A trading scam is a fraudulent scheme that exploits users’ trust in brokerage firms, trading platforms, investment plans, and crypto programs. Tricksters aim to deceive unwary traders and investors by offering alluring opportunities while using common trading elements as a ruse.

There are many illicit methods and systems scammers use to give users headaches daily. Sometimes, there is more than one scheme in play. This article explores some of the most common types of fake platforms and systems found online. 

Learn key details about Forex scams, trading platform fraud, shady investment firms, Ponzi schemes, pump-and-dump mechanisms, and dubious affiliate programs. Find out how to spot these con artists and what to do in case you are a victim.

Forex / Crypto Trading Scams

Forex trading, aside from crypto, is arguably the most frequent victim of online trading scams. It involves buying and selling currencies to generate profits. The decentralized and complex nature of the currency market, with its high liquidity and 24-hour trading schedule, makes it a convenient ruse for scammers.

Such schemes guarantee unrealistic profits or high returns with little to no risk in short periods. Victims are found via social media or messaging apps. Once they are reeled in and deposit their funds, they receive a manipulated platform that displays fake profits.

Forex trading scams often incorporate MT5 scams, which leverage the popularity of MetaTrader 5, the best software in the industry. Promising competitive trading conditions, cyber thieves rig the platform to “trap” users’ funds and subsequently steal them.   

To avoid falling victim, it is imperative to check your platform before investing. Look for user reviews and complaints on forums, and verify the company’s registration and license. Regulatory registers often include a Forex scammer list. Major red flags include unrealistic investment returns, poor website quality, and fake testimonials.

The US Commodity Futures Trading Commission (CFTC) provided clear guidelines on how to identify fraudsters. Victims can report suspicious websites to the relevant financial authorities and/or law enforcement. 

Investment Schemes

Similar to the previous section, all investment schemes share the common goal of convincing victims to invest money with the promise of high returns. These schemes often target inexperienced investors who are looking to make money quickly.

Although the modus operandi remains the same, there are three main ways to execute a shady investment scheme, according to the Australian Securities and Investments Commission (ASIC):

• Completely fake offer;
• Money not going towards the investment;
• Identity theft – scammer claiming to work for a reputable company.

The money usually goes to an overseas bank account, making it hard to recover. To protect yourself from such schemes, be wary of any investment opportunity that swears on high returns with little or no risk. 

Popular online mediums such as dating apps, channels, and social media groups are swarming with anonymous wrongdoers. For that reason, trust only legit investment sites and registers like that of ASIC.

Ponzi Schemes and Affiliate Fraud

Ponzi schemes are a traditional type of fraud that operates by using money from new investors to pay returns to earlier investors, creating a short-lived illusion of a profitable venture. However, these schemes are unsustainable and eventually collapse, leaving most investors with nothing but significant financial losses and sleepless nights.

These fraudulent systems originated in the early XX century with the appearance of the infamous Charles Ponzi. Fast forward to 2024, and the scams have taken online forms to plague the digital realm. For example, traders complained on Trustpilot about Tesler being a Ponzi scheme.

Affiliate fraud is a similar type of trading scam that involves a recruitment-heavy model where individuals are required to promote a trading platform or investment opportunity in exchange for a commission. It’s less complex than the previous type but just as dangerous.

In order to avoid falling prey to Ponzi schemes and affiliate fraud, it is important to double-check any opportunity before investing as there are many fake trading companies out there. Be sure your provider is credible and well-received by other users.

Pump-and-Dump Scams

Pump-and-dump scams involve artificially inflating the price of a stock or some other security through misleading or false announcements. If successful, the perpetrators sell off their holdings at a profit, leaving other unfortunate investors with worthless assets.

Again, these fake investment opportunities can easily be exposed. Just look for indications regarding the suspicious asset, such as the date of creation, company background & following, realistic chances of growth, and price movement, or simply look up the entity on a list of fake trading websites. Promises of high overnight returns, for instance, are a common red flag. 

Fund Recovery – What Should Victims Do? 

If you have fallen victim to a trading scam, there are steps you can take to try to recover your funds. First and foremost, you must gather all documentation relevant to the scam, including emails, contracts, and transaction reports. 

Next, report the scheme to the financial market authorities and consumer protection agencies or law enforcement. If the fraudster was already busted by financial watchdogs, as in the case of Immediate Edge, you may be in luck. Make sure to inform your bank about the incident to prevent further unauthorized transactions and losses.

Last but not least, you ought to consider contacting a chargeback company. Reclaim Block offers professional fund recovery services, including help with chargebacks, recalls, and crypto tracking using CipherTrace. Book your consultation today and get your money back! 

All in all, trading scams come in many forms and can target those looking to make a quick buck in challenging markets. To protect your funds, investigate any investment opportunity that comes your way before rushing into it. If you do end up losing money to a trading scam, take immediate action to retrieve your funds and hope for the best.

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