.
They pool the deposited funds that they receive from
savers to create loans for borrowers.

Definition of Credit 2. Borrowing From Family Members or Friends

1. A borrowing tool - Credit is the ability to borrow - If you're unable to secure a personal loan from a
money or access goods and services with the agreement to financial institution, consider borrowing from family
pay later, typically with interest or fees. members or friends. This option can have its advantages,
such as lower interest rates and more flexible repayment
2. Financial Trust - It represents the lender's confidence terms. However, it's important to communicate clearly
in the borrower's ability to repay the borrowed amount about expectations and to put any agreements in writing to
based on their financial history and credit worthiness. avoid misunderstandings.
3. Variety of Forms - Credit can take various forms, such 3. Exploring Peer-to- Peer Lending
as credit cards, loans, mortgages, or lines of credit, each
with its own terms and conditions. - If traditional lending options don't meet your needs,
consider peer-to-peer lending platforms. These online
platforms connect borrowers directly with individual
Types of Credit lenders, offering potentially lower interest rates and more
flexible terms. However, it's crucial to research and
1. Revolving Credit - Allows you to repeatedly borrow compare different platforms to find the one that suits your
up to a certain limit as long as you make minimum requirements and offers reliable borrower protection.
monthly payments. Example: Credit Cards.
2. Installment Credit - Provides a fixed amount of credit
with specific repayment terms, including interest and Determining Whether a Loan Is Sensible
principal. Example: Auto Loans. - Before taking out a loan, carefully assess your financial
3. Non – Installment - is normally issued for a very short situation. Consider factors such as your income, expenses,
time, such as thirty days or less. It is provided by some and the purpose of the loan. Calculate the total cost of
retail stores to consumers who want to purchase products borrowing, including interest and fees, and determine if
today and need credit for a very short period of time. the loan aligns with your long-term financial goals.

PERSONAL LOAN AND TYPES OF PERSONAL THE APPLICATION PROCESS: APPLYING FOR A
LOAN PERSONAL LOAN

A personal loan is a type of unsecured loan that you can When applying for a personal loan, gather all necessary
use for various purposes like funding a wedding, buying a documents, such as proof of income and identification.
car, or consolidating your debts. Let's dive into the Fill out the application accurately and provide any
different types of personal loans. additional information required by the lender. Be prepared
for the lender to review your credit and financial history
Sources of Personal Loans before making a decision.
- There are many sources of personal loans, such as 1. Creating a Personal Balance Sheet: What You Need
banks, credit unions, online lenders, and peer-to-peer to Know
lending platforms. Each source has its own advantages
and disadvantages, so it's important to compare rates,
 - A personal balance sheet is a financial snapshot of your 6. Building Financial Maturity: Navigating Your
assets, liabilities, and net worth. It helps you get a better Financial Journey
understanding of your financial situation and plan for your
- Developing financial maturity is key to achieving your
future. Start by gathering all of your financial information,
long-term goals. Take steps to build a solid financial
including bank statements, investment accounts, and
foundation, such as budgeting, saving, and investing
debts. Then, create a list of your assets and liabilities to
wisely. Stay disciplined and make informed decisions to
determine your net worth.
secure your financial future.
2. Understanding Your Personal Cash Flow Statement 7. Understanding Collateral: What It Is and Why It's
Important
- A personal cash flow statement tracks your income and
expenses over a specific period of time, such as a month - Collateral is an asset that you pledge to a lender as
or a year. It helps you see where your money is coming security for a loan. It can help you qualify for a loan and
from and where it's going, so you can make more get better terms, but it also puts your asset at risk if you
informed financial decisions. Start by listing your sources default on the loan. Learn how collateral works and how it
of income and your monthly expenses, such as rent, can impact your financial situation.
utilities, and food. Then, subtract your expenses from your
income to determine your net cash flow.
Loan Contract The Pros and Cons of Cosigning a Loan

- A loan contract is a legally binding agreement between a - Cosigning a loan can help someone with less credit or
lender and a borrower. It outlines the terms and conditions income qualify for a loan, but it also comes with risks.
of the loan, including the loan amount, interest rate, Understand the responsibilities and potential
repayment schedule, and any additional fees. It's consequences of cosigning before making a decision.
important to carefully review and understand the terms of
the loan contract before signing to ensure you're making
an informed decision. TYPES OF PERSONAL LOANS

