6 Things I Learned About Trading Scams (Part 2)

Forex trading scams are more common than you think, and new ones keep popping up. In this article, I will share the remaining 4 enlightening things I’ve learned about online investment scams. If you haven’t checked out Part 1 yet for the first 2 things mentioned, you should!

15 August 2019 | MyChargeBack – Last week, I wrote about online trading scams, mostly from the point of view of the victims’ psychology. This week, I’ll be focussing more on the technical and professional aspects of this rather unpleasant world.

  1. Regulation is a really big deal

Financial regulation, that is. The pros and cons of regulation in other industries, from airlines to energy, is beyond the scope of this article, and my expertise. As a matter of fact, even regarding financial regulation, I’ll set aside discussions of what the ideal system would look like, or any other discussion of an ideological, philosophical, or political bent. Instead, let’s just take a look at how things actually work in the real world of 2019.

Most developed countries regulate a range of financial services, from commodities futures to stocks, and from insurance to the money supply. Many prohibit anyone purporting to be a broker from trading regulated financial instruments without a licence.

Long story short, There are a lot of online brokers out there that have no regulatory oversight whatsoever. Among the brokers that are regulated, where exactly they are regulated. In my personal opinion, it is best that you open an account and trade only with a broker that is regulated in your country.

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  1. Bonuses. I don’t think that word means what you think it means

A very common tactic among online brokers is to give out bonus money like candy. The problem here often lies in the fine print. In many cases, accepting a bonus result in your account being frozen from any withdrawals until a certain minimum volume of trading has been reached.

As a matter of fact the EU regulator, ESMA has restricted all brokers’ promotions in Europe. Yet, each country has its own regulation, and outside the EU a lot of brokers still offer promotions. So my advise here is to always read first the terms and conditions of the broker’s promotion.

  1. Be watchful of boiler rooms and aggressive sales calls

If a broker is actively and almost likely to force upon you to open a trading account with them or say that they have a winning trading strategy or signals for you, then this is a red flag! These are tactics of scams that fall under the category; boiler rooms. Many financial regulators in the world has a list of warnings against firms that handle such practices. For example, the Belgian regulator FSMA has warned the public against 3 fraudulent firms which used boiler rooms tactics. Other types of firms you need to be aware of are Binary Options broker scams, recovery scams and more.

  1. What to do when you are scammed?

I know that kind of a bold statement, so let me clarify. Banks are really good at doing specific things. They might even be called efficient in certain contexts. But dispute resolution is, shall we say, not among the banks’ fortes. And when the dispute involves an authorized transaction without a physical product (for example, just off the top of my head, let’s say a TRADING SCAM), the banks are in many cases clueless.

That’s where we come in. To tie this into my introduction back in Part 1, if the banks knew how to take care of their customers after they’d been scammed online, I’d be out of a job. But for now, there’s plenty for us to do. In the last three years, MyChargeBack has successfully recovered more than $11 million for our clients around the world.

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