A Short Guide To Binary Options Fraud
What is Binary Options?
This is a type of options contract in which the payout depends purely on the outcome of a Yes/No proposition. Binary options are different from other types of options in that they do not give the holder the right to trade the specified asset or even ownership of it. The option holder receives either a pre-determined amount of cash or nothing at all upon the expiry of binary option.
The Current situation
Social media platforms are aggressively used by binary options brokers for advertising. Their flashy commercials promise amazing that seem too good to be true, and, in fact, are. Binary options websites are designed to look legitimate, even though they aren’t. Many, however, are poorly proofread.
Their brokers and traders sound friendly, professional and knowledgeable. They are paid on commission. They often use the victim’s credit and personal information to access further funds without the victim’s knowledge.
Binary Options Fraud
Most binary options market sites operate online trading platforms that are not in compliance with relevant financial regulatory agencies. Investors should exercise caution in order to avoid of fraudulent promotion schemes involving binary options and/or binary options trading platforms.
Investor Complaints Relating To Fraudulent Binary Options Trading Platforms
The complaints fall into at least three categories:
- Refusal to credit customer accounts or reimburse funds to customers
Customers who have deposited money into their binary options trading account often report that they were then encouraged by “brokers” over the telephone to deposit additional funds. The trading platforms allegedly cancel customers’ withdrawal requests, refuse to credit their accounts or ignore their calls and emails when customers later attempt to withdraw their original deposit or the return they have been promised.
- Identity theft
Some binary options sites have been suspected of collecting customer information (including copies of customers’ credit cards, passports, and driver’s licenses) for unauthorised (and typically illegal) use.
- Manipulation of software to generate losing trades
Internet-based binary options trading platforms have been accused of manipulating their trading software to distort binary options prices and payouts. For example, when a customer’s trade is “winning,” the countdown to expiration is extended until the trade becomes a loss.
In the United Kingdom, binary options are now regulated by the Financial Conduct Authority (FCA), which maintains a list of unauthorised firms. While they are not calling them scams, they do make it clear that these firms are breaking the law by trading with UK visitors – so they are best avoided. The full list can be found at: https://www.fca.org.uk/consumers/binary-options/unauthorised-firms
By contrast, the United States, along with most EU countries, do regard binary options as financial products.
Potential Courses of Action for Binary Options Fraud Victims
- Attempt a Chargeback
If you transferred money to a binary options site using a charge card, contact your credit or debit card company and report your experience to their fraud departments. If you properly follow the procedure, the credit card companies may process a chargeback if they approve your request. If it is not successful, there are still other legal options to consider.
- Litigation Against the Broker
Hiring an attorney is one of your best strategic moves because he or she will be able to present you with a wide variety of options. That will help you to get your desired result, which is your capital returned to you intact. The attorney that you select should be chosen on the basis of a number of factors, chief of which should be proven experience in this legal speciality.
- Reporting the Binary Options Scams to a Government Agency
What is important to understand about reporting online binary options fraud to a governmental agency is that you may not necessarily see results in the short term. It is important to understand, however, that you will be contributing to the governmental agencies extended their protection to protect consumers in the future. In the UK, the appropriate governmental agency is the ActionFraud National Fraud & Cyber Crime Reporting Centre. Traders in EU member states should contact the European Anti-Fraud Office (OLAF). In the U.S., binary options scams should be reported to the Commodity Futures Trading Commission (CFTC).