What we cover here
How do I know if a Forex Broker is legit?
Forex fraud is rampant and can be hard to spot. Whether you’re already trading or thinking about trading, this article will show you exactly how to identify a Forex scam.
Are issues withdrawing your money normal? Should your broker be calling you multiple times a day? We’ll be answering these questions and more as we explain how to identify a Forex scam.
We’ll be doing this using accurate, up to date, proven data and case studies from our network as we go through an easy step by step process on how to identify a Forex scam. If you’ve already been scammed and you want to know if you can get your money back, send us a message here.
If you are considering a specific broker, you owe it to yourself and anyone dependent on you to proceed carefully.
Too many people lose their money to broker scams every day. We know from our extensive research that by using these 7 telltale signs, you’ll be able to know right away if the Forex company that you’re considering is legit.
The list that we’ve compiled below is a progressive, meaning that the level of indication that the company is a scam will be increasingly telling as we go along.
Let’s get started.
Seven signs of How to identify a Forex Scam.
Sign of a Forex Scam Number 1
1) Withdrawal problems – Or withdrawal Frenzies as one Forex scam victim depicted it.
Forex scams absolutely love to push their clients to deposit money into a trading account. What Forex scams seem to hate is processing withdrawals for their clients. From hundreds of stories told directly from actual victims, the single most consistent metric across the board was the following.
Legitimate Forex brokers allow their clients to withdraw their money freely. If you’re having a hard time withdrawing your money, it’s most likely a scam.
The Common Denominator between all Forex Scams
The brokers always reacted negatively to any mention of withdrawing money.
The broker always showed resistance to even the mentioning of a withdrawal. Often withdrawals were outright denied, but in every case that a client asked for a withdrawal it became a point of contention.
Many victims reported that the broker would show anger and disappointment to the victim if they dared mention withdrawing their money, or even just the earnings!
How can I check if a broker will honor withdrawal requests?
The best way is to check the reviews. This way you’re getting the real picture through clients that have already dealt with the company. If a broker allows its’ clients to withdraw their funds in a timely manner it will reflect in the reviews. Unfortunately the opposite is also true and it’s often much easier to find the withdrawal issues. Below is an example of a broker that does not honor withdrawal requests.
This is one of the clearest signs of a Forex Scam. Unfortunately this sign is often only apparent once you’ve already deposited your funds.
Summary of Sign Number 1:
If a broker refuses a withdrawal is that a sign of a scam?
Refusal to provide a withdrawal to a customer from his or her own account is a sign of a scam. Forex companies, investment brokerages and other financial institutions are all required to provide full disclosure to clients, including honoring withdrawal requests upon receiving them.
Guideline for those already trading: If upon requesting a withdrawal, the tone of the “broker” changes. Or if you are told that it is a lengthy process, or that it will hurt your account. Any kind of strange response to a request to receive your own money is a strong indicator of a Forex Trading Scam. At the first sign of this kind of behavior, you should consider recovery options right away including raising a chargeback dispute. If you need guidance with this let us know and we’ll do our best to advise you.
Sign of a Forex Scam #2
2) The sales techniques are so aggressive that it’s hard to take them seriously
(but they are somehow really convincing nonetheless)
Forex trading scams like to operate as similar as possible to legitimate trading companies. They have sales departments whose jobs are to contact clients through phone and email and persuade them to invest using their trading platform.
While a salesperson from a legitimate brokerage may be on the aggressive side, Forex scam salespeople take their job to the next level. The reason for this is that they’re not operating with any moral code and the only goal that they need to accomplish in-order to keep their job is scam people out of their money. That being the unfortunate case, they do this using any means possible.
If you are dealing with a broker who calls you nonstop and is very manipulative, this is a very telling sign of a Forex trading scam. You should definitely do more research on your broker.
You can also contact us and we will do our best to offer our assessment of the company.
A legitimate broker will reach out to his or her client every so often to offer his service or assistance, however most of the communication with the broker is and should be initiated by the client. If your broker seems to be reaching out to you more often than you reach out to them and every time he or she contacts you it’s because of another “important opportunity”, this may be warning sign and caution should be taken.
Can I get my money back from a Forex trading scam?
Funds that were lost to a Forex Trading Scam can be recovered in some instances. If a credit card was used it may be possible to file a chargeback against the company. It is also possible in instances where the broker is regulated.
Pursuing a chargeback as well as going through a regulator can be daunting tasks especially taking into consideration that many fraud companies are preparing for the backlash from the time they begin operating.
For more information on the above contact us here.
Sign of a Forex scam number 3
3) The broker has tried to manipulate you into depositing money when it’s clearly against your best interest.
