Binary options gained a lot of popularity due to their high profit rate and this is one of the reasons that binary option scams come into existence. This is the niche which has a great potential for unethical activities and fraud. The binary options work on a simple principle that you will either get a premium or you will get nothing.
You will find many brokers that will provide you with false details and will trick you to lose money via fraudulent activities. Due to such practices, many organizations such as FIA and ASIC has introduced a minimum set of rules and regulations that all financial brokers must follow.
Still, there are some financial brokers that have found some loop holes in the system and they scam you in different ways and this cause traders a lot of money. A trader that is new to system is prone to such frauds and they should make a thorough research about the binary options and the scams related to the process; before making large trades.
Binary options are risky and the trader should not place a large trade; which is only based on their sixth sense. You will find some common scams and fraudulent activities carried out by the brokers in the article:
Downplaying the risk of Binary Options
It is very important that the financial broker gives all the information regarding the binary options to the customer. Most financial brokers only discuss the pros of the trade; leaving out the cons in the process. In this way, many people are scammed even before they start the trade and pursue the trading business without any proper knowledge and information of the risk involved.
The financial brokers make false assurances to the clients and give them false hopes of earning a huge amount of money every week. An individual who has just started trading binary options can easily be scammed by such individuals. The best way to protect yourself from scams is doing a research before starting with a broker. See this BinaryTilt Review for a example of a legit broker.
Binary Option Scam involving Privacy Breach
Cold Calling is the new trend among the financial brokers. Imagine yourself sitting in your home and the phone rings. The person on the phone presents you with an impeccable offer that will give you 80% return by investing very little in binary options. As a person who has not traded in the binary options, you will be thrilled to hear about such return on small investment and will want to hear more.
Such brokers buy stolen or leaked databases and contact random people and scam them. You should try not to discuss any trade offers with the company you did not sign up for.
Loop holes in the terms and conditions
Terms and conditions is the way to legalize the website or process by every organization. These terms and conditions put the traders and the brokers into an agreement. However, hidden terms and conditions are a common way to scamming people. Some websites use hidden terms and conditions to scam people.
There are many websites that have been shut down to the loop holes found in their terms and conditions. A common example of such scams is that some websites do not allow withdrawals a month after the last deposit. Such practices are unethical and considered as the biggest scam in this industry.
Many binary options brokers offers personalized accounts to their customers in which they oversee all the trading and make them feel special. This practice can lead to many scams and fraudulent activities and when you are giving the access of your own account to another person; you cannot hold anyone accountable for the loss you suffer. So, make sure that you take financial advice but make the trades by yourself.
Bonuses and refusal to make withdrawal
Bonus terms and conditions are one of the most frequent scams we encounter. It is a common practice for brokers to offer bonuses to the customers but the main thing is that the brokers do not offer correct information regarding the bonuses and does not give all the information regarding bonuses in fine print. So, you should ask for the bonus information from the broker when starting the trade.
The verification process is very difficult in some trading websites. They allow you to make deposits without any verification but require special verification to make withdrawals. The procedure of the withdrawal should be made clear for every trader.
Some websites do not offer withdrawals until you make payments in the last month. Such practices hinders the process of trading and you should make sure that the company you are trading with; has proper terms and conditions.
These are the most common ways that brokers scam the people and these scams can be avoided when the people work with extreme care. You should make sure that you read the terms and conditions of the website before you start trading with them.