I know my readers would never mess with binary options, but for those who have thought about it comes a major warning by Britain’s financial watchdog group.
The Financial Conduct Authority (FCA) said unsuspecting consumers were being lured into buying fraudulent investments via social media sites like Facebook, Instagram and Twitter.
Common schemes involved complex trades in binary options, foreign exchange or cryptocurrencies like Bitcoin.
Gamblers (not smart traders like you) are continuously attracted by ads that promise unrealistically high returns, or featuring images of luxury items to lure unsuspecting consumers.
Fraudulent companies would then “distort prices”, tie people in with extreme pay-out clauses or even close accounts and refuse to give refunds.
In the U.K., investors are lost more than £87,000 a day on binary option scams alone last year.
For those who don’t know binary options allow customers to bet on price movements in a stock, commodity, currency or index without owning the underlying asset.
Binary options are more akin to card games where the house will always win in the end.
It was the first time that online scams overtook telephone fraud for the first time, and oddly it was under-25s who are most at risk of being suckered in and losing money.
“As people have become more sceptical of investment-related cold calls and consumer habits have changed, we have seen investment fraud moving online and to social media,” said Mark Steward, director of enforcement at the FCA.
“While their websites and profiles appear to be professional, they are all too often run by fraudsters who fix prices and pay-outs, or in some instances don’t really place trades at all, before disappearing with innocent investors’ money.”
The FCA has been stepping up its scrutiny of online trading in recent weeks. Earlier this month it delivered a stark warning that consumers could be at “serious risk of harm from poor practices” in the risky sector.
One of the things I have been screaming about for years is that if it looks good to be true, in almost every case it is. Buyer beware can only go so far, so please I implore you to be on the lookout for scams. Choosing a good broker is key to avoiding a binary options scam.
— The Option Specialist