Characteristics of Fraudulent Online Trading Providers
Below you’ll find a list of criteria that describe binary options brokers that are fake. If a broker you come across shows signs that it satisfies one or more of the below criteria, then you should reconsider registering and trading at the respective broker.
A broker does not have a valid license
These days an increasing number of online trading service providers have valid licenses issued by various national governments. Binary trading is at this moment legal in many countries in which brokers that wish to penetrate the market will have to apply for a license.
A license will only be awarded to those brokers that pass independent safety and security tests conducted by a national regulatory agency. These companies will also be constantly monitored by the government that issued the license to make sure that they offer safe and fair services to traders.
If a binary options company does not have any license of any kind than it usually means that the respective company is up to no good. As explained above, a lot of countries are at this moment offering binary options licenses to legitimate brokers. So, if a broker is not interested in such a country then it means that it’s most likely not legitimate.
A broker tries to hide its originating jurisdiction
There are some online trading companies out there that do not want you to know where they are located. Usually this is because these companies are located in weird jurisdictions such as the British Virgin Islands and such.
Some companies decided to establish their base of operations in such countries because that will allow them to scam people. These countries have extremely lax rules when it comes to online trading and are known of not prosecuting companies that break the law.
So, if a broker is trying to hide its base of operations or if you know for sure that the company is located on some weird island, then you can be sure that something is wrong. No serious online trading provider is located in Macau, BVI, Seychelles etc.
A broker tries to hide the identity of the owner company
Most brokers do not operate under their real company names but rather with their brand names. Like, for example, Empire Option is a brand name only, while the company behind the broker is called Riverjor SA. This is a perfectly normal practice in many business.
However, if you come across a broker that does not reveal its real identity and company name, then usually it means that the broker is fraudulent. The only reason why a company might not want to reveal its real name is because its owners want to avoid being discovered and prosecuted after they scam traders.
Not revealing ones real company name is one of the most obvious signs of something shady being up. As such, avoid companies like this at all cost. Even if the respective company does not meet any other requirements in this list, the fact that it does not reveal its real name should be reason enough to avoid it at all cost.
A broker offers unreasonably high bonuses
Binary options companies offer bonuses in order to determine potential clients to sign up. The most popular bonus is the first deposit bonus. This bonus will give extra money for traders on their first deposit. For example, if someone deposits $500, he or she might be awarded an additional $500 for trading purposes.
There is nothing wrong with bonuses like this. However, if they seem unreasonably high then you can know that something shady is up. Like, for example, if a broker wants to offer you $2,000 free on your deposit of $500, then it’s pretty certain that something shady is up.
Bonuses are perfectly legitimate but if someone offers such exorbitantly large ones then you can know for sure that it’s too good to be true. In case a company offers such a huge bonus it means that it would never be able to make any profits for itself. It’s obvious that in cases like this something weird is going on and someone just wants to steal your money.
The company guarantees that you will win all the time
We often encounter binary options brokers that will promise that you will win all the time no matter what. If you see a broker like this or an ad like this, you will know that the broker in question is completely fraudulent and fake. It is not possible to win all the time.
As much as you’d like to, it is not possible in binary options to win all the time. Sure, some people will manage to become pros and generate consistent profits but the truth is that the majority of people will generally always lose.
By reading sites like ours and learning the strategies described there you will be able to become a pro yourself. However, there is still no absolute 100% guarantee that you will always and at any moment win all the time. This is not possible and if someone is promising you this then that person is 100% lying and is up to scam you.
No mainstream payment methods are available
In binary trading you will have to deposit money in order to trade and you will have to withdraw the money that you have won. This is possible using various payment methods such as popular credit cards, PayPal, Skrill (MoneyBookers) and others.
If none of these major and mainstream payment processors are available then it usually means that something strange is up. This is because these mainstream payment processors only accept to process the payments of legitimate companies. Before any company is allowed to process its payments coming from clients using these mainstream payment processors, they will have to pass various background checks.
Likewise, if a broker is scamming traders using a major payment processor then eventually a lot of traders will complain to the payment processor and the broker will be banned using that payment processor. For this reason, scammy binary options brokers don’t even apply for any major payment processor account.
Instead, these brokers allow people to deposit and (supposedly) withdraw money using all kinds of obscure and weird payment processors no one ever heard of. This should also be a major alarm bell for any serious trader. If you can’t use any major payment tool that is known to be 100% safe, then avoid the respective broker.
Support representatives use weird language
Have you ever been approached by a representative of an online trading company that uses weird and unprofessional language? – If yes, then they are a scam.
Check below for some examples:
“Heyyy, how are you? Plzz sign at XXXXX and you win $x,xxx super easily by trading binary options!!!!”
“Guaranteed 100% win all the time, binary options, get rich nowww!!!”
“Super way of winning in binary options all the time!!!!! Sign up today and get $5,00 FREEEE moneyzzz.”
“hey due… wanna win huge money in binary options.. i can teach you to become rich now… try our bokerr xxxxx and win today… “
We did actually not make up the examples above. These are actual messages we received from representatives of online trading companies. Looks like the email addresses we use to sign up at various brokers in order to review them are being spammed by all kinds of weird messages like these.
However, it’s actually a great thing that people who are shady are also dumb at the same time and are not able to write properly. If you ever get a message like this, then avoid that broker immediately. Representatives of legitimate binary options brokers are always extremely professional.
Payments take extremely large amounts of time to be processed
In case you have already signed up at a broker and would like to withdraw money and this process takes a very long amount of time, then you can usually be sure that the company in question wants to steal your money. Withdrawals should under no circumstance last more than 1-2 weeks.
In this case you should report the broker on various forums that expose scammy providers as well as to the authorities in case your country explicitly regulates binary options trading. Unfortunately, you will most likely not get your money back however you can warn others from signing up at the fraudulent company.
However, the best is to completely avoid registering at trading providers of that kind. If you came this far in this article then by now you already know how to spot such brokers and you will never have to worry about falling victim to a binary options scam.
Is it Really this Bad? Are there these Many Fake Brokers?
We want to finish this article by making it clear that the vast majority of binary options brokers are actually not like this. Only an extremely small number of companies are fraudulent and if you have read this article then you will be able to spot them extremely easily.
Just keep all the things described here in mind next time you intend to register at a financial service provider (by the way, the tips described here are also valid in case of other type of trading as well such as forex etc.) and you should be fine.