This is What a Trading Scam Looks Like (Part 2)

22 July 2019, MyChargeBack – Last week, I wrote about the history of online trading, the significance of financial regulation, and the prevalence of fraud among online brokers. Let’s dig a little deeper now into what exactly this fraud can look like.

If you haven’t read Part 1  yet, check it out. You’ll love it!

What a Trading Scam Looks Like

Before we get started, let’s take a minute to discuss the different people who might read this article, and how you might benefit.

  1. You’re an online broker and not the scammy kind. Learn how to differentiate your brand and your services from the scams.
  2. You’re a (potential) investor looking for a broker. Learn how to spot the scams, avoid them, and pick the honest reliable companies to deal with.
  3. You’ve lost money to an investment scam. Amazingly, many scam victims do not even know that they are victims. (The con artists are very good at what they do.) Learn how to understand what happened to you and what you can do about it.

For much of the last decade or so, binary options scams were the most pervasive sort of investment fraud. Between 2016 and 2018, many countries and individuals caught on to what was happening, and binary options started to get a bad name. Many of the scammers simply rebranded their criminal enterprises as forex, CFDs, cryptocurrency, or dozens of other online scams.

The most important thing to keep in mind regarding scam brokers is that they usually go out of their way to steal their victims’ money in such a way as to make it look like the money was lost on a series of unlucky trades. This has the effect of allowing the broker to walk away without fearing that his victim will come chasing after him with either legal or financial consequences.

A few of the Scammers’ Tricks

Another thing to understand is that the scammers plan ahead to mitigate the possibility of facing any such consequences. One way of doing so is by concealing their location and identity. You’ll find on a lot of these scam broker sites they bend over backward to avoid revealing their physical address or anything else about themselves. If you run across such blatant dissimulation, walk away.

Scammers can also avoid unwanted consequences with a little forethought by incorporating and/or applying for regulation in a country with the minimal ability or will to punish financial wrongdoing. Surf enough scam sites, and you’ll see the pattern. The exact same addresses in The Marshall Islands, Estonia, Bulgaria, Vanuatu, and a few other countries keep popping up over and over again. Is that where the fraudsters are actually physically located? Usually not, but good luck finding out for sure.

And speaking of regulation, this is also an area in which a little forethought by an enterprising criminal can pay off handsomely at the expense of innocent victims. The easiest path to take is to avoid regulation entirely, and this is exactly what many of them do. Of course, not all investors are willing to trust an unregulated broker, so what do you do if you want to reach those customers, but still leave as much wiggle room as possible for shady business dealings? The answer is that not all regulators are equal. The same tropical destinations that are attractive havens for offshore corporations may offer financial regulation that is little more than a fig leaf. But even within the EU, with its common rules, some countries are known for more strict enforcement, and some for less.

About MyChargeBack

MyChargeBack is a fund recovery service headquartered in New York. In the past three years, we have worked with more than 750 banks around the world to recover over $11 million for clients on every continent. If you believe you have been a victim of an investment scam, contact us for a free fund recovery consultation.

Stay tuned for more useful info, and check out the MyChargeBack Blog for the latest in scams and fund recovery!

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