3. Determining the Right Amount for Your Loan 1. Interest Rates on Personal Loans
- The three most common types of interest rates financial
- When taking out a loan, it's important to determine institutions use to measure the interest due on personal
exactly how much you need. This can be done by loans are the annual percentage rate, simple interest, and
evaluating your expenses and considering any potential add-on interest.
future costs. Be sure to also consider your ability to repay
the loan, including any interest and fees. Taking out too Annual Percentage Rate
much can lead to financial trouble, while not taking out - Because of the Truth-in-Lending Act (1969), lenders are
enough could leave you struggling to pay for expenses. required to disclose a standardized loan rate with directly
4. Understanding Interest Rates: What You Need to comparable interest expenses over the life of the loan.
Know This makes it easier for you to compare loans offered by
different lenders and select the best loan. The annual
- Interest rates play a crucial role in personal loans. They percentage rate (APR) measures the finance expenses
determine the cost of borrowing and impact your monthly (including interest and all other expenses) on a loan
payments. It's important to compare rates from different annually.
lenders to ensure you get the best deal.
Simple Interest
5. Loan Repayment Schedule: How to Stay on Track
- Simple interest is the interest computed as a percentage
- Having a clear repayment schedule is essential to paying of the existing loan amount (or principal). It is measured
off your loan on time. Work with your lender to create a using the principal, the interest rate applied to the
schedule that fits your budget and consider setting up principal, and the loan’s time to maturity (in years).
automatic payments to avoid missed payments and late The size of the monthly payment is dependent on the size
fees. of the loan, the interest rate, and the maturity. The larger
the loan amount, the larger the monthly payment. The
higher the interest rate, the larger the monthly payment.
 the credit card bill each month. In this way, they
avoid the accumulation of debt.
Add-On Interest
- With the add-on interest method, the amount of the Negotiating The Price
monthly payment is determined by calculating the interest - When shopping for a car, you have a choice between
that must be paid on the loan amount, adding the interest dealers that negotiate and dealers that offer one set price
and loan principal together, and dividing by the number of for a specific car to all customers. Any dealer that
payments negotiates will purposely price its cars well above the
price for which it is willing to sell the car.
2. Car Loans
- A common type of personal loan is a car loan. There are 1. Negotiating by Phone
many decisions to make when you get a car: how much - When purchasing a new car, it may be
money to spend on it, what type to purchase, how to get beneficial to negotiate by phone. After deciding
the best price, whether to finance it or purchase it with on the type of car that you want, call a dealer and
cash, and whether to buy or lease the car. describe the car and options you desire.

