Binary options scams appeared as soon as the number of people interested in Forex binary options trading grew. Many end up being blinded by the promise of quick and easy profits and don’t take the time to consider whether the offer sounds too good to be true. In most cases, they usually are.
As a rule of thumb, you must always ask yourself how a company can profit from the offer you’re considering. No matter how much they care about their customers, a business is still a business, and they will want to make money just as much as you do. If their offers don’t make sense from a business standpoint, you may want to steer clear.
There are extensive lists of known scammers, and these records get updated regularly. Below are some of the most common binary options scams these companies use to trick traders. This review is not meant to scare you off. There are many safe Forex brokers out there. This guide can help you spot those who aren’t.
1. Advertising Additional Tools
The Scam: The trading platform itself works as intended and has all of the necessary security measures in place. However, they attempt to siphon money from their clients using third-party apps and tools which they aggressively advertise to their customers. This software promises to increase profits and make your life easier.
Once these third-party apps are installed, they start asking for additional payments and information, or just don’t have even half of the features they were supposed to.
Bear in mind, not all third-party apps are necessarily a scam. There are plenty of tools that can make binary options trading genuinely easier and more profitable, such as live signal providers. But not all of these providers are legit. Though the trading platform might be perfectly safe to use, these tools might not. And its legitimacy can trick you into buying into binary options scams in a roundabout way. When it comes to Forex live signals, you should only use the best and most well-know signals providers.
How To Avoid It: First, you should ask yourself whether that tool or app is genuinely useful for you or not. You should also be extra cautious with apps that promise far too much. Often times, the actual functionality of the app is not going to be as impressive. Or the genuinely useful features will only be available by paying additional fees to unlock them.
Another thing that’s worth considering is whether the app truly performs a task that the basic platform does not. Many of these companies provide traders with the same tools you could find amongst those offered by the trading platforms themselves, but in a more appealing form. Reliable Forex trading companies will always give their clients almost everything they could possibly need to get started.
2. Your Free Bonus Isn’t Free
The Scam: The company offers a free, no deposit bonus upon creating a new account. At first glance, the bonus has no strings attached. Just sign-up, request the bonus and receive the deposit immediately.
The offer states that they provide this bonus to encourage new clients to start trading immediately. But while you may receive it in order to begin trading, you will need to have a certain amount of money in your account. And the bonus does not cover it entirely, so you still have to deposit additional funds.
After you do, it becomes impossible to withdraw the bonus or your investment.
How To Avoid It: For this scam, it’s good to refer to the rule of thumb. How can the company profit from this offer? If it looks as if they are losing money, they might have a trick up their sleeve. In general, it’s best to opt for platforms which clearly describe how their offers and promotions work and which are know for offering good no deposit bonuses. If their descriptions are vague and ambiguous, it’s better to miss out on that opportunity and look for something better, rather than becoming a victim of binary options scams.
3. Withdrawals Are Gated
The Scam: Not all of these situations are scams. Sometimes, companies find it useful to establish a minimum trade fee until clients can start withdrawing money. Once they have reached that sum, they can easily start taking money out of the account.
However, scammers use this legitimate practice to get more money out of their clients without giving anything back. A needlessly convoluted withdrawal system that depends on way too many factors is usually a red flag.
How To Avoid It: Unfortunately, it can be difficult to spot this scam before setting up an account. It’s rare for scammers to advertise this complicated withdrawal system on their website. If they have a customer care department, you can request more information about it. They should provide you with all of the information you need. If you feel like something is off, or they try to avoid giving your relevant details, it’s best to avoid that particular platform.
4. Account Is Shut Down for No Apparent Reason
The Scam: Many traders who have fallen for scams complain about their accounts being shut down after they deposited money in their account, or tried to withdraw. They received no reason as to why and the company stopped answering their emails. They no longer had access to their funds and there was nothing they could do about it.
These types of binary options scams are unfortunately very common. And once it has happened, there is not much you can do about it. These scammers usually specify in their Terms of Agreement that the company reserves its right to shut down accounts without prior warning and without giving a reason. If the client has agreed to these terms, then there is nothing they can do.
How To Avoid It: First and foremost, read the contract carefully before agreeing to anything. Even legitimate companies have the right to shut down accounts. But they should clearly state in their rules and regulations the reasons for disabling them. If it is not clearly stipulated in the Terms of Agreement, ask their customer service representatives for clarifications. If they do not give you a clear set of conditions that qualify a user to lose their account, it’s best to move one to a more transparent Forex trading platform provider.
General Tips on Avoiding Binary Options Scams
Before creating an account with a binary trading platform, make sure their policies are clearly stated on their website. If they lack relevant information, ask. They should disclose anything that could affect you as a client.
You should also check to see if the company in question has the necessary license(s) to operate. And also whether their activities are monitored by a trustworthy international authority.