(you’ve explained to the broker that you just don’t have the money and he just doesn’t seem to care).
In addition to the aggressiveness that we covered in number 2, this sign that your Forex company is scamming you is unique for one very compelling reason. That is because every scam victim that we interviewed or heard from all said this same point regarding their experience with the Forex scam. The broker was not bothered in any way to convince me to put more money in, no matter what I told him.
Every scam victim that we interviewed all said this point regarding their experience with the broker.
“It was like the broker didn’t hear me every time I said I don’t have any more money”
The broker came off as though he or she was their friend, showing interest in their personal life, their family etc. When it came to the part of the call (almost every call) for the broker to make their ask. Namely to ask the client for more money. The conversation always continued longer than was comfortable (or reasonable) and it always led to the broker convincing the victim to deposit money, even after the victim stated that they had no more money to deposit. The broker had no regard or simply didn’t believe the victim and kept insisting that the victim “came up with” more money to deposit.
In a study of over 2000 cases of Forex scams, a staggering 45% of the victims stated that the broker outright told them to take out a bank loan because this investment opportunity was one that they just couldn’t miss.
Summary: If you are told to deposit more money into your account after you have repeatedly told the broker that you don’t have any. It is a scam.
There is often a very thin line between an aggressive salesperson and a scammer. Both of them have the job to persuade potential clients into buying their product. Both of them should be morally obligated to hold the line of persuasion without entering into manipulation. Unfortunately it can be difficult to tell the difference.
Having said the above, it should now be very clear when it’s time to hang up the phone.
Is this a sign of a Forex Scam?
Rating: 10 out of 10 (it’s definitely a scam)
(in the off chance that the broker is regulated and “legitimate” we would still consider this in the scam category)
Pushing a novice trader or investor to take out a loan to place a trade is a textbook example of a Forex Scam
Word to the wise: A good salesperson may lead you into areas that are outside of your comfort zone, but if they have any integrity they’ll always let you make the decision. If you feel that you’re being pushed to do something that is very far from what you believe would be your best interest, it is a likely sign of a Forex scam and you should look into it further before depositing any amount of money no matter how the broker makes it sound and no matter how urgent he or she says it is.
Sign of a Forex scam number 4
4) The company is not Regulated
If an investment company is not regulated by a government authority or a legitimate regulatory body, it is 100% a scam. This is not a warning sign, or reason to be cautious or any sort of red flag. This is a stamp of scam approval that the company that you are dealing with is a scam and they will steal your money guaranteed if you let them..
Financial institutions must be regulated, there are dozens of reasons for this but we’ll start with the basics. Assume for a moment, that all businessmen are honest (which unfortunately is not true). When it comes to taking money from people to invest in a platform which is controlled in house, the room for misuse of funds is everywhere.
At any given moment with less than perfect planning, a company can run into a situation where they require more cash on hand than they have for the cost of operations (this is called working capital). A Forex trading company’s revenue comes entirely through accepting funds (often in large amounts) from clients. From that revenue a legitimate Forex trading company will get to keep through spreads and fees. If the company is a market maker, which is technically a legal construct, then the company will make money if clients lose money on trades.
If a company is accepting funds to “hold” inside of the company’s account. One can imagine that even with scrupulous accounting, the room for suggestive reasoning/risk taking could bring a company into questionable territory very quickly. This is actually how most Ponzi schemes begin. Even when the owners of the company have good intentions, things can get out of hand very quickly.
Clearly with the above mentioned pitfalls, it’s very understandable why Forex trading companies need to be held accountable. (The same applies to banks being regulated).
If a Forex company is not regulated does that mean it’s a scam?
A financial institution that operates without a license or regulation is definitely a scam. Every country in the world requires financial institutions to be held accountable for their handling of money and advisory practices.
Summary:
If a Forex trading company is not regulated, there is very little keeping the owners of the company from closing the doors and disappearing with all of the “company” funds.
Therefor a forex company operating with no regulation is a sure sign of a Forex scam.
Unfortunately, due to the large scale lack of awareness of the dangers of unregulated Forex brokers. Trading Scams have popped up in the hundreds and continue to be a source of scamming for criminals worldwide.
This part is very important…(Bonus information that you really need to know)
Forex scams are not new to the idea that a financial institution requires regulation. They know that many potential clients will be inquiring about their regulatory standing. They therefore have many clever methods that they use to deal with this issue. This often comes in the form of a foreign registration along with a foreign address. The Forex scam representative will try and distract the victim from the regulatory information and move their attention to the registration information. It’s a cheap tactic but unfortunately in many cases people have reported that it sounded good and they weren’t the wiser.