How much Money to Spend on a Car 2. Trade-In Tactics

- Your decision about much money you should spend on a - If you are trading a car in, some dealers will pay
car is critical because it can affect your budget as well as a relatively high price for your trade-in, but
your lifestyle. When making this decision, carefully charge a high price for the new car
consider how your choices could affect your spending on
other needs, and your lifestyle in general. 3. No-Haggle Dealers
- Some car dealerships advertise that they do not
1. Consider How Your Decision Affects Your haggle on the price. Buying a car from these
Personal Budget dealers is not only less stressful but far less time-
- Before buying an expensive new car, consider consuming.
how your personal cash flow statement would be
affected by large monthly car payments 4. The Value of Information
- Some car dealers attempt to make a higher
2. Adding Credit Card Debt to Car Loan Debt profit from customers who are not well informed
- Some consumers might consider purchasing a about the price that they should pay for a car
new car with a car loan and avoid restricting their
other spending by using credit cards and making 5. Purchasing a Car Online
only the minimum required payments on the cards - You can buy a car online directly from some car
each month. This solution provides immediate manufacturers or from car referral services.
satisfaction because it initially allows them to buy
a new car while living a lifestyle beyond what 3. Purchased Versus Lease Decision
they can really afford. - A popular alternative to buying a car is leasing one. An
advantage of leasing is that you do not need a substantial
3. The No-Debt Solution down payment. In addition, you return the car to the car
- Some consumers avoid the debt problems dealer at the end of the lease period, so you do not need to
described earlier by limiting the amount of money worry about finding a buyer for the car. Furthermore, you
they will spend on a car (or on any purchases) to will always be driving a relatively new car.
whatever they can afford to pay with cash.
4. Student Loans
4. The Limited-Debt Solution - The largest personal loan for many students is the
- There are many variations of the no-debt student loan, which is a loan to finance a portion of a
solution that are not as extreme but still very student’s expenses while pursuing an undergraduate or
effective. Some consumers might use cash to graduate degree.
purchase a used car and use credit cards for other
purchases, but they may limit these purchases to 5. Home Equity Loans
what they can afford to pay off when they receive
 - Home equity loan A loan where the equity in a home likelihood that an individual will be able to make
serve as collateral for the loan. Equity of a home. The payments on credit in a timely manner.
market value of a home minus the debt owed on the home.
A home equity loan or home equity line of credit Credit Scores and Reports
commonly has more favorable terms than other personal
1. Credit Payment History
loans. It has a relatively low interest rate because of the
Your credit payment history is the most important factor
collateral (the home) that backs the loan.
in determining your credit score. Late payments, missed
payments, and collections can all have a negative impact
Impact of the Economy on the Credit Limit
on your score, making it harder to get approved for loans
- When the economy improves, job opportunities
and credit cards. Learn how to manage your payments and
improve, consumers receive more income, and they
improve your score.
increase their demand for homes. The market values of
homes rise in response to the strong demand. As the
2. Credit Utilization
market value of a home rises while the existing debt on
Learn what credit utilization is and how it affects your
the home mortgage has not changed, the home equity
credit score. Discover tips and strategies for keeping your
value rises
credit utilization low and improving your score.
Interest Rate
3. Credit History
- A home equity line of credit typically has a variable
Measurement of your credit history may include the time
interest rate that is tied to a specified interest rate index
since your accounts were opened and the length of your
that changes periodically (such as every six months). The
relationship with creditors. In general, long term
loan contract specifies how the interest rate will be
relationships with your creditors are perceived to be more
determined.
favorable.
6. Payday Loan
4. New Credit
- A short-term loan provided in advance of a paycheck. A
Measurement of new credit may include the number of
payday loan (also called a cash advance loan) is a short-
new accounts that you opened recently, the proportion of
term loan provided to you if you need funds in advance of
new accounts relative to your older accounts, the number
receiving your paycheck. To obtain a payday loan, you
of recent inquiries by credit card companies and other
write a check to the lender for the amount of the loan plus
lenders (which may be in response to your applications),
the interest.
and the time since any recent accounts were opened.
How Personal Loan Fit Within your Financial Plan
5. Credit Mix
- Personal loans allow you to obtain assets that you could
Types of credit include credit card loans, retail accounts,
not obtain if you did not have access to funding. They can
installment loans, mortgages, and finance company loans.
enable you to achieve your financial goals, such as buying
This factor is generally the least important, although
a car or a home.
people who have no credit cards and few other types of
credit are generally considered higher risk than people
CREDIT BUREAUS who have several types of credit and use them responsibly.
Credit bureaus provide credit reports that document your
Reading and Interpreting Credit Reports
credit payment history. Your credit report shows every
time you apply for credit, whether you pay your bills on 1. Identifying Errors
time, whether you maintain balances on your accounts,
Discover strategies for detecting and disputing errors on
and whether you pay late fees.
your credit report.
2. Protecting Your Identity
Understanding Your Credit Score Learn how to safeguard your credit identity with tips for
In addition to the credit report, each credit bureau also fraud prevention and identity theft protection.
calculates a credit score, which is a rating that indicates a
person’s creditworthiness. The rating reflects the
The Power of Good Credit Preventing Identity Theft: Best Practices and Tips
1. Access to Better Opportunities 1. Stay Vigilant
Explore the advantages of a good credit score, such as Keep an eye on your personal information and check your
getting approved for loans, securing lower interest rates, credit report regularly.
and improving overall financial standing.
2. Secure your information
2. Building Strong Relationships
Shred documents containing sensitive information, use
Discover the ways in which good credit can positively secure passwords, and don’t share personal info.
impact personal relationships, including renting a home,
3. Be Safe Online
buying a car, or starting a business.
Avoid scams, use antivirus software, and don’t click on
3. Financial Peace of Mind
links from entrusted sources
Learn how maintaining good credit can provide a sense of
4. Get Identity Protection
security and peace of mind in both short-term and long-
term financial planning Consider enrolling in an identity theft protection service to
safeguard your information and monitor your credit report

