Much of the binary options market operates through internet-based trading platforms.
The number of the trading platforms that offer the opportunity to purchase and trade binary options has surged in recent years. This has also caused an increase in the number of complaints about fraudulent promotion schemes involving binary option trading platforms.
There are non-regulated platforms, where clients’ money is not necessarily kept in a trust account, as required by the financial regulation, and transactions are not monitored by a third party to ensure fair play.
Traders can fall into the hands of a scam, pretending to offer the same services and level of customer care that the popular brokers offer their users. Depositing money is easy with any company you sign up with, yet the withdrawal process might quickly become a nightmare if you sign up with the wrong broker.
There are variations of binary option contracts in which a binary option that expires out of the money may entitle the customer to receive a refund of some small portion of the deposit, but this is not happening everywhere.
In fact, some binary options internet-based trading platforms may overstate the average return on investment by advertising a higher average of return on investment than a customer should expect, given the payout structure.
There is no binary options scam as a whole. What there is, however, are individual binary options scams, usually run by dishonest broker affiliates.
Luckily, almost all of these scams operate in a very similar manner, but their strength is also their weakness because they all work basically the same.
Is it possible, then, to identify a binary option scam? How?
One of the first signs is the lack of customer service. If the customer service team is unavailable during trading hours they probably won’t be around when you ask for your money back.
Another signs is the registration. The binary option contract is a security and may not be offered or sold without registration, unless an exemption from registration is available. If there is no registration or exemption, then the offer or sale of the binary option would be illegal.
Another way to identify a Binary Options Scam is by conducting a Google Search to find any negative testimonials and reviews on the company.
It’s recommended to look for the company/platform before you sign up. It won’t help much to research the company after you already funded your account.
Last but not least, it is important to not trust some internet advertising saying: ‘System/Software Promising Easy Large Returns…’; ‘Get Access for “Free” Or With “Free Trial”…’; ‘…But Only If You Open New Account & Deposit $100 With Their “Approved” Broker or Brokers’.
Other details can differ somewhat, but the three phrases above will always be present if it’s a scam. Now, just because one of those things may not be present does not necessarily mean that is not a scam, but it does mean that it might not be.
So, before sign up your account to a platform that you do not know, remember that all trading platforms are not necessarily complying with applicable regulatory requirements and may be engaging in illegal activity.
Do not invest in something that you do not understand. Check on the internet about the company/platform and trade without fear.