Online Gaming Scam: Deposit Required Before Cash-Out
A Comprehensive Legal Overview in the Philippine Context

I. Introduction

Online gaming has become increasingly popular in the Philippines, fueled by easier internet access, a thriving gaming community, and the global rise of e-sports. In tandem with the legitimate gaming industry, however, fraudulent schemes have proliferated. One of the most common scams is the “deposit required before cash-out” scheme. This article provides a comprehensive overview of how this scam works, its legal implications under Philippine law, and the remedies available to victims.

II. How the Scam Works

Invitation to Play
- Victims are lured to join an online gaming platform, often through social media, chat apps, or referral links. Promotions typically promise lucrative winnings or bonuses.
Accumulation of “Winnings”
- The online gaming platform may allow users to win or appear to win large amounts. This initial success is carefully orchestrated to make the game seem legitimate and profitable.
“Deposit Required” Request
- When a player attempts to withdraw their “winnings,” the platform requires an additional deposit, labeled as a “withdrawal fee,” “tax fee,” “insurance fee,” or “verification fee.”
Repeated Fees
- Even after the first deposit is made, the scammer may demand further deposits under various pretexts—such as a “release code” or “security” payment—before the withdrawal can be processed.
Non-Payment
- Eventually, the victim realizes that winnings are never actually paid out. By this time, the scammers may have moved on, shut down the site, or blocked communication.

III. Legal Framework in the Philippines

Philippine laws provide multiple avenues to address and penalize online gaming scams. The key statutes and principles are:

Revised Penal Code (RPC)
- Estafa (Swindling) under Article 315 of the RPC may apply when deceit or false pretenses are employed to defraud another of money or property.
- In these scenarios, scammers induce victims to part with their money through fraudulent misrepresentations about the “winnings” and “fees.”
Cybercrime Prevention Act of 2012 (Republic Act No. 10175)
- Broadly criminalizes online frauds and scams, treating them as cyber-related offenses (e.g., computer-related fraud).
- Penalties under RA 10175 can be higher than under the Revised Penal Code if the criminal act is committed through information and communications technology.
Anti-Money Laundering Act (AMLA, as amended)
- May come into play if illegally obtained funds are laundered through local or foreign financial institutions.
- While AMLA primarily targets bigger financial crimes, it may be used against organized groups repeatedly victimizing players and funneling substantial amounts of money.
Consumer Act of the Philippines (Republic Act No. 7394)
- Though traditionally focused on consumer goods and services, the Act underscores the state’s policy of protecting consumers from unscrupulous practices.
- In conjunction with other specific laws, it reaffirms the right of consumers to fair and honest transactions.
E-Commerce Act (Republic Act No. 8792)
- Governs electronic transactions and can be used to bolster cases against fraudulent online platforms.
- Provides the legal recognition of electronic documents and signatures, which can be useful in court proceedings.
Regulatory Oversight by PAGCOR
- The Philippine Amusement and Gaming Corporation (PAGCOR) oversees legal and regulated gaming in the country, including online gaming operators holding PAGCOR licenses.
- Unlicensed platforms are clearly operating illegally; victims dealing with unlicensed platforms have limited recourse and face heightened risks.

IV. Government Agencies and Enforcement

National Bureau of Investigation (NBI)
- Through the Cybercrime Division, investigates cyber-facilitated scams and gathers digital evidence.
- Victims may file complaints directly with the NBI Cybercrime Division, providing screenshots, proof of payments, and any other relevant documentation.
Philippine National Police (PNP) – Anti-Cybercrime Group (ACG)
- Has jurisdiction over cyber-related offenses, including online fraud.
- Maintains hotlines and online portals where victims can report scams. The PNP-ACG can coordinate with local or international law enforcement agencies.
Department of Justice (DOJ) – Office of Cybercrime
- Serves as the central authority for cybercrime matters under RA 10175.
- Provides legal guidance and assists other government agencies in prosecution.
PAGCOR
- Investigates complaints specifically related to licensed gaming operators.
- While PAGCOR’s jurisdiction is limited to licensed entities, it also issues warnings or advisories regarding dubious online gaming platforms.

V. Legal Remedies and Process for Victims

Filing a Criminal Complaint
- Victims can file a complaint for Estafa under the Revised Penal Code, in conjunction with violations of the Cybercrime Prevention Act, at the NBI or PNP.
- The complaint should include all evidence:
  - Correspondence with the scammer (emails, chats, screenshots)
  - Proof of online transactions, such as bank receipts, e-wallet transfers
  - Website or platform details (URLs, domain registration data, if available)
Civil Action for Damages
- Separate from criminal proceedings, victims may file a civil case to recover the money lost due to the scam.
- However, identifying and locating scammers—especially if based abroad—can be challenging.
Coordination with Banks and E-Wallet Providers
- Victims can immediately notify their banks or digital payment providers about fraudulent transactions.
- While refunds are not always guaranteed, timely reporting may lead to account blocks or reversal of transactions in some cases.
Free Legal Assistance
- Victims lacking resources may seek help from the Public Attorney’s Office (PAO) or accredited legal aid clinics.

VI. Preventive Measures and Best Practices

Check for Licensing
- Before playing online games for real money, verify that the operator holds a PAGCOR license or a license from another recognized authority.
Be Wary of Unrealistic Promotions
- Scam platforms often promise excessively large winnings or bonuses. Exercise due diligence—read user reviews, look for credible endorsements, and research the platform’s reputation.
Avoid Upfront Fees
- Legitimate operators seldom require repeated upfront deposits or “facilitation fees” before allowing withdrawals. Immediate requests for deposits are a red flag.
Secure Your Personal Information
- Use strong passwords, enable two-factor authentication (2FA), and avoid sharing personal or financial details on unverified sites.
Report Suspicious Activities Promptly
- Even if you suspect a scam but have not yet been victimized, report suspicious websites and social media pages to the PNP-ACG or NBI Cybercrime Division to help prevent further fraud.

VII. Challenges in Enforcement

International Jurisdiction
- Many scam operations are based overseas and use anonymous servers, complicating investigations and extradition.
- International cooperation through mutual legal assistance treaties (MLATs) is required to apprehend perpetrators.
Technological Sophistication
- Scammers continuously adapt, using encrypted messaging apps and fake or “clone” websites that disappear quickly.
- The decentralized nature of digital currency transactions also hampers traditional investigative methods.
Low Reporting Rates
- Some victims are reluctant to come forward out of fear, embarrassment, or lack of knowledge, resulting in underreported incidents.

VIII. Conclusion

The “deposit required before cash-out” scam is a prevalent online gaming fraud in the Philippines. While Philippine laws—particularly the Revised Penal Code and the Cybercrime Prevention Act—provide robust legal tools to combat these fraudulent schemes, enforcement can be complicated by cross-border operations and technological barriers. Nonetheless, proactive prevention, prompt reporting, and coordination with law enforcement agencies can mitigate losses and increase the likelihood of apprehending perpetrators.

Key Takeaways

Always verify a platform’s legitimacy and licensing (ideally with PAGCOR).
Be cautious of too-good-to-be-true promotions and upfront “withdrawal fees.”
Gather and secure evidence if you suspect fraud.
Report incidents to NBI or PNP cybercrime units for further investigation.
Seek legal recourse to recover losses and hold perpetrators accountable.

By understanding the legal framework and practical measures against this scam, both players and legitimate online gaming operators can help foster a safer digital environment in the Philippines.