There are also fraud regulators such as the FSPC. The only reputable regulatory bodies that you can rely on in most cases are the FCA, ASIC, FMA, SEC and CySec (To a certain degree). If the company does not have any of these regulations it is most definitely a scam. As sophisticated as it may seem, not being regulated is a definite sign of a Forex trading scam.
Sign of a Forex Scam number 5
5) The Forex company is located in a remote European country
(or any remote location)
As we’ve begun to touch up on, Forex scams and any type of investment scams tend to operate in a way where the owners of the company are protected from prosecution and often from being caught.
One of the primary ways that Forex scams avoid being prosecuted is by registering their companies in a locale that doesn’t mind turning their heads to illegal or unethical activity. These locations tend to be small countries where corruption exists and government officials are able to be “persuaded” in the form of monetary compensation to allow scam companies to operate.
If you’re trading with a company that’s located in a remote island country where the government isn’t the most developed let’s call it. This is almost guaranteed to be a Forex Trading Scam.
We would recommend checking their regulation just to be certain. However if the company that you’re trading with or that you’re thinking of trading with fits the above description and/or is located in any of the locations in the below list of countries, and it’s not regulated. You can rest assured that you are dealing with a Forex trading scam and it’s time to either take action if you’re already involved, or stay far away if you haven’t yet opened an account.
Popular Locations for Scams
Here is a list of very popular countries where Forex scams love to register. (Please comment below with any countries that should be added to the list)
We’ve also included examples below of actual Forex scams that have operated or are currently operating from these locations.
Saint Vincent and the Grenadines
AZ Trades registration on website. (AZ Markets Ltd.)
Belize
Belize is an industry favorite for criminals to open their trading companies. 24Option is registered in Belize. As one of the most infamous trading shysters in the industry 24Option sets a clear example of the benefits of registering a company there. Their parent company Rodeler Ltd. is based in Cyrpus and regulated by Cysec.
24Option Company Information: https://www.24option.com/
Email: info.int@24option.com
Phone +357 25 262063, Fax +357 25 030329
Another example of a Belize based fraud operation is Xtrade Online Trading. XTrade is a full blown trading scam that is registered in Belize and is authorized and regulated by the IFSC (International Financial Services Commission) in Belize. (The IFSC is about as reliable as the Belize government.)
The XTrade scam broker is owned by XTrade International Ltd.
This trading scam even has it’s own trading app and 2 explainer videos to go with it!
We recommend the information contained in this video over the one above.
We don’t recommend reaching out to this company for any reason other than to demand your money back.
Email: info@xtrade.com Phone: +44 2038074001
Website: https://www.xtrade.com/
Commonwealth of Dominica – Popular Scam Location
Concept4x scam company info stating that the company is owned by AllGreen Capital Ltd.
Concept4x is located in the Commonwealth of Dominica and is a confirmed scam.
The Cook Islands – The Cook Islands is another hotspot for trading scams. Check out the following article to find out more about why the Cook Islands is a popular place for scams.
The Marshall Islands
The Toptradepro scam is located in the Marshall Islands under the name Ideas in Motion LTD.
Mauritius
LiveFXTrader is a good example of a Mauritius based Forex scam. LiveFX Trader made claims that they were regulated by CySec. Cysec subsequently issued a warning regarding LiveFX Trader.
Seychelles
IC Markets owned by Raw Trading Ltd registered in Seychelles. (IKBK Holdings Ltd. operating out of Cyprus).
Vanuata
IQ Options based out of Vanuatu
Sign of a Forex Scam number 6
6) The Forex company found you, you didn’t find them.
(and you won’t find them searching online unless you type in their actual name)
This is more of a subtlety, however it came up in our data and is a way of doing a reverse check. We’ll explain what that means.
Scam companies are not good at appearing in Google search rankings for their services because the Forex industry is full of legitimate trading platforms that populate the search engine results and offer real products, services and content.
How do Forex scams find their clients?
All of the traffic to Forex scam websites must come from paid marketing initiatives. This essentially means that unless you somehow know the name of the Forex company prior to seeing their advertising, you cannot find them. The only way for them to do business with you is if they find you.
Sure, legitimate companies use paid advertising as well. We agree that this is not the most telling indicator of a trading scam that we’ll list, but as a consistent part of the data that came up in our research, we thought we’d include it. It also may resonate strongly with those who have been targeted by a trading scam.
A search for a Forex scam company service or anything related to the Forex industry will never result in the company’s name coming up in the search results, certainly not in the top results. Meaning if you search “Forex trading platform”, the scam company will be nowhere to be found in the the search results. This is NOT because there are so many Forex companies, this is likely because they are a scam and have no chance at competing with legitimate companies and generally offer no real content value.
