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Forex scams include creating falsecustomeraccounts for the purpose of generating commissions, sellingsoftware that is supposed to garner large profits for the customer, false claims of customers making huge money, the theft of a customer’s account and phony marketing. Forex scams draw customers in with sophisticated advertisements placed in the newspaper, heard on the radio, or seen on internet websites. Forex promoters often
lure investors into scams with various assurances, including their ability to predict an increase in currency prices and claims of highreturns with low risk. An unregulated financialcompany trading off-exchange Forex, foreign currency futures and optionscontracts with retail customers is illicit and may be a fraud or scam. In many cases, investors may be guaranteed high returns in the tens of thousands of dollars over a few weeks or months, with a relatively low initial investment. In reality, the investor’s money is never used for forex trading, but is simply stolen.
The company guarantees profits or claims unusually
high performance: Anybody claiming to give you a 30 or 40% return in two months is promising something that they cannot deliver. These claims of massive profits are false and are basically tactics to lure in your money.
The company downplays the risks involved with currency trading, or tells you that a written risk disclosurestatement is just a routine formality imposed by the government: Always be wary of statements claiming that a company will recover your loses or that your investment will remain safe. Forex trading involves a high amount of risk, and you may end up losing all or part of your money in it. Do not put any money which otherwise you cannot afford to lose.
The company operates on an interbank market: Stay away from companies which lure you into trading in the interbank market at better prices. In the interbank market, mostly speculative and short-term currency transactions are negotiated in an unstablenetwork of large companies and banks.
The companies wants you to send or transferring cash to them via the the Internet, mail, or non-physical location: Steer away from sending your money online to companies providing online forex trading. These phony companies are located overseas and are created with the sole aim to defraud investors. If the company does not have a physical office near you, be wary.
Currency scams targeting members of ethnic minorities: Ethnic communities, chiefly
in the Russian, Chinese, and Indian immigrant communities, are lured by scammers who place advertisements in ethnic newspapers and television infomercials. They promisejob opportunities and end up using your own money for their own currency trading.
The company makes it difficult to get their performance track record: Be skeptical of forex trading companies that provide no or incomplete information about their performance history. All reputable forex trading websites, companies and brokers are a member of the CFTC or the NFA. Even if the sham company provides a glossy brochure with false information, check with CFTC or NFA to see that the company is a member of one of these organizations before dealing with them.
It is difficult to get background information on the company: Don’t deal with anyone who won’t readily give you their background information. Use the CFTC and investigate the company or broker you are thinking of doing business with by checking their fraud alert pages.
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