How Does The Scam Work?
The rise of the binary market has attracted many con artists to the foray, and they start even before you open your account. In order to understand whether the brokerage site you are visiting is genuine or a fake, you must have some basic knowledge about how these scams work? The following text will try to answer this question.
- They disguise you with a fake website which looks like a legit binary option broker
- They promise exorbitant success ration on their signal services, some even goes on to guarantee it.
- They use the web for fake reviews and testimonials under multiple names to trap you.
- As soon as you join such scams, you lose your initial deposit amount.
- Once your deposit has been lost, you get a call from so called senior broker asking you to deposit further funds.
These are the general steps followed by the binary broking scams. It is advisable, if you see any of the above signs, just stay away from them.
Types of Binary Options Scams
The unparalleled rise in the binary options trading has attracted several new traders in the market. Unaware about how things work in the binary arena they come with very high expectations from the binary trading. Such newbies fall prey to the sharks of the binary arena or so called scam artists. They advertise themselves with some unheard payouts and consistent revenue stream to lure the investors. Once, these newbies have enrolled themselves then only they realize that they have been conned. The regulators in the several parts of the world are aware of this nuisance and have identified three types of fraudsters in the financial markets. The following text enlists them in detail.
Brokers Who Block Withdrawals
This is the first type of scam artists. Once you enroll with such brokers and make a deposit, and try to request a withdrawal, you just can’t. sometimes, such brokers go even step further and calls you up to deposit further funds to initiate the withdrawals by making some nonsense argument of how beneficial it is to deposit further funds to your account. Then, the nimble trader request for withdrawal which is now repeatedly denied, your phone calls go unanswered, and your e-mails to the customer support start bouncing. All your attempts to get your own money goes in vain with some point in terms and conditions or having no one in the organization to listen to your requests. Then only you realize that you have been conned, while, the realization would not have cost a million but surely few hundred dollars.
Such scam artist advertises being one of the best in the business and offers unrealistic gains by trading with them. So, how to avoid such con artists? Read on:
- Do comprehensive research about the brokerage house even before thinking about depositing funds. Search the internet for the available online reviews about the brokerage house, specifically, on the third party websites and social forums. The customer often reports such con artists on various forums so that other don’t get trapped.
- Thoroughly read terms and conditions on the website along with the FAQ relating to the deposits and withdrawals. You must be aware of any restrictions in terms of a minimum deposit and a minimum withdrawal.
- When you are starting with a new broker to start your binary trading journey, only make a deposit of minimum amount as indicated in their terms and conditions. After depositing funds, try a test withdrawal in accordance with their terms and conditions before building up the account and adding further funds in the account.
- If you receive a phone call from the broker to add funds to your existing account in order to make it big then the first thing you should do is try and withdraw the existing amount from the account and start searching for a genuine broker.
Scam Artists Who Steal Identity
Such scam artists go even a step further, they not only try to steal your money, they also steal your identity to take more money from you. The requirements of Anti-Money Laundering and Know Your Customer guidelines are followed by all the brokers, which requires them to ask you about your proof of identity, address and sometimes, a copy of your credit card, and hence it is a challenge to avoid. You may have provided your credit card details while making the payment or provided your identity proof to initiate a withdrawal or provided a copy of your credit card (back and front) or you may be asked to provide Social Security Number. You may be asked to provide faxes of such proofs, we recommend not to comply such requests.
If you have even a slightest of a doubt about the brokerage house, just avoid or avoid using your credit card to make the deposits instead you can use other modes of electronic payments like e-wallets, which secures your identity.
We are not saying that every broker in the binary arena is a scam artist who asks for credit card details, but it is always better to be safe than sorry. Specifically, you should be aware of the brokers who does not require your identity proof while enrolling but demand proofs before initiating withdrawal requests.
Some pointers to avoid such scam artists:
- As always, make a thorough research about the company even before thinking about depositing funds. The internet is a great source of information, and there are websites and forums which provide independent advice on several brokers, read each of the available reviews about the website before initiating the registration process.
- Read the terms and conditions, and FAQ on the respective broker’s website to gain a complete knowledge about the withdrawal process and its requirements. If you still have a doubt, make a call to the customer service department of the broker to verify that they will not compromise your identity and will not ask you to comply later on.
PS: In a circumstance where you need to provide a copy of your credit card, then you must black out the middle eight digits on the front of the card, and CVV number on the back of the card to be safe.
Trade Manipulating Brokers
This is the most sophisticated than the other two but could cost a fortune over a period of time. Such brokers manipulate the software to generate losses to the traders. The most common technique used is: the trade expires after it was set to, and suddenly, your trade jumps from in-the-money to out of the money. You make a call to their customer service which ultimately denies giving reference to the terms and conditions of the site about technical glitches. The repeated occurrence of such episode is a big warning signal for the traders, and one must exit entire funds from such websites.
There are other aspects in the binary arena which is managed by such scam artists. For instance, sudden changes in payouts for no obvious reasons, and a price fluctuation of an underlying asset without a convincing reasoning. However, you must remember that the most common reason for losing a trade is because you did something wrong, and not your broker. In other words, do not impose your own mistake onto the broker and label them scam artists.
Avoiding this scam:
- Once more, research, research, and more research! Always, make an effort to learn more about the brokerage house through various independent websites, customer forums, and social media to gain a complete knowledge. We are reiterating again that you must research thoroughly about any brokerage site before even thinking about depositing funds.
- To identify such brokers, you must keep your eyes wide open while trading and lookout for any sign of suspicious price jump and suspicious expiry moves. If it is a once in a blue moon kind of an event then it is okay, though less likely, but if it repeats more than once, just beware. If anything looks suspicious then you must try and withdraw all your funds and start researching for another broker.
You must remember that the binary options trading is not a scam by itself – it is just an another way of trading financial instruments. However, there are some con artists at play who tries to take the advantage of novice traders and steal their money. Just to be aware of such con artists, you must research well before making any commitments to the brokerage website.
Avoid These Things in The Binary Options Trading
We have already discussed how the scam artist works, and what are types of the scam artists who are at play in the binary trading arena. Now, we will discuss some of the most common mistakes traders make and fall prey to the con artists. By avoiding these mistakes, you can keep these con artists at arm’s length.
- Registering with the new brokers: The binary options trading has been around for quite some time and there are some brokers who have proven track record. So, it does not make sense to get register to the new brokers unless and until you are absolutely sure about it.
- Not knowing T&C of bonuses: Bonuses are a great way to increase your initial balance, but they come with certain terms and conditions. These conditions restrict the withdrawal until you meet their requirements, and hence, you must read the terms and conditions along with the FAQ about the bonuses on their website.
- Managed Accounts: You should never, and I repeat never, allow any third party including the account manager from the brokerage house, to trade on your behalf. The offering of the managed accounts is a one-way to lure the investors in their scheme of things.
- Don’t gamble, strategize: The binary trading is not a gambling but it can become one if you treat as a random investment. There are several strategies available to invest for the long or short term. Not using such strategies will definitely make you lose.
- Don’t’ bet your account: As a beginner, you must not risk a large amount on a single trade. The binary trading is a long-term association and not a get rich quick scheme. So trade wisely.