Legitimate companies like IG Forex, Avatrade and FXtrading.com populate the search results. Note: OctaFX has lost their regulation from the FCA and PRA. They are in the results because of their previous credentials.
Even at page 10, scam Forex companies are nowhere to be found.
How does the fraud broker find you?
In order for them to have found you, they must have used a targeted ad campaign or through a marketing website. This means that through an online search that you did or through a specific demographic, the Forex company paid for ads to show to people similar to you. Even though many online companies rely on paid advertising to obtain clients, the difference here is that this is the only way that they can reach their potential clients.
Summary of the first sign of a Forex scam:
If you arrived at the company’s website through clicking an ad, and all communication has been consistently initiated by the broker without you express interest enough to be pursued, while by itself this is not a definite sign of a scam (most of the signs in this list are definite signs) but it may be a good idea to look into the company a bit more.
Forex Scam Indicator: Is this a sure sign of a Forex Scam?
Rating: 2 out of 10 (it might be, but it also might be a new legitimate broker, more research is needed)
What to do: If when recalling your experience with the Forex company, the company seems to have found you and does all of the reaching out, it’s a good idea to look into the company a bit more before depositing money into their trading account.
Sign of a Forex scam number 7
7) The Forex company has a scarce or troublesome web presence
This one can be tricky, but we’ll break it down for you as clearly as possible. The following guidelines should help you know what you’re looking for and encourage you to look closely when researching a company online.
Firstly. if a company has a scarce web presence and you can’t find any information on them, it is definitely a reason to proceed with caution. Secondly, legitimate brokers will have some kind of information available online other than their own website. They might have review pages or sponsors or web pages that are using them to provide content, one way or another there will be something. Not having any web presence at all outside of the company’s website is a reason to do more homework.
On the other hand, loads of Online Presence Can Make it Tricky
Here’s what to look for…
A more common scenario, is when there is a lot of web presence about the company. Multiple review sites, some giving positive feedback some giving negative. You can always expect when a company is doing business on a large scale that there will be people satisfied and there will be people who are unsatisfied. The sign to look out for here, is when there are a large amount of negative reviews online, with multiple people singing the same tune.
Review Websites Can’t Filter the fake from the real
As much as they may try, review websites like Trustpilot and Feefo, who try to maintain integrity in preventing fake reviews to be published are not always successful. Unfortunately, Forex Trading Scams are notorious for posting fake reviews about their operation.
The good news is that the negative reviews most of the time stay posted. (Even though the Forex scam companies try to have the negative reviews removed by reporting them). By checking a company’s Trustpilot page one can often tell a lot about the company.
A study conducted by Scam News Channel showed that Forex Scams with large followings often have review pages where up to 40% of the reviews are fake. The study covered companies who had more than a staggering 300 reviews. One company in particular had over 700 total reviews. That means a whopping 280 FAKE positive reviews.
Confirmed Forex scams were the only companies covered in the study.
Summary: If the company that you’re trading with or looking to trade with has a significant amount of negative reviews saying similar things, it is a likely sign of a Forex Trading Scam.
Data-backed research to prove why these are signs of a scam
Checking if a company is a Forex scam is not an easy task. The information in this article is based on actual industry data that we’ve collected from years of research on online trading scams. That is to say that all of the methods of identifying a Forex scam that we’ve spelled out are based on actual exchanges through first hand reporting. This proven information will definitely tell you how to check if the Forex company you are trading with is a scam and if it doesn’t we’re here to help. To note, we’ve indicated which are guaranteed signs of a scam and which are warning signs.
If you have been scammed and you are in need of assistance you can message us at any time and we’ll do our best to reply as soon as possible.
Synopsis: Taking into account all of the above, the two most telling signs of a Forex Trading Scam are.
- If the company is based in a remote location
- If the company is unregulated.
Special thanks to Calvin Lamar and the Scam News Channel Team for compiling and providing the data and statistics in this article.
Help Us Help Others
There are certain companies that if you’re trading with them, we would advise re-assessing your position (no pun intended). Our hopes are that our articles will save as many people as possible from losing their money to a scam. Our watch list includes companies that we’ve received many negative reports regarding. These are companies that have developed a reputation of misconduct which we recommend not doing business with. In some cases we are able to point individuals in the right direction to figure out how to get their money back. In cases where it’s virtually impossible to recover lost funds, we’ll let you know that and how you can avoid falling to a recovery scam.
Here is our updated list of Trading scams. If you would like to report a scam, you can do so on our form page by clicking the button below.
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