Traders have a wide range of options. However, you should exercise extreme caution, as not all of them are trustworthy. A large number of Internet brokers are unregulated. It’s essential to keep out those with whom you don’t want to trade.
There are also many regulated financial derivatives brokers available; because not everyone’s work is transparent, not all of them are the best choice.
And how do the dishonest rob you?
What is a Binary Option?
It is a contract option in which the payout wholly depends on a “Yes” or “No” proposition. It all depends on whether the price will rise or fall for a particular asset. There is a set price that decides your profit or loss.
The first choice is your last choice, as you can exercise the binary option only once. The trader will not have any choice after accepting the trade because binary options exercise automatically.
Once a binary option is selected, the holder will not have any right to buy or sell the designated asset. There are two types of payout once the binary option expires like the trader will receive a pre-decided amount of cash or nothing.
Binary Options frauds explained:
The binary options market majorly operates through digital trading platforms. However, many such trading companies do not comply with the countries regulatory requirements.
Such types of companies cannot be ruled out of indulging in illegal activities. These Internet-based binary options trading platforms often come out with fraudulent promotional schemes. The Investor should be thoroughly aware of the brokering company that they are in investing in.
Some Complaints from Various Investors are as follows:
#1 Refusing Credit/Reimbursement of Funds to The Customers
These situations are common, which arise when the customers have already deposited money in binary options trading account. Employing telephonic calls or emails, the brokers coerce the customers to deposit extra funds in their accounts.
Later on, when the customer tries to withdraw their original deposit/returns, the trading platform cancels the withdrawal request. They will block your calls, emails and refuse to credit the amount to the respective account.
#2 Identity Theft
There are other types of complaints received by the regulatory bodies. The binary trading platforms on the Internet can collect customer information like credit card details, passport details, driver’s license details.
These are valuable information that, at any cost, should not be given out. The trading platforms can use this data for illegal purposes. Hence it is advised not to divulge any personal data.
These scammers can also falsely claim that they need photocopies of your utility bills and other personal data. One should not oblige to these requirements unless they are sure of the company.
#3 Software Manipulation
The binary options trading platforms can Manipulate software to show losing trades. This type of fraud leads to distorting the binary options prices and payouts.
When they see that the customer has a 100% chance of winning, the software extends the expiry time so that the trade results in a loss. So again, it is a loss to the customer but again to the trading platform.
#4 Inflated Investment Returns for Binary Options
The internet platforms dealing with binary options can inflate the investment’s average return. They will advertise a higher investment return on the customer’s investment and the laid-out payout structure.
They will cheat you by designing the payout structure so that the expected return goes negative. This results in a net loss to the customer.
#5 Background Check of the Firm or Broker
The first basic rule for an investor is to check for the trading firm or brokerage company they are investing in. This includes license and registration status.
If you find that they are not in registration with the country’s regulatory body, you should not invest your money with that broker. They might give you a good return for the first time, and it will entice you to invest more the second time and get conned.
One more important thing is not to share your personal information or invest money on the first go. The moment you see that they are not registered or licensed, you should not trade with them.
#6 Sales Pitches
The employees of binary options websites often use fake names assigned to them. They can even be from a different country and putting on an accent. In addition, they will give out fake qualifications, titles, and even experience.
They will entice you to invest your money in their platform by stating that the company you are currently investing in is fraudulent. Such scammers try every bit to gain your trust and coax you to deposit your money in their company.
#7 Gratuitous Offers
The fraudsters often deploy offers that seem unreal. For example, they state that the investment returns will be high, far from being true. This is a red flag that indicates that this investment scheme is a fraudulent one.
#8 Threats and High-Pressure Sales Tactics
The representatives of the binary options website you are dealing with or are planning are highly trained. Therefore, they will gain your trust and can state that they have to reach their target and make you invest more.
There have been instances wherein they threaten various legalities, like filing a lien against your property, etc. all these are a part of a bigger plan to swindle you off your money.
#9 Turnover of the Assigned Broker
At one time, you will be in touch with ABC, and in a short span, you will hear from XYZ. When you ask the reason, the staple answer you can get is that the former broker has been relieved of his services.
10# Withdrawal Issues
The most common way of cheating you from earning your returns is delay tactics deployed by the company. They hold up your withdrawal request and delay it to the point that you will not be able to even dispute the charges with your credit card company.
There is also a scheme called “Premium Account.” The broker will convince you to pay more money by offering very few restrictions on withdrawals.
#11 Fraudulent Activities on your Credit Card
When you use a credit card to fund your binary options account, you should always check your credit card statements. The company can cheat you with unauthorized charges on the account.
Never even sign a form that requires you to waive any rights regarding dispute any credit card charges. Read the form carefully and never authorize such a right. One should always report unauthorized charges to the credit card company immediately.
#12 Government Impersonators
At times the brokers even claim to be associated with the Regulatory body and ask you for money to recover your returns. The Regulatory bodies and Governments are aware of such frauds, and they set up dedicated hotlines and websites wherein you can report any wrongdoings.
Frequently Asked Questions
Is Binary Option safe?
Binary Options are considered a safe investment. However, when investing in this money instrument, you have to research and see if you are investing with a legitimate provider.
Has anyone made Money from Binary Options?
A trader with high knowledge of the market can make money by investing in binaries that will expire in the allotted time. One should always learn to read the candlestick charts, which provide information on the movements of prices in the past.
Can You Lose Money in Binary Options?
Binary options are straightforward, but they all depend on the company/website you are investing in. Many of the investors lose money either through cheating by the broker or other factors. It is nothing but gambling.
There are reports where on some platforms, customers have lost up to 80% of their investment. However, it can be profitable if the investment is made by performing a thorough background check and license/registration.
What is Wrong with Binary Options?
The Regulatory bodies keep receiving numerous complaints of fraud with Binary trading websites. These Internet-based trading platforms offer various opportunities to buy or trade binary options, which are all fraudulent.
The most common complaints that are received fall into the category of refusal to reimburse funds to customers and refusal to credit customer accounts.
As there are two sides to a coin, investing in binary options can be profitable or loss-bearing. No amount is big or small, so before investing, you have to research and go ahead.
In this article, we have listed how the Binary Options websites can con you with your investment. It is better to imbibe this article and put it to use when you are trading in Binary Options.
You are highly likely to get cheated by a Binary Options broker if you do not follow the set protocols.