When an industry is growing as big as the binary industry is, it is unfortunately very common that scams occur. Nowadays scammers are relying on the innovative tactic of faking the fact that they have a license when they don’t.
Regulators Facing Many Challenges
Just recently IFSC, the regulatory body in Belize, warned about a broker YieldOptions who was claiming to be properly regulated, when in fact, all information on the website regarding this topic was fake. In the meantime, YieldOptions removed this information from the website.
Also, Hong Kong’s regulatory body SFC warned about FXGlobal1, a forex broker who is not providing sufficient data for traders – only one telephone number. Find out more about FXGlobal1 warning.
Manipulating with business data is seen as a major offense by all binary options regulators, as traders often find it impossible to research further, especially when it comes to beginners. Most of them don’t even know who the authorities are, and how to approach a broker for more information.
The number of scam services is increasing, and regulators are having more and more challenges in front of them. The binary industry is developing extremely fast and there are innovations implemented every few seasons. They have to follow those improvements, take care of customers, supervise regulated brokers, prosecute scam brokers and frauds and implement all changes ordered by governments and other legal entities.
This creates the perfect environment for scam brokers to operate and take advantage of traders’ naiveté thanks to data manipulation.
Fake License Binary Scams
The practice of claiming to have a license is just a further level of already well-known scam that involves fake certificates. While some false brokers prefer to decorate their websites with fake seals and awards, other have more courage and claim to have a regulated status.
How to Recognize this scam?
In most cases, scam brokers use one of these two methods, explained in the text below.
Scam brokers simply invent a license number and add it to the website. Sometimes they even make up the regulatory body or mention government entity that is not even in charge for binary trading but sounds legit. For example, the bad broker will claim to be regulated by Tax Commission, when in fact, binary options in that country are regulated by the Financial Agency.
There are also scams that claim to have a connection with some reputable broker and simply use the license belonging to other company. All these practices are unethical towards traders and competition.
How to Check if the License is Real?
Binary options licenses have a specific form – it is a code consisting of numbers. There are scam brokers who put random numbers as their license number, and those that steal number belonging to some regulated broker. On the picture below, readers can see different licenses obtained by Banc De Binary. All these numbers are easy to find with local regulators named.
We will explain how to check the true status of the broker on the example of Banc De Binary, whose CySEC license is no. 188/13, and is in the ownership of BDB Services Ltd.
Traders simply have to visit CySEC website and find a list of investment firms. In the search field, they can type the name of the broker, or do an alphabetic search. In case the broker is really regulated, the results will show up. When trader clicks the name of the broker, he will be apple to find out more about the broker, like on which markets is he allowed to offer services.
This search process may differ from regulator to regulator, but keep in mind that all of them also provide customer support that will be happy to provide users with good information.
When Broker Steals from Another Broker
If traders encounter a situation when one broker claims to have connections to the second broker, it is possible to contact the broker who originally holds the regulation license. Customer support will be more than happy to provide the trader with correct information.
Also, in case that the scam broker really is stealing business information, the regulated broker will probably react and prosecute the scam.
Scam Brokers Using False Data
Many brokers operate on several addresses, and that is nothing to be concerned about as they are multinational companies and it is natural to do so. However, some brokers take advantage of that fact and try to misguide traders by using false business information. How this case looks like, will be explained on the example of FXGlobal1, forex broker that is caught the attention of Hong Kong’s regulator.
According to SFC warning, they simply didn’t provide enough information for traders from Hong Kong. There was no address listed, only the contact phone.
Further investigation by FBO team showed, that they claim to be licensed by FSA. Things get suspicious as we know that FSA is not a regulatory body in Hong Kong. They never point out in which country they are regulated, which means that this information could be fake. British FSA stopped existing in 2013, China doesn’t have a regulatory body under that acronym, so it can make a trader wonder what is going on.
What to Do to Avoid This Scam?
The best way to avoid scam that involves using false business data is to know the market. There is also the possibility of trading with safe brokers, like those on FBO Top List
Traders should get familiar not only with trading terms and options but also with the legal framework within which binary brokers operate. It is of crucial importance to understand who the regulators are and how binary trading is defined. There are many articles ready to help you with this issue:
- How to file a complaint with CySEC?
- Binary Options Regulation
It is also always recommended to research the broker before making a deposit. Try and find the regulator’s page and see is the data provided real or not. Also, read forums, reviews, and other reliable resources.
Make sure to read terms and conditions and understand what is going on. Also, ask the customer support whatever you want to know. Reliable brokers have the professional support that will give you the information you need as soon as possible.
Conclusion
At the first glance, all brokers look the same, but just a quick investigation can protect traders’ money from the scam. Never hesitate to research and take the time needed in order to make the right decision.
Good news is that regulators are also noticing this concerning trend, and they, more than ever, are extensively working on informing the public about such practices.
Traders from all over the world can hope that international cooperation among regulatory bodies will only increase and that traders all over the world will be safe when trading binary options.