There are three certainties in life. Death, Taxes, and scammers trying to scam people out of their money. Because of this, we are destined to see countless different scams in our everyday life. If there is something involving money, it is destined to be filled with countless scammers trying countless different methods to scam as much money as possible.
This might not be news to most, as there are some really famous scams out there that most know and yet fall victim to. Financial scams such as the Pyramid schemes, Ponzi schemes, property scams, and many more are common occurrences. We can go look online or ask around, and we are destined to find one of those in a short manner.
But Forex scams are somewhat different from these common scams, and we need to approach them with caution. Since moving to the digital space, Forex has become filled with all kinds of scams, each better and harder to spot than the other one. In this guide, we will discuss common FX scams, and how to spot and avoid them.
Common Forex Scams List
- Fake Signal Providers
- Fake or unregulated brokers
- Social media scammers
- Caller scammers
- Fake help provider companies
- Scammers taking control
Fake Signal Providers
One of the most common types of scams is fake signals. When trading forex, making quick and right decisions is what determines the success a trader achieves. To get this early information, traders implement different charts, analyses, and patterns in order to find upcoming trends and find signals as to when is the best time to enter the market. But this requires expertise and not everyone is able to do this intensive research process. But these types of people who are not experienced enough to find these signals try many different things in order to succeed in the FX market. This is exactly when fake signal providers come into play.
If you are familiar with the sports gambling space, you most probably have seen people selling betting odds, and in essence, this is the same thing. Fake signal providers are people who are disguising themselves as experienced traders and offering people really lucrative Forex market signals that are destined to generate good profits. But in reality, these signals are some made-up stuff that these fake traders came up with. So in the end traders who bought these signals end up being scammed of this signal money, and also they end up losing the money they invested in believing these signals.
In order to avoid being one of these victims, it’s always the best option to learn how to do the analysis yourself and rely on yourself. But if you believe that you will not be able to do that, only believe in signals provided by famous traders who have a big following and are well-established names in the FX market.
Fake and unregulated brokers
This might be one of the most famous scams out there. There are countless different fake and unregulated brokers out there who try to take advantage of unsuspecting victims. We can split these websites into two types and let’s discuss each type individually.
Fake brokers are brokers that try to make traders believe that they are someone else. These types of brokers are copying the design of famous broker websites and using URLs that look similar to the original one, usually changing one letter or using different domain extensions.
What these types of scams aim for are unsuspecting victims who think that they are joining a famous broker with a good name. When it comes to actually scamming people, it’s usually done in one of two ways.
One way they do this is by making these users deposit funds into their accounts. Once these funds get deposited into the accounts, accounts might get credited with fake balances which can not be withdrawn, or they are not credited at all, and traders realize that they have been scammed.
The simplest way to avoid this kind of scam is to double-check the website link every time you visit the broker, even if you entered it manually.
The second type of brokers that we need to keep an eye out for are unregulated brokers. Since Forex brokers are dealing with money transactions and interact with the international financial market, they are regulated by different government agencies. What these regulations mean is that they have to follow certain rules and laws, and they cannot do anything illegal as they are looked at by government agencies.
So when there is a broker that looks interesting, has lucrative offers, low spread, low fees, and other attractive offers but has no regulators, in almost every case scenario these are scam brokers that are praying on inexperienced traders. Some of these fake brokers might even tell you that they are regulated by a certain regulator, but in reality, they are not.
So to avoid falling victim to these kinds of scams, always check what regulations each broker has. But since some scam brokers provide fake information, you would need to double-check that as well. Whenever a broker says that it is regulated by a certain regulator, they will need to provide a registration code. Once you find this code, you can visit the regulator webpage and check if the code is valid and if this regulator really regulates this broker. If the code comes back clean, then once again double-check the website URL and if that’s also in order, you are safe to deposit your funds there.
Social Media Scams
Everyone knows that social media is filled with countless scammers. Almost 5 billion people worldwide use some sort of social media, so it is one of the best ways for scammers to reach a wide range of people to scam. One of the most commanding social media platforms used by Forex scammers is Instagram.
There are countless Forex scam Instagram accounts, and it’s relatively easy to spot them with a good eye. You might have seen Instagram accounts where a person uploads photos of themselves with expensive cars and watches, visit expensive restaurants and hotels, and do other activities that make them look rich. Then, once we look at their bio, we will see that they are declaring themselves as millionaire Forex traders. Then they will talk about how they help people make money and lastly provide links to their paid courses. In the end, these courses are some made-up strategies and ideas and don’t help newcomers learn anything new.
