It is very unfortunate but scams have been part of traders’/investors life from the time when forex trading became popular many decades ago.
In the last decade or so, scammers started manipulating the financial market for their gains and that figure runs into billions of dollars. Even now, the figure is quite high. According to studies, traders lose millions of dollars to forex scams in Europe, the UK, and the USA alone. These scammers have now diverted their attention to European countries.
The forex scam is common even when the markets are supposed to be regulated by professional bodies of different countries. Many factors have sprung up in recent years and one of them is the rise in web-based trading. Another factor is people want to “get rich quick” which is more prevalent in European countries. Rising social media usage is also one of the factors that help scammers commit fraud.
One of the main culprits is Web-based trading.
Forex trading has opened its doors to web-based trading or trading through the internet. It has it plus and minus points. Previously forex trading was largely an exclusive sector where only a few traders used to be involved. Because of the internet, anybody can start trading from anywhere. Web trading has demolished boundaries between the nations. Many legitimate brokers have taken steps to combat scams and enhance security. They also ask KYC to identify their clients better. This does give the confidence to the trading community who are using their sites as they are on a different level from criminals and money launderers.
The other side of the coin is there is no human interaction when anyone wishes to place a forex trade. The critical movement to spot that something is fishy with the broker is gone forever. Nowadays scammers can develop highly sophisticated websites, which are virtually carbon copies of the original sites. That is why it is a good notion to check websites and read scam reviews on our site before investing or trading. Our site contains reviews of many scam brokers and is better to avoid those sites.
Role of demand and supply is increasing frauds in Europe.
The demand for forex trading has skyrocketed in Europe. And the supply of scam brokers has also increased proportionally. Because of the high demand in forex trading, scammers take benefit of the circ*mstances. That is why many people are vulnerable to becoming victims of fraud. Nobody wants to be scammed willingly by forex brokers, and wants to go through a bad experience.
The deregulation of the financial market started in the mid-1980s and people thought it is possible to get rich quickly by investing/trading in the forex asset class than any other asset class. These ideas were fuelled by movies “The wolf of wall street” and a few other movies. This created a perception in people’s minds they can make good money by currency trading.
For a fraudster, it is a readymade market and they people exploited for their financial gain. Fraudsters very well know that whosoever enters the market cannot always walk away with a profit. With help of social media tools, they produce an image of a perfect and rich life everyone can enjoy through forex trading. People jump into this trade seeing those “created images”. It will take time for people to change their mindset and that is not happening in near future.
The Internet plays a big role in propagating forex scams as everybody can access opening new accounts with the scammers easily. There is no human interaction as accounts can be opened from anywhere. Many people do not have knowledge, resources, patience, or experience in trading but they are eager to trade and want to make huge money. They are the ones who are ultimately scammed by scammers.
What to do if scammed?
These scams and frauds aim to illegally obtain personal data and money from the traders. They typically include the use of regulatory authorities’ logos, letterheads, and pages from the site. Anybody asking for personal data should be looked upon with caution.
There are many scam brokers out there. If you have any doubt about the authenticity of the company, do read our reviews and scam reports on different scam companies.
Forex scam fund recovery is hard but not impossible. We guide victims of scams how the forex scam recovery is possible.
You have a great chance to uncover the scammers, not only locally but also worldwide. Check for latest scam news at our site. Scams can be of any type, binary options scam, cryptocurrency scam, pet scam, romance scam, investment scam, etc.
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FAQs
Top three signs you might be dealing with a forex scam
- Unbalanced claims. ...
- Requests for money. ...
- Lifestyle pictures or testimonials from “successful” traders. ...
- Unregulated (or lightly regulated) forex brokers. ...
- Binary options. ...
- Clone firms. ...
- Social media scams and imposters. ...
- Scam signal providers.
If you are the victim of a forex scam, recovery will depend on a number of factors unique to your situation (such as your location and your country's regulatory body) and the circ*mstances of the potential scam broker (such as the alleged scammer's location and any applicable laws and regulations).
