Warning Signs that You’re About to Get Scammed by Your Broker

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Although the field of online trading had been making a lot of progress over the past several years, scam brokers have not yet completely disappeared. This should be a great concern for traders looking to benefit from enhanced trading conditions by choosing to work with a questionable broker. Every year, millions of fraud reports are filed, and victims suffer billions of dollars in losses as a result of fraud-related criminal activity. Being aware of and taking steps to protect yourself and your family from fraud and scams is increasingly important as fraud becomes more prevalent. You need to step up your game and become an expert at identifying common warning signs that you might be dealing with fraud.

The regulation currently in place in Europe or North America was specifically designed to prevent a CFD or forex scam from conducting illicit activities. However, if you want to know some of the common warning signs suggesting that you’re dealing with a scam broker, we hope this material will help you.

1. Not regulated by any major financial entity

A professional online trader will always take a first look at the regulatory background of the broker. In case it is not regulated by any well-known financial agency (Financial Conduct Authority in the UK, CySEC in Cyprus, ASIC in Australia, BaFIN in Germany, etc.), that means there is no government agency making sure the broker is working in line with the highest trading standards.

At the same time, it would be an important bonus if your broker is registered within your country of residence. That would mean you can get personalized customer support, and at the same time, the broker is compliant with local regulations. A broker that’s not regulated by any financial regulator should be avoided, considering the high risks associated. No matter how tempting the trading offer might be, it is crucial not to make any concessions when it comes to this matter.

tablet showing broker process

2. Limited or confusing information about the trading services

When it comes to the trading services provided, all the information should be available on the broker’s website as clearly as possible. Scam brokers don’t bother optimizing their official websites, and many times you will find confusing or incomplete details. Grammar errors, wrong pages, and false claims are common among any forex scams. If the broker is committed to the highest trading standards, the information available on the website will be clear as water, and even a beginner will manage to understand the details. Before signing up for an account, it is highly important to go over the website and read all the details carefully.

Most scam brokers provide limited information on the website and keep all the important details in the Terms & Conditions section. We know all this is part of the boring side of trading, but at the end of the day, you are going to trust the broker with your hard-earned money and personal data.

piling coins

3. Poor customer support

Sometimes you may encounter problems. Technical issues with the trading software or difficulties in passing the verification process are common among retail traders. As a result, a reliable broker will have an efficient customer support service, ideally personalized for clients depending on their country of residence. Scam brokers are not interested in providing high-quality trading services, and as a result, they will have poor customer support services. It generally takes days or even weeks until someone replies to emails, and the answers are very superficial. This should act as an alarm bell and keep you as away as possible from such companies.

A company that does not have a customer-oriented approach is not one that you should be working for. Especially now, when financial markets are extremely volatile, the customer support service will ensure smooth operations for all customers, no matter their country of residence or account size. To find the right broker or financial advisor, you must feel comfortable with the people who will be advising you, providing you with products, and assisting you with your financial planning needs. Pose as many questions as you can about the company’s services and its experience working with clients who have similar needs to your own as you can.

Check to see what kind of relationship you will have with the professional as well. When making investment recommendations, for example, financial professionals are required to put their clients’ interests ahead of their own. This is known as the fiduciary standard. That is a higher level of performance than the so-called suitability standard. A professional is only required to make recommendations that are consistent with the client’s best interests in mind. While investment advisors are required to adhere to the fiduciary standard at all times, broker-dealers are not required to do so. However, you may be able to find a broker-dealer who is willing to adhere to the fiduciary standard. If you are unable to obtain straight answers, or if the individual appears rushed or otherwise unwilling to provide you with complete and accurate information, seek help from someone else. Don’t forget to inquire about rates, fees, and commissions as part of your inquiry.

person with chart onhand

4. Asking for very high initial deposits

Sure, initial deposits for any sort of service are valid, however what scammers do is that they will ask you for 70%+ of the amount as an advance deposit! The main goal of scam brokers is to persuade customers into depositing as much money as possible. As a result, they design a very complex trading offer with multiple trading functionalities that seem very attractive at first glance. In reality, once you open an account, you see that most of the benefits were just false promises. Even after making a large deposit, the actual services are well below expectations.

This is how a CFD or forex scam operates to get its hands on your hard-earned money, and each time you see a broker demanding a large initial deposit, you should walk away. Now that there are so many trusted brands allowing customers to open trading accounts with a low initial deposit, there is no point in taking risks with a questionable broker.

man signing a contract

5. Long processing time for withdrawal requests

Most of the traders will very likely acknowledge they want to have access to the funds in their trading accounts easily. However, scam brokers can keep on this promise. As a result, they set long periods for processing withdrawal requests. Most scams reserve the right to process them within several business days or sometimes even weeks. On top of that, they even charge a hefty withdrawal fee. That should not be the case. If there is a solid team of professionals working for the broker, any withdrawal request should be processed within a maximum of 48 hours. Depending on the payment method selected and country of residence, it could take more until the money ends up in your account, but the broker’s responsibility should be done fast.

