The Art of a Binary Options Scam
Binary options, fraudulent “trading products” that are designed to part prospective investors from their money are very different from real options. In essence, they are simply a bet that the price of a particular asset will rise in a given time frame. If you win the gamble, the company is supposed to pay a fixed payout, within the 70%-95% range. If you lose, however, you not only lose the “payout” but the initial investment as well.
If this was merely the case this would fall under the category of gambling, something that millions upon millions of individuals do recreationally. However, that is primarily not the case. With almost all binary options brokers you are “trading” against the broker and not the market. The broker wants you to lose, or else the company would not make a profit. Even if the broker pays out your winnings he can easily govern your profit with payout conditions. This means that even if you have a winning formula, the company will just decrease the payout, ensuring you ultimately lose in the long term.
There is more to the scam
That, unfortunately, is not where it ends. Numerous “brokers” are notorious for spreading fictitious stories about their clientele making gigantic profits with trading robots. Almost all of them manipulate their price curves to prevent you from winning. What’s worse is even if you do win, many of them refuse to pay out, and ultimately drop off the face of the earth (with your money).
Now clients are left in with a major dilemma. To whom do they turn? To the police? To regulators? The answer to these questions is that it depends. Most of these binary options brokers are not regulated and are located offshore, allowing them to do what they want. Often in their terms and conditions, they concoct various rules that ensure they keep your money once they have it. When it comes to regulators such as ASIC or the FCA they are relatively useless as they cannot shut down the actual binary options websites and to make it even worse search engines such as Google allow these websites to appear in their search content.
Shouldn’t the banks put a stop to this?
Yes, they should. However, the banks, which should be the number one line of defense against these scams either do not know the extent of the problem or are turning a blind eye to their nefarious activities. Additionally, in order to process credit card, debit card payments most of the binary options brokers have registered a small company in an E.U. country.
Recovery scams
Unfortunately, fraud encourages more fraud. Various individuals targeted U.S. citizens who were swindled by the now-defunct brokerage, Banc de Binary, and a few other binary options companies that were being sued by the SEC or the CFTC (Commodity Futures Trading Commission). They impersonated SEC officials as part of an advanced-fee fraud scheme in which they deceived victims into forwarding them money. Approximately 95 individuals were targeted by this despicable scheme and 25 of them sent 235 thousand dollars in total to these swindlers.
Light at the end of the tunnel
There are numerous service providers that Broker Complaint Registry recommends. For those who deposited an online trading company via credit or debit card, MyChargeBack can certainly assist you. There are various law firms that can help as well. If you or someone you know was the victim of an online trading scam, submit a complaint here and we will do our very best to refer you to a feasible solution.
