Many people have made money on Forex, but unfortunately, there are also a multiplicity of scams intended to take advantage of people who want to make money quickly
Online trading is growing in popularity, People who are saving for retirement, college, or toward a down payment first home are looking for long-term investment prospects, but there are others who want to make some extra money in quick trades. Many are trying forex, CFDs, and crypto as vehicles for fast and highly liquid trades.
Along with the growth in online trading, there are unfortunately many investment scams, forex trading scams, and broker frauds that are designed with the sole purpose of robbing people. Often brokers disguise their theft by telling clients that they lost money in the trade when no trading has happened at all.
In this risky environment, you need to stay safe. Trader Defense Advisory experts will help you avoid all types of fraud including forex trading scams, crypto fraud, and identity theft. Contact TDA experts who are experienced in investigating scams and helping clients with fund recovery. Contact TDA for a consultation today.
The number of reported investment and trading scams is rising. Part is this is inevitable, given the increase in the number of online traders. Fraudulent behavior tends to flock where it can find the most victims. People who are new to trading and who may lack information on how to choose a reliable broker may be vulnerable prey to broker scams.
If you are seeing more ads for high-risk, high-return prospects that look like forex trading scams, it is probably not your imagination. Since the beginning of 2020, the number of trading scams has increased in the US by 32% according to the SEC.
Part of this is just the natural upward trajectory of the rise in crypto and forex trading scams which corresponds with the popularity of online trading and cryptocurrencies. Another factor is the COVID-19 pandemic.
Even as economies open up and people return to full employment, the debts incurred during the crisis may create a feeling of desperation which can cause people to seek fast ways to make money. Engaging in high-risk trading rarely makes people money if they are just starting out, and of course, forex trading scams will rob them of the cash they need.
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All scam brokers steal customers’ money, but they may employ various tactics to do so. Some will tell their clients that they lost their investment when the broker pocketed the money.
Others will charge extremely high fees and will keep clients from withdrawing their money. Others enable actual trading but will use pump and dump strategies that will devalue their clients’ investments. Here are some types of broker scams:
There are some crypto and forex trading scams in which no trading occurs at all. One example is Ponzi schemes in which the incoming money from people opening accounts is used to fund withdrawals. As the money circulates in and out of the Ponzi scheme, the scam broker makes money through commissions. At some point, the broker may disappear so they can make off with all of the funds.
Other brokers fool clients through fake trading platforms. These platforms are nothing more than video games that seem to track trades but in reality, no trades are being made. The fake platforms will indicate losses whereas the actual asset may be rising in value.
Sometimes forex trading scams involve actual trades, but the broker seizes the money or charges such high spreads and commissions that the client gains no benefit from even successful trades. Scam brokers will charge very high commissions or spreads that eat into gains.
They may also refuse to allow clients to withdraw their money without paying high fees. The broker could suddenly claim there is a special rule that there are withdrawals for a certain period of time. Meanwhile, they will pressure clients to make additional trades even though they haven’t received the payout from the first round.
Pump and dump schemes are also a common problem with forex trading scams. Although the SEC has strict regulations preventing pump and dump schemes, unregulated brokers do not have the kind of oversight that would prevent these illegal activities.
This scheme occurs when the broker holds an undervalued asset. The broker encourages clients to buy this asset until hit has reached an optimum level. Then the broker will sell their holdings or “dump” them, and when profits are taken, the asset will drop dramatically and the clients’ holdings will be devalued. To prevent this, regulations require that brokers inform clients of their holdings.
There are several ways to identify scam brokers. Avoid these to reduce the risk of becoming the victim of forex trading scams.
If you avoid brokers who have these qualities, you may lower your risk of falling victim to a broker scam. However, there is no guarantee that a regulated broker won’t deny a withdrawal or refuse to honor your complaint. In the case of broker scams or broker disputes, you will need assistance to resolve the issue. Trader Defense Advisory can provide guidance and solutions for fund recovery.
Unfortunately, many people tend to take the path of least resistance and not seek help when they have a broker dispute or suspect a forex trading scam. They may feel that getting their money back is hopeless or that their complaints will fall on deaf ears. However, TDA experts can attest to the fact that many forex scams or broker scam complaints are resolved in favor of the client, and in many cases, fund recovery is a realistic goal.
If you have been the target of a fake broker, crypto scam or forex trading scam, talk to Trader Defense Advisory. Our team of experts has vast combined experience combating fraud. Consult with us and we will create a claim and help you get started on the path to fund recovery.