What is an example of a forex scam? ›
Offering to do a small favor for you in return for a big favor. "I'll give you a break on my normal forex commission if you buy now—half off." Creating a false sense of urgency by claiming limited supply. "There are only two units left and the Asian market is about to open, so I'd sign up today.”
What to do if you are a victim of a forex scam? ›
Many individuals have been victims of forex scams. To recover funds, report the scam to authorities, contact your financial institution, and seek legal advice. To avoid future scams, be cautious of unrealistically high returns, research brokers thoroughly, and only engage with regulated and reputable entities.
How to spot a forex scammer on Instagram? ›
Too Good to Be True: If it sounds too good to be true, it probably is. High returns with little or no risk are a classic sign of a scam. Educate Yourself: The more you know about forex trading, the harder it will be for scammers to deceive you.
How do you track down a scammer? ›
Employing digital forensics, exploring social media trails, and utilizing reverse search tools are among the methods one can use to uncover a scammer's identity. It is important, however, to remain within the bounds of the law; any attempt to track down a scammer should not involve illegal activities.
Is forex legal in the US? ›
Are Forex Brokers and Forex trading legal in the U.S.? Yes, forex brokers are legal in the U.S., but they must be registered with and regulated by the Commodity Futures Trading Commission (CFTC) and be members of the National Futures Association (NFA).
What is the lawsuit against my forex funds? ›
The CFTC sued Kazmi and My Forex Funds, also known as Traders Global Group Inc., in September. The agency alleges that the business charged over $300 million in customer fees by falsely promising to grant retail investors access to the forex market.
Do banks refund scammed money? ›
If you've transferred money to someone because of a scam
This type of scam is known as an 'authorised push payment'. Your bank or building society should reimburse you if it's registered with the Lending Standards Board under their Contingent Reimbursem*nt Model Code (CRM Code).
Is there a forex scam? ›
Many scams in the forex market are no longer as pervasive due to tighter regulations, but some problems still exist. One shady practice is when forex brokers offer wide bid-ask spreads on certain currency pairs, making it more difficult to earn profits on trades. Be careful of any offshore, unregulated broker.
Scammers are attracted to wealth. Most Forex trading scams make unrealistic and quick returns by deploying "secret algorithms" or sophisticated bots that trade on your behalf. It's crucial to confirm that the forex broker you're using is legitimate and subject to dependable financial authorities' regulation.
Why forex is not a scam? ›
One common misconception is that Forex trading is a scam, primarily fueled by stories of people losing money. However, it's essential to recognize that trading, like any investment, carries risks. Forex itself is a legitimate market where currencies are bought and sold.
Who can I talk to after being scammed? ›
If you or someone you care about is the victim of a fraud, scam or financial exploitation, you can report the fraud or scam to the Federal Trade Commission (FTC). Because all scams are different, you might have to reach out to a number of other local, state, and federal agencies depending on your situation.
How to recover money from a forex broker? ›
Recovering money from Forex scams is challenging, but you can take steps. Report the scam to regulatory authorities like the CFTC or FCA. Contact your bank and provide evidence of fraudulent activities for potential chargebacks. Seek legal advice and consider reporting to law enforcement agencies.
Can a scammer be traced? ›
Finding the person who scammed you can be challenging but not impossible. With the right approach, determination, and tools, tracing the scammer's digital footprint becomes feasible. Key strategies include: Reporting the scam to authorities for a professional investigation.
What are the signals of manipulation in forex? ›
A sudden and unexplained widening of spreads, especially during volatile market conditions, could be a sign of manipulation. Reputable brokers maintain consistent spreads, and any deviation should be scrutinized.
How do you identify a false breakout in forex? ›
Fake Breakout is a term used in Forex trading to describe a false breakout when the price breaks through a key support or resistance level but reverses its course and returns to its previous trading range.
How do you identify forex signals? ›
Signals are ascertained after analysing the currency pair's historical price movements. Trading signals are like forex alerts that inform you whether you should short or long a trade based on different timeframes, prices and market conditions. However, trading signals do not mandate taking an order based on the signal.