Improving Your Credit Scores

Recognizing and Responding to Identity Theft
1. Review your household budget and cut back on all
unnecessary expenditures. 1. Recognize the Signs
2. Destroy your credit cards so you won’t be tempted to Look for unfamiliar charges or transactions, missing bills,
add to your debt. Keep your accounts open, however, or new credit accounts you didn’t open
because part of your credit rating is determined by how
much credit you have and what percentage of it you use. 2. Respond Quickly

3. Call your creditors immediately if you won’t be able to Contact your bank or credit card company immediately if
make your payments on time. you notice any suspicious activity
3. Fraud Alerts

IDENTITY THEFT: A THREAT TO YOUR CREDIT Place a fraud alert on your credit report to notify potential
lenders that you may have been a victim of identity theft.
Identity theft is a serious issue affecting millions of people
every year. It can lead to financial ruin, loss of reputation, 4. Freeze you Credit
and even legal trouble. Consider freezing your credit to prevent fraudulent
accounts from being opened in your name.

Understanding the Impact and Risks of Identity Theft

to Credit Reporting Identity Theft to Credit Bureaus and Law
Identity theft can cause serious damage to your credit Enforcement
score and financial history. Step 1
Criminals can use your personal information to open Contact the three national credit reporting agencies:
credit card accounts or take out loans in your name. Equifax, Experian, and TransUnion.
Unpaid bills and maxed-out credit cards can take years to Step 2
clean up and can lead to lower credit scores.
Place a fraud alert on your credit report to prevent further
If left unchecked, it can take years to recover from damage.
identity theft.
Step 3
File a report with your local police department and keep a -Lenders also consider any capital that the borrower puts
copy for your records toward a potential investment. A large capital contribution
by the borrower decreases the chance of default.
Borrowers who can put a down payment on a home, for
Steps to Take to Recover from Identity Theft example, typically find it easier to receive a mortgage—
even special mortgages designed to make homeownership
Contact Creditors and Banks accessible to more people.
Contact all financial institutions and creditors associated
with the fraudulent activity. COLLATERAL
-Collateral can help a borrower secure loan. It gives the
Monitor Your Accounts lender the assurance that if the borrower defaults on the
loan, the lender can get something back by repossessing
Keep a record of all phone calls and letters sent to
the collateral. The collateral is often the object for which
creditors and monitor all involved accounts for any
one is borrowing the money: Auto loans, for instance, are
additional fraudulent activity.
secured by cars, and mortgages are secured by homes.
Identity Verification
CONDITION
Gather and make copies of government-issued IDs, -The conditions of the loan, such as the interest rate and
financial documents, and any police reports. These may be the amount of principal, influence the lender’s desire to
useful to verify your identity and could also be required finance the borrower. Conditions can refer to how a
by the creditors. borrower intends to use the money. Business loans that
may provide future cash flow may have better conditions
than a house renovation during a slumping housing
Lesson 6 environment in which the borrower has no intention of
selling.
5 C’s OF CREDIT
-The five Cs of credit are important because lenders use
these factors to determine whether to approve you for a
financial product. CREDIT CARD
The easiest way to establish credit is to obtain a credit
CHARACTER card, which allows you to purchase products on credit
-Character, the first C, more specifically refers to credit wherever that card is honored. You receive a monthly
history, which is a borrower’s reputation or track record statement that identifies the purchases you made with the
for repaying debts. This information appears on the credit card during that period.
borrower’s credit reports, which are generated by the three
majors credit bureaus: Equifax, Experian, and Normally, credit cards are not used for very large
TransUnion. Credit reports contain detailed information expenditures such as cars or homes, but they are very
about how much an applicant has borrowed in the past and convenient for smaller purchases, such as meals at
whether they have repaid loans on time. restaurants, gasoline, clothing, car repairs, and even
groceries.
Obtaining a credit card is easy, perhaps too easy. Credit
CAPACITY card companies frequently send unsolicited offers of credit
-Capacity measures the borrower’s ability to repay a loan cards to consumers. Often the cards are preapproved.
by comparing income against recurring debts and
assessing the borrower’s debt-to-income (DTI) ratio. ADVANTAGES OF CREDIT CARD
Every lender is different, but many lenders prefer an -First, you can purchase products and services without
applicant’s DTI to be around 36% or less before carrying a large amount of cash or a checkbook.
approving an application for new financing. It is worth -Second, as long as you pay off your balance each month,
noting that sometimes lenders are prohibited from issuing you receive free financing until the due date on your credit
loans to consumers with higher DTIs as well. card statement.

