21 September 2020 | AtoZ Markets – Fraudsters are taking advantage of the people's fear and financial uncertainties created by COVID-19. They are scamming the public who desire to regain safety and security in the pandemic. They even try to persuade the victim to make a money transfer for a quick-rich scheme.
Belgium FSMA Warns Against Online Trading Platforms
Belgium FSMA has issued a warning against selling online trading and training software related to FX, CFDs, and cryptocurrencies. The regulator said that most of these products are sold using a so-called multi-level marketing (MLM) strategy. MLM is a marketing strategy for selling products or services where consumers receive rewards in commissions and discounts to bring new members. FSMA also noted:
"The offers of CFDs and forex via the internet are very risky and vulnerable to fraud. The possibility of loss is much higher than the possibility of gain."
FSMA said that most online trading platforms advertise their products via social media to recruit new members. They primarily target younger audiences by advertising that "everyone can afford this kind of lifestyle if they bring in enough new members and make the right investment in the software being promoted."
In the first six months of 2020, investors in Belgium have shown a growing interest in online investment, trading 50% more than last year. According to the FSMA, the trading activity increase more than five-fold during the coronavirus crisis. However, FSMA also said that 75% to 89% of investors in derivatives products are losing money.
Recently, FSMA is receiving several consumer complaints about fraudulent online trading platforms operating in the Belgian market. However, FSMA alerts the investors to avoid fraud by saying, "Always check the identity (company name, home country, registered office, etc.) of the company. If the company cannot be identified, it should not be trusted."
Think we missed something? Let us know in the comment section below.