There are more than 4,000 brokers globally who offer some kind of trading platform or service. There are many reasons to choose a niche broker, it could be a service they provide, the leverage they offer, special incentives or low fees. We strongly advise that before you contract to trade with any broker, you search our global database to see if we have any warnings listed.
We compile this list monthly and endeavor to keep it fresh. If you know of a broker who is not listed here who has received a warning or if you have personally experienced fraudulent behaviour, please let us know using our dedicated fraud alert section: fraud-alerts
The high profile international ‘trade wars’ are current headline grabbers, but ‘Clone Wars’ have been an issue for consumers across the world since 2014 or earlier. The practice has fallen under the spotlight of various regulators, but the scam has built upon early models to become a sophisticated ruse using new technology to great advantage for malicious and criminal ends.
In the UK the watchdog regulator the Financial Conduct Authority (FCA) has been particularly active in rooting out ‘Clone Firms’ that operate fraudulent websites which so closely resemble the real thing they often fool even the most cyber-aware traders and investors.
The objectives of the scammers that use cloning often mean that cold-call targets are chosen to try to sell them worthless or overpriced products. One way this is done is by obtaining personal information and data fraudulently by using simple contact form requests that look like they come from a trusted source.
The aim is to trick you into believing that your existing account needs attention from you and then you willingly give out the information required to access your account. This often comes about by so-called ‘phishing’ emails, which can look very convincing. Likewise, malware can be downloaded to your devices, which can even record keystrokes you make and transmit the data to the criminals.
Not only has the tech evolved but also the markets that are targeted too. Today forex trades and especially cryptocurrencies, binary options, and CFDs are the hot items on the crooks wish list. By using fraudulent websites, which are virtual offshore jurisdictions, make it even harder to track down those responsible and bring them to justice.
Although both the approach and the technology may appear sophisticated, the scams are often let down by simple errors such as clumsy misspelling or mispronunciation of terms or names. Likewise, the misuse of official badges or accreditation is common, so an easy way to weed out the scammer is to carry out some due diligence and check with industry and regulatory bodies to authenticate claims.
Cyber security comes in many flavours but at its most basic it means protecting your own data and personal information in any way you can. Making sure you only give out passport data, payment information, personal ID details of any kind to wholly authenticated sources is vital. Learning the essentials of cyber safety isn’t difficult, and awareness is the crucial first step that needs to be taken to combat cloning threats and other common ruses.
It’s a common misconception that scams need to be complicated to work, and it’s one that is perpetuated by popular heist films and con artist TV shows. In fact, the most successful scams are usually quite simple, as the current wave of ‘phishing’ email attacks shows.
With cybercrime never far from the headlines, the idea that fraudsters use human psychology to great effect is beginning to be more well known, but in foreign exchange trading, even experienced investors and traders can find themselves falling for old tricks in a new wrapping.
A “Ponzi scheme” is named after Charles Ponzi, who, in the 1920s, used a scamming technique that offered high returns with little risk. The appeal of such a deal is still a big draw today, which is why this kind of pyramid scheme is an enduring fraud that returns in new guises.
Essentially, the funds that new investors put in go to pay off those who back the scheme earlier in the chain. Today, slick videos or expensive-looking websites can be used to deliver the message that is the ‘hook’ for the scam. The format may vary from guaranteeing a simple return with the promise of huge gains at no risk, or perhaps come in the form of a special piece of software or an app that can be used to make millions overnight.
Forex fraud – fertile ground
Foreign exchange has a certain mystique about it that makes it fertile ground for fraudsters and their scams. It isn’t really greed that lies at the heart of the process but more likely a gullibility that means ‘marks’ are easily targeted and then drawn into the scheme.
Essentially, having an awareness of the dangers is the best way to protect yourself against them. Having trusted advisers or sources with whom you have built up a working relationship is always the best bet, but of course, everyone has to start somewhere and that’s where things can be risky.
Marketing materials that look too good to be true probably are, and unbelievable promises should be taken with as big a pinch of salt as possible. Fortunately, there are regulatory bodies that cover many aspects of international financial dealings and it is always worth checking the credentials of anyone that you might be thinking of entering into a financial relationship with.
Being wary of unsolicited or unexpected approaches, taking a common sense approach and refusing to be rushed into making decisions are all key to avoiding being scammed. Above all though, listen to your gut instincts and stay sceptical at all times.
When someone looks into a business deal of some kind, the phrase ‘due diligence’ often comes up. This is especially true in the world of finance and economics, so it’s no surprise that it is something of a buzz phrase in the forex sector.
Essentially it means doing your homework and research into the other parties involved in a potential deal, business arrangement or transaction that you might be considering. It is an important process as it can save you from falling victim to a clever fraudster and is hugely relevant today as scam artists are very sophisticated in their dark art.
Applying due diligence used to mean simply looking into official registrations and the approval of various regulatory bodies, as well as delving a little deeper into the history of the parties that are being looked at. However, with the wealth of methods that are now available to fraudsters, going even deeper is often the best strategy to take.
Faking credentials is something that scam artists use to catch the unwary and the use of websites and links that seem real but are anything but is a common occurrence in the current climate. This is because it is relatively easy to using spoofing techniques to hide the actual addresses of websites and using a link that reads one way, but points to a different site is a simple thing to set up.
Reviews on credible websites can be a great way of finding out about potential hookups across a broad spectrum of activities, but unfortunately the ‘bad guys’ know this too. That’s why building up fake reviews has become something of an art form of late. It can be hard to shift the wheat from the chaff when it comes to reviews, so using other methods to verify the integrity of a ‘due diligence’ target need to be employed.
Things to look for
Websites that carry a lot of information aren’t necessarily legitimate. A large section with management names and biographies might look impressive, but crooks can use these to provide an air of credibility. Some easy tricks to help work out if there is something to be worried about is to take something like a featured telephone number and do an online search. This will usually point towards the true owner of the number and often bring up any questionable activity attached to it.
Legal documentation in the form of official licenses or memberships of various industry bodies can be easy to fake, but if you are in doubt, they can also offer the chance to do some digging that can work in your favour.
Simply get in touch with the organisation in question by finding a link from a different source and ask them if the broker you are interested in is, in fact, a member. If not, the body may choose to take action for misrepresentation, and you might be doing other people a big favour, as well as avoiding a scammer yourself.