The internet has connected the entire world together, but it does not have an infallible means of checking who is bad and who is good. The rise of online fraud has evolved greatly in the past 10 years, from the simple phishing email trying to get your personal information, to established companies, platforms and operations whose sole intent is to string you along and defraud you.
The phishing email is an example of a one-time scam, or it has also been referred to as an “analog scam carried out in a digital world.” Once they get your details they use them once (or as many times as they can until you notice). Banks and merchants now have the checks and measures to deal with these scams before they get out of control. If suspicious activity is noticed on your card, you will be contacted by your bank to confirm the transaction is real and authorized.
One of the biggest and most dangerous online frauds currently lies within the unregulated binary options industry. The binary options scam was setup to bypass regulatory measures. It is a scam built for the digital world and fraudulent companies are in it for the long con.
Elaborate trading platforms are set up to make it look like everything is real and legitimate. So, if and when the bank calls to ensure the money transfer is not a fraudulent activity, it is you, the victim, who gives the authority to be defrauded. That’s not to say that these scammers won’t resort to a phishing email when all else fails and you try to withdraw your “winnings.”
The success of this scam over the past decade is beyond what anyone could have imagined. In Israel where the de facto center of this scam phenomena started and is still located, brought in almost $2 billion last year from the online trading industry, with 63% coming from unregulated binary options. Unlike the old email phishing scams, you as the victim actually continue to help the impostors (often building up great relations with your “broker” as he/she deceives you with a smile until it’s too late). Financial fraud expert Austin Smith talks about what you should be looking for to determine if you are being contacted by an online scam operation.
Here are 5 things to consider before investing any of your money with an online trader:
Location, Location, Location
This is the first thing to check before giving out any credit card details online. The two places on the website to check are the ‘contact us’ page and the footer. Check both and compare. If they provide you with an address, look it up online. A simple search for the address will show up results, if they are using a registered office address, this is a red flag. For example, if they claim they are based in London, tell them that you are visiting and want to meet in person. Do not take anything at face value.
ABC … A – Always be Closing, Always!
Anyone who has seen Glengarry Glen Ross knows, ‘Always be closing’ is more than just a sales strategy, it’s a way of life. But with online scams like the binary options scam, the agents take this to another level. Austin Smith of Wealth Recovery International says “When we speak to defrauded clients, one of the things that always stands out is the level of persistence and hard selling done by the scam artists.” Once you have given your personal (not payment) details to one unregulated binary options scam, it is as if you have given them to everyone. There is no honor amongst thieves, they will sell and share lead information between themselves until they get a sale. “It is common for a client to tell us they have been called numerous times a day by different ‘advisors’ representing different companies.”
Where Did You Get My Details From?
You leave your details on the page of one company and you end up getting calls from multiple companies. This is another red flag. No company that is legitimate is going to pass around your information to their “competition.” Remember, these people want your money and will say anything to get it. Do not get lost in the sales pitch, test them and play with them. Austin’s rule number 3: If you sign up with one company and get a call from another company you do not know, do not give your money to either one of them.
How Much Can You Make in a Day?
If it sounds too good to be true, it is. An online advert telling you how to join the “secret millionaires club” is a red flag from the outset. Try taking yourself out of the scenario and view the content objectively. Just because something is online doesn’t mean that common sense is not relevant anymore. Think to yourself, if this was really so profitable, why would these money crazy investors share their amazing techniques? The answer is obvious … they wouldn’t. They are not here to help you make money; in fact it is the opposite: they make money only when you lose money.
Do Your Own Research
The internet is here to help you. The beauty of the internet is that no matter how individual you may think your situation is, you are probably wrong. Always tread with caution as today’s scammers are active in providing fake information and fake reviews. It can be hard to distinguish what is real and what is false. The one-time biggest binary options company, Banc de Binary, was famously involved in the Wikipedia edit-wars by paying thousands of dollars to rogue Wikipedia editors to change their negative Wikipedia page. The way to research online is to always check the source. Search the company and even the person you are dealing with. If they have nothing to hide then it will not be a problem.
Keep it simple. Try to see through the sales pitch and get down to the brute facts. If your trader cannot explain to you how the system works – they do not know. You would not trust someone in the street if they acted like this so use the same rules you would apply in the physical world to the online world. The fact is that online, there is more reason not to trust the person you are communicating with.