The sun is sucking water, and so are fraudulent solar earning apps sucking your hard-earned money.
The heatwave in Pakistan this year smashed all previous records, raising the mercury levels tremendously. However, money-sucking solar earning apps are not a recent phenomenon and have existed since 2015, if not earlier. Across the border, the Indian capital police have arrested perpetrators of four solar earning application scams. But that is only equivalent to scratching the surface. Many similar apps are still fooling the gullible, greedy, and foolish across and beyond the subcontinent.
How do These Apps Suck Your Hard-Earned Money?
These apps are reminiscent of multi-level marketing (MLM) scams. For those unaware of MLM scams, the author already wrote a piece on MLM Scams & How to Spot Them back in March. Fraudsters aim to extract "investment" from the gullible and promise unprecedented daily three-to-four-figure returns. Sounds tempting, right? However, here is a catch. One has to bring in other users. Voila, MLM scam in the guise of an affiliate/referral program. However, this is not a new trick up the scammers’ sleeves. The infamous Pi Network also employed this "referral" trick to bring in more "miners."
Performing the Due Diligence
As mentioned previously mentioned by the author in another piece, due diligence is "the act of critical inquiry that helps you arrive at a(n) (investment) decision." However, back then, the author barely touched upon the how of due diligence.
In this information-centric world, performing due diligence in this regard is not as overwhelming as it may seem. It is ironic how many people, including those with 16 years of education, still fall for such scams. However, it must be kept in mind that there is no fool-proof due diligence. But that should not hold someone back from performing due diligence. Repeating what the author wrote in a previous piece:
Originally published at https://rafeyirahman.substack.com. If you liked this or learned something new, please consider subscribing to Finesse for more financial literacy posts.
The heatwave in Pakistan this year smashed all previous records, raising the mercury levels tremendously. However, money-sucking solar earning apps are not a recent phenomenon and have existed since 2015, if not earlier. Across the border, the Indian capital police have arrested perpetrators of four solar earning application scams. But that is only equivalent to scratching the surface. Many similar apps are still fooling the gullible, greedy, and foolish across and beyond the subcontinent.
How do These Apps Suck Your Hard-Earned Money?
These apps are reminiscent of multi-level marketing (MLM) scams. For those unaware of MLM scams, the author already wrote a piece on MLM Scams & How to Spot Them back in March. Fraudsters aim to extract "investment" from the gullible and promise unprecedented daily three-to-four-figure returns. Sounds tempting, right? However, here is a catch. One has to bring in other users. Voila, MLM scam in the guise of an affiliate/referral program. However, this is not a new trick up the scammers’ sleeves. The infamous Pi Network also employed this "referral" trick to bring in more "miners."
Performing the Due Diligence
As mentioned previously mentioned by the author in another piece, due diligence is "the act of critical inquiry that helps you arrive at a(n) (investment) decision." However, back then, the author barely touched upon the how of due diligence.
In this information-centric world, performing due diligence in this regard is not as overwhelming as it may seem. It is ironic how many people, including those with 16 years of education, still fall for such scams. However, it must be kept in mind that there is no fool-proof due diligence. But that should not hold someone back from performing due diligence. Repeating what the author wrote in a previous piece:
One of the first and foremost steps is to search for the business's name in the Securities and Exchange Commission of Pakistan's (SECP) company database. The SECP is the official company registrar and regulator in the region. If the search query returns with "No Company according to given criteria was found. You may contact the concerned CRO for further processing." message, that is a red flag. However, the company record of at least one MLM scam perpetrator can be found in the SECP's database, clearly an exception. Hence, this statement by the SECP:"The more the questions, the better. Remember, no question you throw at the person who introduced you to a venture should remain unanswered. Any unanswered question is a red flag."
The second step is to know the law. Also, anyone aware with first-hand business knowledge would be familiar with the fact that private companies are not allowed to raise funds from the public. Only public companies can do so after getting issued a commencement certificate by the SECP. Hence, The Companies (Invitation and Acceptance of Deposits) Rules, 1987 assert the same:"Please note that the mere registration of a company with SECP does not authorize it to seek deposits from [the] general public. The general public is hereby cautioned in their [own] interest to be vigilant with their investments and not to be misled by such lucrative schemes offered by any company."
The third and, probably, the final step is to swallow the hard pill that no business (no matter how legit it may seem, can provide sky-high returns. Even the safest, risk-free investments in government securities (T-Bills, PIBs, etc.) do not yield such high returns on invested capital (ROIC)."No private company shall invite or allow or cause any other person to invite deposits from the public whether by [the] issue of and advertisement, public notice or otherwise."
Originally published at https://rafeyirahman.substack.com. If you liked this or learned something new, please consider subscribing to Finesse for more financial literacy posts.
