Scams

3 Common Forex & Binary Options Scams

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The binary options industry has experienced phenomenal growth over the past several years, and with that, the numbers of binary options scams using various ways to fleece investors has also increased.

Even though the spotlight on binary options by regulatory agencies from countries like the US, Australia, Cyprus, South Africa and others has helped maintain a level of standards in the industry, we continue to see the widespread use of shady business practices that cost traders their hard earned money.

Here are the 3 most common binary options scams. Keep in mind, some of these scams can also be seen in the Forex trading industry.

Cold Calling

Cold calling is one of the oldest scams in the financial industry, not just in binary options trading. This binary scam involves a guy from an “investment firm” or broker calling an unsuspecting person and letting them know all about this new amazing investment opportunity.

They tell them they can make 100% to 200% on their investment if they just make a deposit. Needless to say, after handing over credit card information, the trader never sees the money or hears from the firm again.

Managed Accounts

Some binary options brokers offer personal account managers to traders who deposit and signup at their highest-priced trading account. Personal account managers typically provide 1-on-1 sessions and personalized analysis to make the trader feel special.

One of the problems with personal account managers is the fact that many brokers takes trades against the trader. This is risky for the brokers, but if they find the right customer, such as someone with little knowledge about the industry, they can reap the benefits.

Under this scam, brokers usually try to get the trader to deposit more money. The account manager will make a few good profitable trades, but then, somehow things go wrong and the trader will start losing a substantial amount of their money. Some traders even lose everything they deposit because of a personal account manager.

Refusing to Process Withdrawals

This trading scam is fairly common and is arguably the most frustrating. Please note that brokers legally require traders to verify their identity before withdrawing their funds, so this is perfectly normal, not a scam.

But what is not legal or normal is for brokers to refuse to process withdrawal requests. When a trader does not receive his or her funds,  they are forced to play a waiting game with the broker. Often times the broker will not even return phone calls or emails.

Sometimes brokers will just quote a section of their Terms and Conditions as the reason for not processing the withdrawal when it has no clear connection. Shady brokers may also claim the trader hasn’t reached their bonus rollover when they actually have.

There are many ways to accomplish this scam. Brokers typically wait to see if the trader just gives up, sometimes they even try to convince customers to deposit more money.