Beware these latest trends in forex scamming

The number and variety of forex scams have multiplied since the Covid lockdowns, when millions of South Africans were understandably concerned about the security of their jobs and income.

One of the newer scams involves convincing the victim to send bitcoin to an address controlled by the scammer on the promise of making vast riches.

“The first thing to look out for is promises of high returns of say 7% or 10% a week, or even a month,” says Isaac Izy, partner at online broker OctaFX.

“Yes, it is possible to make returns like that in the forex market, but very few people do it consistently. Scammers will convince you they have an automated trading system that works like an ATM, churning out profits daily. Don’t fall for this.”

The first port of call when seeing an offer that seems too good to be true is the website of the Financial Sector Conduct Authority (FSCA). There is a search function that allows members of the public to check whether or not a company or entity is licensed to provide the services they are offering. If you’re still unsure, there is a number to call that will very quickly establish the legitimacy of the company.

OctaFX is licensed and regulated by the FSCA, says Izy.

Another sign of a scam is offering capital guarantees. “They can be quite convincing and the idea that you cannot lose any of the capital you invest with them seems to be comforting to those unacquainted with the market. There are very large and reputable companies that offer capital guarantees, but the trade-off is that you must accept modest returns on your investment, even in very good years.”

These are some of the trends in scamming that have become prevalent in recent years.

1. Deceptive forex investments with unrealistic returns

“Beware of individuals showcasing lavish lifestyles on social media, claiming they’ve unlocked the secrets to quick wealth through forex trading,” says Izy. “They prey on desperation, promising sky-high returns if you hand over your money to them. They’ll request funds from you, assuring a return within a week. These scammers go to great lengths, even fabricating testimonials to appear legitimate. Remember, anyone guaranteeing returns in trading is unequivocally a scammer. Protect yourself and steer clear.”

2. Impersonation via fake social media profiles

Another prevalent scam involves impersonating public figures or affluent individuals on social media platforms. These fraudsters compile images of well-known personalities, creating counterfeit profiles to dupe unsuspecting victims into falling for investment schemes. They are able to add credence to the fake accounts by building up a large social following. These imitations can look like the real thing, but they are not. “Exercise extreme caution with these accounts,” adds Izy. “Always verify through video calls or in-person meetings before parting with your money.”

3. Crowd funding schemes

A relatively new type of scam involves so-called forex mentors who encourage you to pool your funds with scores of other victims into a single account, the idea being that the ‘mentor’ is an expert and will help you on your way to accelerated riches. You may be told that you are part of a select group chosen to participate in this rare opportunity to make money at the shoulder of a forex master. For instance, they may claim they’re assisting 100 clients, each contributing a sum. The mentor then aggregates these amounts, supposedly enhancing the chances of success. Clients are promised access to monitor trades as a form of transparency. However, behind the scenes, mentors collude with brokers. The broker furnishes the mentor with a fictitious ‘real’ account, known as a test account, displaying fictitious funds. “Eventually, this account will incur substantial losses, which the mentor will attribute to a bad trading day,” says Izy. “Clients are left without grounds for complaint, having witnessed the losses. In truth, the funds never reached the trading account. The scammer diverts the funds to finance their extravagant lifestyle, enticing more unsuspecting victims. Remain vigilant.”

If you are desperate to make money, stay away from forex

Many people are roped into forex trading scams because they are in a financial bind or are desperate to make a quick killing. They almost always lose everything they ‘invest’ in these scams.

“It is crucial to remain vigilant and informed about the prevalent forex scams in South Africa,” adds Izy.

“These fraudulent tactics prey on desperation and trust, promising unrealistic returns and using deceptive means to appear legitimate. Whether it’s through flashy social media displays, impersonation of public figures, or enticing crowd funding schemes, scammers are adept at manipulating unsuspecting victims.”

Whenever confronted with a too-good-to-be-true opportunity, don’t be rushed into making any hasty decisions, exercise caution, verify identities through secure means, and remember that guaranteed returns in trading are red flags for scams.

“By staying informed and cautious, we can protect ourselves from falling victim to these deceitful practices and help safeguard our financial well-being,” concludes Izy.

OctaFX is a global and transparent broker licensed in South Africa, which offers zero fees and zero-commissions trading, and focuses on building successful trading habits through comprehensive education. 

Apply the limited MONEYWEB promo code for an exclusive 100% deposit bonus and double your trading margin. Log in to your Personal area, go to the Promo code section, activate the MONEYWEB promo code, and make your deposit with a 100% bonus. That’s it. Now you can trade twice as much as you invested.

Brought to you by OctaFX.

Moneyweb does not endorse any product or service being advertised in sponsored articles on our platform.

Source link