CAPITAL
-Third, you receive a monthly statement that contains a -allow cardholders to keep their personal and business
consolidated list of the purchases you made with the credit expenses separate while they earn rewards on all their
card, which enables you to keep track of your spending. business spending. Interestingly enough, like personal
rewards cards, business credit cards can also be cash-back
DISADVANTAGE OF CREDIT CARD credit cards, general rewards credit cards, travel credit
-The main disadvantage of having a credit card is that it cards or even secured credit cards. You do need to have a
allows you to make purchases that you cannot afford and business or income-producing activity to qualify for a
should not make. It gives you the opportunity to spend business credit card.
beyond your means.
CO-BRANDED CREDIT CARDS
-are store or brand credit cards offered through traditional
TYPES OF CREDIT CARD card issuers like Chase, Citi or American Express. These
can include airline credit cards that let you earn miles
The major issuers of credit cards include MasterCard, within a specific frequent flyer program or hotel credit
Visa, American Express, and Discover. These types of card that let you earn points within a hotel loyalty
cards are especially convenient because they are accepted program. Some co-branded credit cards also partner with
by most merchants. The merchants honor credit cards retail stores, although you can typically use them for non-
because they recognize that many consumers will make store purchases as well.
purchases only if they can use their credit cards
MEDICAL CREDIT CARDS
REWARDS CREDIT CARDS -Many health care professionals such as doctors, dentists,
-typically give you points or cash back based on a and veterinarians have recently started offering medical
percentage of your spending and some even offer bonus credit cards to persons using their services.
points in popular categories like groceries, gas and dining Medical credit cards can be useful because they enable
out. consumers to pay off a large medical bill over several
This makes them a great option for everyday expenses months without paying interest.
when you know you can pay off your card right away. By
using a rewards credit card to cover your basic purchases, CREDIT LIMIT
like groceries and household supplies, you can earn cash -A credit card limit is the maximum amount you can
back and travel rewards for purchases you needed to make spend on your credit card. Every cardholder is assigned a
anyway. limit on their card based on their income and spending,
and it differs for different types of credit cards.
CASH-BACK CREDIT CARDS -Although credit card companies may not charge an
-make it easy for you to earn cash back or statement inactivity fee if you do not use your credit card for a
credits on your spending, although how rewards are doled specific period (such as one year), they may cancel your
out varies from card to card. Some options in this niche card.
offer a flat rate of rewards, while others offer bonus points -In addition, a card’s annual fee may be linked to the
in certain categories like dining or travel. Some even offer level of spending. If you spend less, you pay a higher
bonus rewards in rotating categories each quarter, as well annual fee. Some rewards programs may also require a
as a flat rate of rewards on all non-bonus purchases. certain amount of spending during a given period.

