Let us begin with a quick primer on Binary Options. With Binary Options, the trader selects whether the value of an asset such as stocks, commodities, or currencies will go up or down in value by a certain point in time. This is called “Binary” because the trader must choose between two possible options – either a YES, that the asset will rise above a specified amount, or a NO, that the asset will fall below the specified amount. You either win or lose on your investment decision. If the trader chooses correctly, he/she will make a fixed amount of money. If the trader does not choose correctly, they may lose part or all their initial investment.
A lot of people are attracted to Binary Options because of the low minimum investment capital needed, making it quite easy for anyone to start investing even if they do not have a lot of capital to start with. This burgeoning interest has not been lost to scammers, as they have resorted to several tactics to fleece the undiscerning of their funds.
How Binary Options Scams Fleece Victims of Their Funds
Failure to credit customer accounts or reimburse funds. This occurs when Internet-based binary options trading platforms refuse to credit customers their payout for correctly predicting the outcome of a binary option contract. Some dubious platforms even go to the extent of refusing to return the initial deposit made.
Software manipulation to generate losses. This occurs when the trading platform manipulates the time period or payout. For instance, when a customer’s trade is about to close with the right prediction, the time for the trade to expire is extended arbitrarily until the trade becomes a loss.
Card details theft. This occurs when binary options platforms request credit or debit card details then use them for fraudulent purposes.
How To Spot Binary Options Scams – Red Flags
- Promise of large profits. Binary Options scams always promise large profits with little or no risks.
- Sketchy company information. Fraudulent internet binary options platforms usually have a website with just an email and phone number. Most often there is no physical address, and if an address is listed, it is a virtual address used by many other businesses.
- They are Unlicensed. Fraudulent binary options platforms are not licensed by the security exchange commission in the countries they operate or offer their services.
- Unsolicited Contact for Investment: Most scammers buy contact databases to send bulk emails, or they might send unsolicited messages on social media about an investment that gives a high return.
- Paucity of online reviews: You may also want to search for any news about the company. If there is no information on Google and very few mentions on review websites, it is likely a scam.
Remember, if it looks and sounds too good to be true, then it probably is.
Contributors:
- Chinonso Joshua Aguonye
- George Kaduru