Binary Option Scams
What is Binary Option and how to trade them?
Find out who are Binary Options Scams, how they work and how to avoid falling into a trap?
While the main aim of scammers is to get clients funds or personal details, everyone likely to fall under unlikely actions of scams, that is why you should know how to protect yourself and spot fake offering.
Introduction into Binary Trading
Binary Options is a financial instrument in which trading is performed by a fixed amount of cash and time. Options trading allows investors to buy a stock or other investment, or bet set to an underlying asset above a certain price with a particular expiry date. The potential loss or gain is limited to the difference between the market price and the option price itself. In binary option case the set amount of time is much shorter and in fact, is a short-term bet on the asset direction. The Means, if the trader’s guess is right, you get set amount of money from the other, while in case of opposite “guess” or if you are wrong you lose it all.
Since the binary and options trading appeared as an attractive offering among financial investments, the whole business got involved in its discussion of trustworthy operation or not. Its popularity explained by open access to anyone who seeking for an investment opportunity and allegedly allows to enjoy high incomes in a very short time. Yet, let us look closer to the opportunity itself.
How Forex Trading scam work
The binary brokers as a typical mean locate their offices primarily in offshore zones and other jurisdictions that did not imply the strictest regulation to financial investment firms. Therefore, the company will enable their operation with a very low requirement and capitals while as a general rule will claim its presence in prestigious jurisdiction alike UK, Hong Kong, US or another European country. The phone number may appear to be a local line, but eventually to have the end user in the option trading hub somewhere in the world. Therefore, binary scam gear towards investors and promote fake binary trading software through easy for unscrupulous providers to take the advance.
Most often binary frauds use heavy advertising tactics through a social media, advertising on websites and emails with a redirection to a very-well developed websites with an allegedly professional offering and a very attractive opportunity of gains available to everyone. The majority of binary option scams lure traders with a very small initial deposit and “free bonuses”, and most often it is enough to get interested in. Further on an options broker will ask for credit card information and eventually, that’s where the positive side finishes. Then, the trader puts his life savings into “potential investment and gains”, but faces the loss of everything. The attempts to get money back turns out to be unsuccessful with further stress from understanding what happened.
The main trap in binary options trading is that firm may easily manipulate software and distort price which will lead to sudden loss of the trading account and balance. Furthermore, the scam brokers may use credit information to withdraw funds from the cards, therefore you should be extremely cautious about giving the credit details.
As the nature of Binary Options trading allows company providers to operate the “business” easily as well to enjoy high incomes to their pockets, the industry shows its growing tendency constantly. However, the situation has now changed due to better regulations and observance that keeps track on scams. Securities and markets regulators across international jurisdictions received thousands of complaints as the binary options providers’ target investors aggressively, yet, the truth of victims is far beyond the received number of complaints. While Binary Option is often categorized as a sort of gambling by the authorities the binary options broker may be a registered firm in particular or offshore place, yet the firm is not allowed to sell its offering to residents of other jurisdictions.
The authorities and international trading industry regulators regularly check on the trends and actions performed or offered by various brokers with a purpose to protect clients and maintain a trustable or smooth market operation. In regards to binary options trading sites, the most trusted regulators issued an Investor Alert, with an advice not to involve in binary trading at all and even banned binary options to retail traders. The agencies mention that numerous complaints received and relatively easy way to manipulate software or to generate losing trades during the binary options trading delivery involves significant risk to be involved in fraudulent activity. The authorities then identified thefts through a fixed-odds betting nature of the binary options trading and try to educate the population and warn about fraudulent promotional schemes.
In 2013 US regulators CFTC and SEC officially joined and published an alert to investors along with a ban on binary options trading to the residents. The Canadian authority mentions binary option fraud is a leading investment fraud that facing potential investors, while there are no registered firms permitted to trade these products in Canada. The European ESMA along with the respected EU authorities followed by series of warnings and from 2 July 2018 banned firms from selling binary options across the EU. While the ban is for a three month period, a further extend took place from 2 October and continues.
Check on UK FCA warning against Binary Options Scams: https://www.fca.org.uk/scamsmart/binary-options-scams
Recently, on November 2018, German Federal Financial Supervisory Authority BaFin announced that it is planning to prohibit the marketing, distribution, and sale of binary options to retail clients at a national level. Overall, mostly all respected regulators confirm a fact of an extreme risk involved in binary trading, therefore the majority of authorities alerts if you are offered binary options it is probably a scam.
After all, there are too many tragic stories about binary options victims, it became so common that the authorities try their best in order to prevent a population from fraudulent.
How to protect yourself
However, the regulators are not able to power each and every offering or specific jurisdiction where most of the scammers based. In many instances, you should protect yourself and be aware of an interaction, that takes place with a purpose to take your money.
There is no any guarantee on a statement made at the broker’s website, thus do not believe on every statement, specifically about its registration status, but carefully check on through official regulatory sources. Scams often present themselves as a reputable firm with professional data, an allured attractive possibilities of high gains and fast outcomes. Yet, often its all faked, always remember because information looks official, it does not mean it is.
Always verify the broker’s registers before dealing with them and check on the reputation, as well read Forex Brokers reviews. Probably, if the firm is not authorized it is a high risk to be a scam. You can always check Warning lists issued by the industry authorities and of course, you should consider strongly any issues, as well review the List of Brokers to Avoid.
If you got scammed
In case you fall, a victim of Binary Option scams, at first you should immediately recall the credit card and try to withdraw funds from an account. Because scams are likely located overseas, there is almost no way to get any money back or to receive any sort of support.
The typical traders complain included refusal to credit accounts or return funds and in fact, are not able to be supported further, as simply the company is not regulated or compensated by anyone. However, you should report a scam to specified authorities and better to access a specialist to advise on your following steps. The regulators like UK’s FCA, Australian ASIC, Cyprus CySEC or others provide an open and well-guided complaint procedure, therefore you should contact authority immediately in case there are any concerns.
Submit your complaint about Australian Broker to ASIC: www.fos.org.au
Cyprus Broker to CySEC: www.cysec.gov.cy/en-GB/complaints/how-to-complain/
UK Broker to FCA: help.financial-ombudsman.org.uk
If you invested with a non-regulated entity, there is no investment protection applied, as well as there is no established compensation, unlike the Regulated Forex Brokers status provides.
The sad truth is that scams among the binary options trading market are something that dominates among the offering. While the broker may provide a robotic software or to act as a broker, the trader should always keep caution against scams.
Overall, it is very high risk, noting facts and issues happened to thousands of investors around the world, to engage in Binary Options trading. We can not recommend trading with binary option brokers due to the revealed facts and numerous warning issued by the trusted authorities around the world. We value a transparent operation and investment service, therefore both reliable and trusted brokers will be always regulated and authorities in terms of their offering and performance. On the contrary, we offer to check out a list of Regulated Brokers and description of their investment proposal, which is available by the link.