TRAVEL CREDIT CARDS ANNUAL FEE

-offer you the opportunity to earn rewards that are geared -Many credit cards charge an annual fee for the privilege
specifically toward travel, whether that means earning of using the card. Annual fees range from Php 100 to Php
flexible travel credits you can use toward any travel 500 for cards with extensive rewards programs. The fee is
purchase or even points you can transfer to airline or hotel sometimes waived for individuals who use their credit
programs. Some travel credit cards also let you earn points cards frequently and pay their credit card bills in a timely
within a specific program, such as a frequent flyer manner.
program or hotel loyalty program. -You can find detailed information about credit cards at
several Web sites. By reviewing the lists of available
BUSINESS CREDIT CARDS cards, you can probably find cards that do not charge fees
that may be suitable for you.
 credibility of the person or company you are dealing with,
Lesson 7 the soundness of the information being provided, and the
possible risks of a certain action.
SCAM
-A fraudulent scheme typically committed to cheat a Examine
victim into giving money resulting in the victim’s When in doubt, do not rush into a decision. Scammers
financial loss. usually create a false sense of urgency. Examine the
situation first and ask questions. Challenge the person you
Article 1338 of the Civil Code of the Philippines states are talking to about the things and ideas that you are not
that there is fraud when, through insidious words or sure of and are uncomfortable with.
machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he Study
would not have agreed to. Insidious words or Give yourself time to study and get as much information
machinations refer to a deceitful scheme or plot with a from different sources. Consult other people who are
fraudulent purpose. It can be done by concealment or familiar to you or who are experts on the issue at hand.
omission of material facts. You can also get information from credible agencies like
government institutions or reputable private organizations.
How do Frauds Happen?
COMMON TYPES OF FRAUD AND SCAM
False Representation
-Fraudsters usually pose as someone they are not. They SKIMMING AND JACKPOTTING
prey on people’s emotions to manipulate our human -Illegal installation of malicious hardware (e.g., scanner,
tendency to trust. They tell stories that either resonate to camera, keypad overlay) or software in Automated Teller
our sensitive side or to our desires and aspirations. Then Machines (ATMs) or Point of-Sale (POS) devices. The
they employ tactics to induce pressure. scanner copies information on the debit, credit, or ATM
card while the camera captures Personal Identification
Phantom Riches Number (PIN). This enables hackers to create counterfeit
- Fraudsters promise the prospect of instant and cards and gain access to accounts. Jackpotting happens
guaranteed wealth. People tend to forget that “If when an illegally installed software gives hackers control
something sounds too good to be true, it usually is a over ATM functions.
scam.”
CARD CLONING
Social Consensus -Creation of counterfeit credit, debit, or ATM cards, and
-To increase trust, fraudsters claim that others have using the same to make purchases or withdrawals against
already joined or contributed to a cause at hand, like an the legitimate owner’s accounts.
investment opportunity.
IDENTITY THEFT
Source Credibility -A scammer assumes your identity and uses your personal
-To further build credibility, fraudsters claim to be information, bank account or credit card details to make
affiliated with a reputable agency or claim to have a unauthorized transactions and purchases, whether online
special expertise. or in person. They usually obtain a victim’s personal
information by posing as someone from an authority (like
Things to Keep in Mind to Avoid Financial and a bank or government office) and telling the victim that
Investment Scams they need to provide personal information for official
Scammers are experts in manipulation and they will purposes. The same information can also be obtained
spend time earning your trust until you let your guard through other fraudulent means like skimming, card
down. To avoid loss when faced with a scammer, exercise cloning, phishing, vishing, and spoofing.
the following three activities:
TEXT SCAM
Think -Random text messages asking for personal information,
Before providing personal information or giving away bank account or credit card details, or fees in exchange for
money, take a moment to pause and think about the an item or a service. Text scams come in many forms.
Common text scams include winning a raffle you did not
join and asking you to pay a shipping fee in order to Ponzi Scam
receive the prize, requesting return of mistaken fund -A scammer pretends to be a successful investment
transfers to your account or phone, forcing you to pay for manager, owner or representative of a bogus investment
COVID-19 testing, or charging you for a service you did company, or head or member of a reputable organization
not avail of. but, in reality, does not have an existing investment
portfolio. The scammer would offer high returns in a short
PHISHING period of time, promising guaranteed profits with little or
-Unexpected emails asking for your personal information, no risk of loss. The scammer is usually a skilled,
bank account or credit card details, or passwords. These charming, and convincing communicator who encourages
emails usually ask you to click a link to a spoofed or fake investors to also invite others to invest and promises
website to enter your information. The email looks commissions for new recruits.
legitimate but often has a generic greeting (e.g., “Dear
Valued Client”), grammatical errors, sense of urgency, and Pyramiding
no verifiable contact information of the sender. -Scammers convince investors to buy an investment
product, and promise high earnings over a short period.
Variations of Phishing: Investors are required to recruit other buyers as their
earnings increase based on the number of new recruits.
Spear Phishing Scammers normally pay investors back during the initial
-Sending of emails that are targeted attacks on specific stages to appear legitimate and encourage more investors
individuals or companies. to buy the product. The “pyramid” eventually collapses
when the money coming from new investors is not enough
Pharming to cover the payouts to earlier investors.
-Redirection of a user to a fake website to steal personal
information or account information details.
ADVANCE FEE FRAUD
Vishing -An email, fax, or letter from strangers which requires the
-Voice calls, automated voice recording, or Voice over victim to pay an “advance fee” before receiving a
Internet Protocol (VoIP) from someone pretending to be significant share of a large sum of money. The advance
an employee of a bank or popular company, and asking for payment may be described as a processing fee, tax,
account details. commission, or incidental expense that will be repaid
later. If a victim makes the payment, the fraudster either
SMiShing invents a series of further fees for the victim or simply
-Same modus operandi as phishing but uses text or Short disappears. Advance fee fraud may involve urgent
Message Service (SMS) on mobile phones instead of business transaction, inheritance or income windfall,
email. emergency situation, sale of products or services, lottery
winnings, or other similar unexpected opportunities.
SPOOFED WEBSITES
-Websites that look legitimate, but are created by
scammers to trick you into entering personal information, ROMANCE AND DATING FRAUD
bank account or credit card details. It is usually linked to -A scheme where scammers target the victim’s
phishing emails, or other fake websites. emotional, romantic and compassionate side to get them
to provide money, gifts, and personal or account
FAKE DOCUMENTS information. Scammers target victims by creating fake
-Fraudulent documents allegedly serving as proof of profiles on social media or legitimate dating websites.
peso or dollar deposit accounts, fund transfers, gold Once in contact, the scammers will then express strong
reserves, securities, or investments being marketed, sold emotions for victims and will try to gain their trust and
or traded by individuals or companies which claim that ask for money, account details and personal information
such documents are issued, secured or guaranteed by the for a variety of reasons (e.g., loss of job, involvement in
BSP, the government or any of its agencies. accident or serious illness).

