8 Types of Forex Market Fraud!!!

No Doubt forex market is vast and complex that involves the trading of currencies from all over the world. While it can be a lucrative investment opportunity, it is important to be aware of the various types of fraud that can occur. These fraudulent activities can have a significant impact on traders and investors, and it is crucial to understand the risks involved. In this article, we will explore some of the most common types of fraud in the forex market.

Boiler room

‘Boiler room’ fraud is a type of fraud that involves contacting potential investors – usually unsolicited, often by telephone – offering them a fantastic deal that will supposedly earn them a lot of money.

The fraudsters put consumers under severe pressure (hence the name ‘boiler room’) to pay more and more money. In reality, the consumers end up holding fictitious shares or worthless financial products. The fraudsters disappear with the money, and the investors never recover the amounts invested.

Be vigilant, the fraudsters are very shrewd. They present themselves as authorized financial service providers and have a professional-looking website. They ensure that the first investment always appears profitable. That way, they gain consumers confidence. As soon as the latter are prepared to invest higher amounts, things begin to go wrong. The new investments incur losses. If a consumer asks for his or her money back, it turns out to be impossible to do so!

Fraudulent online trading platforms

Fraudulent online trading platforms boast a very professional design and look. They try to arouse the curiosity of potential victims, claiming to have a found a way to get rich quick.

They offer a range of financial products that are no longer limited to binary options, forex trading and CFDs. They also offer regular investments (e.g. currencies, shares) as well as alternative investments (gold, precious metals, etc.) and virtual currencies. Their offers adjust to the trends and generally target the product that elicits the most media interest.

These platforms usually target their victims by means of fake advertisements on social media, in which the identity of well-known individuals is used without their knowledge. After clicking on the fake ad published on social media and having given their contact details, the victims are usually swiftly called by fraudsters presenting them with an investment offer.

These platforms act very aggressively. Scammers even try to persuade victims to allow them to take control of their computer remotely. They take this opportunity to carry out the transactions themselves. The fraudsters also try to persuade their victims to invest increasingly higher amounts of money.

Recovery room

‘Recovery room’ fraud is a practice that consists of contacting investors who have already been victims of investment fraud.This type of fraud involves contacting such investors without their having requested it, offering to help them recover the sums they lost, on condition that the investor makes an additional payment or opens an account on a trading platform. If a financial contribution is requested before the service proposed is provided, that is a clear indication that this is a ‘recovery room’.

Despite the promises of those making these offers, the victims never recover the money they lost, and in fact go on to lose the further amount paid in order to receive the promised assistance.

The persons behind a recovery room are often the original swindlers or other fraudsters who have acquired lists of victims of fraud. Any investor who has ever been the victim of an investment fraud needs to be aware that the swindlers may target him or her again or may sell his or her coordinates.

Cryptocurrency fraud

Cryptocurrency fraud seeks to get consumers to invest in supposed cryptocurrencies, vaunting the secure, easy and very lucrative nature of such investments. Swindlers try to inspire confidence in their victims. They assure you that you don‘t need to be an expert in cryptocurrencies in order to invest in them, and that ’specialists will manage your investments for

The swindlers promise that the funds invested can be withdrawn at any time or that the funds are guaranteed. However, in the end the victims are never able to recover their money.

Pyramid schemes

Pyramid schemes are a type of fraud in which the initiator of the pyramid offers the potential investor the opportunity to make an investment that promises a very attractive return, far above the market rate.The initiator thus receives the first payments from investors who have been taken in by the prospect of a high profit. Contrary to what the investors were promised, their money is never actually invested. Rather, the investors are asked to bring in new investors themselves and are promised increased profit if they do so. New investors who enter the system bring in money, which once again is not invested but used in part to pay returns to the first investors.

With this type of fraud, all the consumers taken together make up the pyramid. The higher one rises in the pyramid structure, the greater the chance that he or she can earn a lot of money. As in the case of Ponzi schemes, the fraud is discovered once too few new investors join.

Cloned firms

Identity theft, or ‘cloning’, is a form of fraud in which swindlers take on the identity of an authorized company in order to give consumers the impression that they are authorized to offer them credit or investment products/services, whereas this is not the case.

To this end, the swindlers usurp the names and other legal information of regulated providers and refer consumers, for example, to the official website of the FSMA to try to convince them that they are indeed authorized companies. Consumers are thus deceived, thinking they are dealing with a regulated entity, whereas the latters identity has simply been stolen.

Fraudulent offers

In a fraudulent offer of portfolio management, the victims are contacted by phone by a salesperson who offers them portfolio management contracts, (savings) accounts or alternative investment products (rare earths, gold, precious metals, etc.) with the promise of far higher returns than those on the market, often even promising a guarantee.

Behind these attractive offers, there are often fraudsters who are not authorized to make such offers and whose sole aim is to steal the money that their victims have entrusted to them. The fraudsters may also approach their victims via appealing advertisements published on social media or via websites.

Social media

Social networks such as Twitter, Facebook, Instagram or LinkedIn have become ideal channels for spreading false investment offers, such as offers of cryptocurrencies, binary options and forex products/CFDs, “investment wines”, portfolio management offers or credit offers.

These fraudulent offers are spread on social media primarily via sponsored ads on Facebook and Instagram, simple Facebook posts, fake press articles or via direct messaging between the fraudster and the victim.

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