​The Binary Options Scams Costing Traders $117,000 a Day​

Jeremy Biberdorf  |

When it comes to money, there will always be someone who has found a way to take it from you. In order to part you with your hard-earned cash, you will typically need to fall for what they are selling. When it comes to the various binary options scams which have been conning would-be traders into losing their money, these methods continue to become more refined.

Binary Options Scams

The Financial Conduct Authority (FCA), which is based in the UK, has been warning traders of the dangers of binary options scams. In a report released earlier this year, the FCA confirmed that £87,000 ($117,000) is lost to binary options scams in the UK every day. This represents a huge sum which is worrying for traders who believe that many of these unregulated platforms offer a fast-route to big winnings.

As part of the recent ScamSmart campaign, the FCA’s study also found that under 25’s were six times (13%) more likely to agree to and trust in an investment offer received on a social media platform. Those aged 55 or over were significantly more skeptical, coming in at 2%. Another interesting figure is one provided by Action Fraud figures: under-50’s are also more likely to become a victim of binary options scams over any other form of investment.

As such, the FCA has been targeting potential victims of fraud when it comes to binary options scams. It is important to stress that it is not binary options itself which tends to be the problem, but the nefarious activities of many of the “brokers” and trading platforms which prey on the vulnerability of these individuals.

Unregulated Binary Options Trading Platforms

In the UK, The FCA has started a drive to regulate companies which operate such platforms. Earlier this year, the authority published a list of 94 binary options trading firms which were acting without true authorization. These companies typically follow a pattern of “recruiting” potential investors online and through social media channels, such as Twitter, Facebook, and Instagram, according to the FCA.

Mark Steward, the FCA’s director of enforcement, cited the increasing growth in social media activity has majorly contributed to this:

“While their websites and profiles appear to be professional, they are all too often run by fraudsters who fix prices and payouts, or in some instances don’t really place trades at all, before disappearing with innocent investors’ money,” he said.

Hargreaves Lansdown head of policy Tom McPhail commented that the telephone cold-calling ban was partly responsible for the major shift to social media:

“In principle this is a good idea but fraudsters are already evolving tactics to circumvent any ban on unsolicited phone calls.

“In the meantime, the whole investment community including legitimate firms, the regulator and investors themselves must remain alert to the risk of fraudsters trying to separate ordinary people from their hard-earned savings”.

It is the unregulated firms which tend to capitalize on these methods will no longer be able to escape the clutches of the FCA. On Jan 3, 2018, binary options became a regulated investment product in the UK. As such, any firm trading in binary options is required to authorized by the FCA.

What we can learn from the UK

While things are certainly done differently in North America as opposed to the UK, there are many things we can do to ensure we are minimizing the risk posed by rogue platforms and brokers. By ensuring that we are following a similar no-nonsense approach as those on the other side of the pond, this will effectively cut down the possibilities of unskilled traders in this country being targeted by such fraudsters.

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