6. Brokers operating offshore

Lastly, one of the biggest signals for a forex scam is represented by the address of the mother company. All brokers operating offshore should be considered potential scams. The regulation for online trading is very loose, and as a result, no one could sue them in case of bad practices. Make sure your broker operates from a well-known country that has solid regulations for financial services providers.

Only by taking this measure, you won’t end up having a real account with a broker that can do what it wants without facing penalties. Also, read the terms & conditions of the broker to see what its governing laws are. Even though scam brokers don’t show their operating address on the website, this detail will show more insight into whether you’re working with an offshore broker.

businessman logging his tablet

Any broker that has at least some of the warning signs we’ve talked about should be treated with caution. As a result, we advise all traders to avoid them and work only with the brands that have an already-established reputation. Despite the fact that offshore brokers provide numerous advantages and a great deal of flexibility, it is important to be aware of the risks associated with offshore investment accounts. As soon as you have made a deposit into your offshore account, you will be able to begin trading regardless of whether you are using credit or cash to fund your account. Offshore brokerage accounts are used for a variety of financial transactions, including the holding, investing, and trading of a variety of financial instruments. Stocks, forex, bonds, and a variety of other financial instruments are examples of this. Because of this account’s offshore status, you can move your assets around the world while enjoying significant tax benefits. Offshore broker accounts are typically held by corporations rather than by individual investors.

A common account type for small or inexperienced retail traders, this is not the case here. Offshore accounts frequently require a much larger initial deposit than domestic accounts. Although it varies from broker to broker, the cost of opening an offshore account is significantly higher than the cost of opening a regulated account. Customers have been known to be scammed by untrustworthy brokers with a bad reputation. Because they are not regulated, these brokers are free to scam people without fear of repercussions. Despite the fact that some have numerous advantages, they can also be risky. Some brokers have been accused of evading taxes and possessing illegal information about foreign customers, among other things. As a result, many countries, particularly in the United States and Europe, have strengthened their tax laws.

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When compared to regulated brokers, they provide you with significantly greater flexibility and freedom in your trading. Having said that, these brokers are not suitable for beginning or small-scale Forex traders. Traders who are just getting started should avoid this. Offshore trading is only recommended for traders with a great deal of experience. In order to find this type of freedom appealing, you must have confidence in your investment strategies and risk management techniques. Investing in offshore accounts is a great option for individuals and businesses looking to move financial assets without incurring tax liability.

Compared to regulated brokers, offshore brokers incur fewer overhead costs. Because of the lower operating costs, this results in significant financial savings. It is critical to be aware of the dangers associated with international trading. By using an unregulated broker, you are dealing with the broker in a completely unethical manner. If you choose to operate from a foreign country, you do so entirely at your own risk. Because they are not regulated by any financial institution or government, no one is looking over their shoulders to make sure they are not stealing from you. If you are a victim of fraud, there is little you can do to recover your financial assets. This is why you must conduct extensive research into a broker’s reputation before putting your trust in them to trade.

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    7. Sales techniques that put you under a lot of pressure

    Be wary of sales pitches that encourage you to get in on the ground floor or to act immediately, whether they come from individuals or advertisements. Try not to be pressured into making a quick purchase at a “low, low price,” to buy now because “tomorrow will be too late,” or to overreact when you are told “don’t be a fool,” or “when this becomes public knowledge, people will line up to take advantage of this golden opportunity.” Some unscrupulous promoters may even offer to have your check picked up by an express delivery service. They don’t want you to take the time to consider your options, read the fine print, or consult with others.

    Banking Scam

    8. Not responding to your questions 

    Con artists do not want you to inquire about their schemes. Instead of responding directly, they will engage in a dialogue with you by asking you questions. A positive response is usually the goal of these types of questions. “You’d like to make more money, wouldn’t you?” says the narrator. Investment professionals with a good reputation encourage you to ask questions. Con artists don’t want you to do that, either.

    Protect Yourself from Getting Scammed by Your Broker!

    Despite the fact that investing has become safer, more affordable, and more efficient for the average investor, some instances of brokerage fraud continue to occur in order to fleece unsuspecting or greedy investors. There are several ways to determine whether or not your broker is legitimate. Always complete your homework prior to class. Check the firm’s and broker’s or planner’s backgrounds to see if they have had any disciplinary issues in the past, be wary of cold calls, and double-check your statements for any funny business. If you are in doubt, there are several avenues through which you can file a complaint and seek restitution.

    Lost money to online fraud? We will recover your funds !

    You are just 2 steps away from a free case review !
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      We only process cases of more than $5000

      We do understand that you’ve already been scammed online and that you’re naturally afraid of paying online. This is why we do offer a free case review, and won’t charge anything if your case isn’t qualified. Please do your part of the deal, and submit your case only if you truly intend to proceed with the recovery process.


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