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Forex Broker Scams: Fake credentials and reviews befuddle regulators

The term “due diligence” gets thrown around a lot in our industry and in others for that matter, but the nuances of the craft can save you from becoming a victim at the hands of a clever fraudster. Today’s scam artist is armed with the knowledge of the Internet and a variety of cute tricks that any normal human being or even a regulator could pass over without a second thought. Whereas applying due diligence might have meant using reasonable steps to protect yourself from fraud, you might now need to go deeper.

Faking credentials and pumping up reviews on credible websites has become an art form of late. If you step back for a moment and try to think like your crooked adversary, your first task would be to establish trust and respect with your intended “mark”, before you ever try to “set the hook” for later. There are actually a number of dodgy forex brokers out there that never bother, choosing to go with a “skeleton” website with no transparency with regards to credentials. Let’s assume for the moment that you would naturally steer clear of any broker that withheld such important information.

What then are the normal items that we would include in confirmation of “credentials? Here is a brief list to consider:

  • Management names, bios, and pictures: Yes, crooks are adept at copying impressive resumes, complete with associated pictures, to provide an air of credibility;
  • London office address or another respected forex centre: In today’s cyber world, a scammer only needs a website to open shop. He can outsource or white-label the other activities needed and operate totally as a virtual outpost in Never-Never-Land. Inserting respectable office addresses, impressive ones to be sure, can only improve his odds;
  • Telephone numbers: Why would you ever call a fake number, unless you had a complaint. Always “Google” phone numbers. You might be surprised at who really owns it;
  • Forex review sites: Easy to load up with only good things to say. Be wary if there are no reviews to be found;
  • Official licenses and legal documentation: These are easy to fake, too – just copy them from another website.

In each of these cases, a quick check with your local regulator should help you determine if your potential forex broker is legit or listed on an authorized list or blacklisted due to complaints. In any event, insert each item into a search engine to verify authenticity. Scammers typically focus on lazy, greedy types that prefer to get rich quick by taking shortcuts. Take the time to validate what may appear to be legitimate.

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