She Was Scammed of ₱200K By Her Niece: Why You Should Always Be Careful with Your Money, Even with Family

*All names in this article have been changed for privacy 

“Never trust anyone with your money, unless they’re family.” This is what retired public school teacher Lily (not her real name) thought. That is until she lost all her money because of her blind faith in her niece.  

Over a period of six years, Dahlia falsely reported how she was helping her aunt, 64-year-old Lily to grow her money. Instead, she’s using her aunt’s money to fund her own lifestyle.  

And she managed to do this undetected because Lily never thought that her own niece would be the one to milk her savings dry.  

It was supposed to grow her savings, not deplete it

Living comfortably in her retirement was always Lily’s goal. Hence, she led a prudent lifestyle to grow her nest egg that would support her in her later years.

A bulk of this money sat in her bank account, something that Dahlia came to know of as Lily had a close relationship with all her nieces and nephews. This was when Dahlia went to Lily with a proposition to grow her wealth at a faster rate than a bank savings account could.  

”Dahlia, who is also a teacher, approached me with a proposal to ‘grow’ it: lending money to her fellow teachers at a slightly lower interest than the prevailing rates of banks,” shares Lily. 

It seemed like a low-risk venture to her as the borrowers would be people that Dahlia knew and getting back the money would not be a problem.  

Hence, she handed over ₱200,000 to Dahlia as a “seed fund” for this newly formed informal lending business.  

Every month, Dahlia would report to her the fund status: how much was loaned and how much interest was earned. As compensation for her work as an ‘agent’, Lily let Dahlia take out loans from the fund without charging her any interest.  

“Dahlia and I had a notebook where we would record all of the transactions. We would compare notes twice a month to ensure everything was accounted for. Business was running smoothly, and everything was in order,” Lily says. 

According to the books, their business had “ten consistent borrowers” who were very punctual with their monthly repayments. “Dahlia would deposit the interest into my bank account twice a month, whilst the capital would be loaned out to the same people,” she recalls.   

This should have been a red flag, but Lily simply brushed aside any fleeting concerns that the same people were borrowing and repaying her regularly. As long as they paid on time, and she earned interest with every loan made, she didn’t need to bother herself with the details, she thought.   

What Lily didn’t know was that in the six years that the “business” was running, there wasn’t a pool of people who were taking out loans. There was only one person using her money, and that was her agent and niece, Dahlia.  

“At the start, it probably was legit. There might have been 10 borrowers. Looking back, I realized there had been a few clues that a problem was looming, but I missed them because I trusted Dahlia so much,” recalls Lily. 

It was only when some “borrowers” suddenly began requesting to pay the full amount with interest at the end of the year instead of the usual bi-monthly installment schedule that Lily started to be concerned. But Dahlia told her that was because these “borrowers” wanted to use their year-end bonuses to repay the loan. 

However, soon the remaining “borrowers” began defaulting on their monthly installments. After months of not receiving repayments, Lily told Dahlia that she wanted to stop lending money and get all of her money back. However, it was met with resistance from Dahlia.  

“She said it would be a bad idea because we will miss out on more opportunities,” says Lily. 

But the true reason was because for the few years, there were no borrowers. All the names that were given to Lily were fictitious. The money was being used by Dahlia, who “paid” the repayment instalments by borrowing more money from the fund under another name.  

Over time, the fund inevitably dried up and the “repayments” stopped.  

Unbeknownst to Lily, Dahlia was also in deep financial trouble. She had defaulted on her bank loans, maxed out three credit cards, and could not pay the monthly installments billed by her other creditors. 

Dahlia filed for early retirement, hoping that her retirement pay would be enough to clear her debt, but it wasn’t. She also no longer had a regular stream of income to cover her daily expenses nor any healthcare coverage as it was previously provided by her employer.  As she had not turned 60, she was also not eligible for social services pension.  

Her other attempts to earn money failed and to make matters worse, she got into an accident that resulted in a broken shoulder. This left her hefty surgical bill that added to her mounting debt.   

It was then that Dahlia finally confessed to one of her sisters how she had used their Aunt’s money. This sister then told Lily the truth. 

“I froze when I learned about it. ‘What have I done to deserve this?, I asked myself,” shares Lily. “I have been very kind to her and her entire family, but I was deceived all because of money. She could have told me she needed money, and maybe I would have helped her.” 

Lily could not believe that her hard-earned money was most likely gone, and the culprit was her favorite niece, whom she treated almost as her eldest daughter.

Trusting the wrong person was her downfall

Wanting to put her money in a business wasn’t wrong. What Lily did wrong was to unconditionally trust her niece, just because they had a close relationship.   

“Good thing I did not invest all of my money. I still have enough in my bank account, partially thanks to the “interest” that I collected over six years,” says Lily.  

That said, there are still many lessons to learn from Lily’s experience and here’s what you should do the next time a family member approaches you for money to “invest” in their business.  

Don’t trust without questioning, just because they are family

Just because one is a relative doesn’t mean s/he wouldn’t run away with your money. Instead you should scrutinize each proposal like you would any financial product offered by banks, insurance companies or financial advisors. After all, it’s your hard-earned money at stake.  

Learn to say no

In Asia, we are somewhat conditioned to believe that we can’t say no, especially if it’s a family member. However, this is what leads to eventual trouble, particularly when money is involved. Instead, no should be said at the right time, with boundaries set and clear expectations outlined.  

Had Lily been able to do that, she might not have seen her money disappear. Even if she agreed to go into business with Dahlia, Lily should not have allowed Dahlia free reign to manage the money just because she was her favorite niece. This includes not letting Dahlia borrow money interest fee and looking more closely at the books.  

We’re not saying it will be easy to do these things as you could be labelled as being selfish and apathetic. But it’s better than putting your money at risk, and potentially losing all of it, whether it was intentional or not.