So how can we avoid these types of scams? Well, it is the easiest scam to avoid. Don’t buy online courses from someone who only has a famous Instagram account. Just do simple research into the person in question and see if they are actually legit, or someone pretending to be a trader.
This type of scam might be the most popular. Have you ever received a call from someone telling you about great investment opportunities? If your answer is yes, then you have dealt with this type of scam.
There are countless Forex scam WhatsApp calls where someone is trying to convince people to register on a specific broker’s website and make an investment into a specific asset. These types of callers usually make you register an account on the fake broker website that we discussed earlier. These callers are usually good talkers, and they know how to lead the conversation in their way.
So how can we avoid this type of scam? Simply ignore the calls and don’t answer them. If you were to answer this unknown number and realize that they are offering you an investment opportunity, simply hang the call and block the number. Never go into conversation with them, even if you know that they are scammers.
Fake help providers
This might be the most creative scam out there. So what happens when someone gets scammed by the aforementioned scams? They try to find a solution and get their money back of course, and this is where this creative FX scam comes into play.
There are a big number of so-called help providers that give people, who have been scammed, promises that with their help they will be able to retrieve their funds. This is a creative approach because these companies know that these people have already been scammed, and they are easy targets. They take this knowledge to their advantage and scam these people out of even more money.
One of the best ways to avoid these kinds of scams is to always pay attention to the company. Look into their background, search for some information on them, and only after you are certain that they are a legitimate company, can you trust them.
Scammers taking control
This is probably another popular way people, especially those that are unfamiliar with computers, get scammed. Since the FX market moved to the digital space, people who don’t have huge experience with computers and want to trade on the Forex market often run into problems.
This is where these scammers take over. Most of them show themselves as the supporting staff of a certain broker with the goal of helping them around. Once they go into conversation these hackers confuse unfamiliar people with some strange terms in hopes of giving them the idea that him doing this whole thing would be faster. Once a scammer takes these traders to that conclusion he uses different types of software to access their computers and steal their money with them thinking the scammer is helping them.
One way to avoid this type of scam is to never give someone access to your computer. If you are approached by someone from the support staff, always check if that person is actually associated with that broker by his email or other identifiable detail.
What to do if you have been scammed in Forex
If you ever fall victim to the FX scam, there are multiple steps you can and should take. But know one thing for sure, it is somewhat unlikely that your money will be returned.
When this happens, you should first make an official police complaint. This is unlikely to show any results, but an official police report might help on the way. If other financial regulators and companies start to look into your case, there will be an official report, to back up your claims.
Once you do that, you should contact the supporting staff of every financial website/program, card provider, and bank you used when making this transaction. Then learn if it is possible to charge back the transaction you just made.
If you do that and the answer is no, you can contact the local financial overseeing authority. These government organizations oversee the most financial dealings going on in your region, and they are most likely to know if any scam took place.
How to avoid scams
As we learned from this guide, there are different popular scam methods out there, each of them needing a different approach. But here we will go over the basics of how to avoid scams on the FX market, and these will be effective in almost every scam out there.
- If it sounds too good to be true, it probably is.
- Whenever dealing with any financial broker or person on the financial market, always make sure that you can gather some information on them to confirm their safety.
- Never believe someone randomly giving you an FX investment opportunity.
- Use different levels of security for your financial tools.
FAQs on Common Forex Trading Scams
How to identify Forex scams?
If you are dealing with a broker, always check if they have regulations. You can even double-check the registration number on the regulator’s website. Lastly, look at the URL and check if every letter is in the correct place. If you are dealing with a person, it is generally advised not to believe and deal with them at all, and if absolutely needed, then double-check their information.
How do I know if a Forex broker is legit?
Every single legit Forex broker has at least one regulation in place. What this means is that there is at least one government agency regulating this broker. Each broker provides a registration number, which you can confirm on the regulator’s website. After that double-check the URL and you are good to go.
How not to be a victim of a Forex scam?
One of the best pieces of advice is that if it sounds too good to be true, it probably is. Don’t believe in everything you see, double-check everything. When dealing with brokers, check their licenses. And never deal with actual people, outside the support staff, contacting you through official channels.