PONZI AND PYRAMIDING SCAM RECRUITMENT FRAUD

 -Scammers pose as recruiters and offer fake job
opportunities to obtain payments from job seekers. This is
especially popular for supposed employment opportunities
abroad. The scam starts with a fake job advertisement and
then asks interested applicants for payment for various
“requirements” like a certification, travel or work permit,
and/ or seminar fee. Once payment is done, the recruiter
suddenly stops any communication.

SIM CARD FRAUD

-Safeguard your Subscriber Identification Module (SIM)
card! Majority of banks and other financial institutions
require Multi-Factor Authentication (MFA) in online
transactions. This entails requiring customers to key in an
OTP or password that they will receive via their registered
mobile phone number, identified by a SIM card, before
online transactions such as fund transfers can be
completed. Fraudsters are therefore interested in this piece
of information which is received on the victim’s SIM card
for them to carry out unauthorized fund transfers.

Attack Type 1: Fraudster obtain personal and account

details through phishing and other tactics. Once sufficient
information is obtained, fraudster requests for a
replacement of the victim’s SIM card from the mobile
phone provider. The old SIM is then deactivated by the
mobile phone provider, allowing the fraudster to access
the victim’s accounts or make transactions since
authentication verifications are now sent to the new SIM
card in the possession of the fraudster.

Attack Type 2: Fraudster in the guise of a telco

representative entices the victim to exchange his/her SIM
card for a fake “promo”. Once the victim agrees, the
fraudster either clones or steals the victim’s SIM card
details and proceeds to access the victim’s accounts for
unauthorized transactions.

UNAUTHORIZED ONLINE LENDERS

-A scheme where fraudsters pretend as private individual
lenders or claim to operate on behalf of a legitimate
financial institution. They offer lenders credit lines or
loans online, either through a website or social media
platforms. Fraudsters will put more focus on collecting
upfront fees for the so-called credit scoring or loan
application and gathering the victim’s personal details for
potential or abusive fraudulent financial transactions.