Don’t be a scam statistic – How to protect your trading funds

Don’t be a scam statistic – How to protect your trading funds

How often do you see stories about scams?

Either I seem to have an eye for finding the stories or it seems to me that they are increasing.

Unreputable firms are everywhere, whatever language you may speak or wherever your location may be, they are out to target you.

Learning how to identify their phony schemes can help you avoid getting scammed, preventing you from becoming a sad statistic. So how are you going to recognize a bogus investment ‘opportunity’ when it is in front of you?

Some statistics from the regulators

The Financial Conduct Authority (FCA) and Action Fraud alert the people of fraudulent investment schemes concealed through online trading platforms that are illegitimate.

They are urging the public to be cautious. According to them, fraudsters promise high returns from investments in crypto and forex, with victims losing over £27 million in total during 2018 and 2019.

According to the National Fraud Intelligence Bureau of London, the British community loses billions of pounds to fraudsters every year. As mentioned in the Financial Times, the Police of the City of London reported that as early as the first six months of 2019, the investment frauds recorded were 8153. This number is almost double compared to the first six months of 2018.

Scammer evolution

Scammers have become ever-more ingenious in chasing your hard-earned cash. Each technique is becoming incredibly clever and convincing.

Gone are the days where broker deception was limited to the misrepresentation of facts, leaving out influential information, unauthorized trading, churning, and so on.

However, not all the old tactics are buried in the financial scam graveyard just yet. Up until today, they still exist and thrive with a modernised twist.

In recent years, some of these fraudsters have decided to fish large numbers of unsuspecting customers with a single social media net, stealing millions in the process.

The rise of social media scams

Scammers are incresingly using social media to target their victims. They are also using false advertising and manipulated news by word of mouth in its own form of ‘Fake news’.

The scammers attract you with empty promises or simply set up cloned sites of authentic firms so that you will send them money.

Some even go as far as organizing events that introduce you to the trade and their platform.

The fraudsters can hook you in with promises of generous returns or deposit bonuses that are very well sugar-coated. All these empty promises are then backed-up with marketing ploys and decent looking websites.

What the FCA says

The Financial Conduct Authority (FCA) revealed that the fraudsters take advantage of the broad influence of social media to promote their get-rich-quick online trading platforms.

They hype-up the interest of people by posting images of luxury items, and they even make use of fake celebrity endorsements.

When you take the bait, the social media post links you to a professional-looking website where they entice you to invest.

Like any other scam, they will seduce you enough until you let your guard down and they will do everything in their power to persuade you to trust them even more.

When you do invest, you will think that you made a substantial gain and that your first-ever trade is profitable. With this, you will be encouraged to become a bolder investor, and sadly, your new-found confidence in the platform will make you do so.

You are then convinced to share your luck with other people. “Do not keep all this inside information to yourself!” they might say. With this in mind, you invite your acquaintance, friends, and family to join as well.

This cycle goes on for a while until the investment returns discontinue, the online trading account then closes, and your deceptive broker ceases to exist.

Your investment now disappears along with the shady brokers that lured you in. They will leave you with a big hole, not just in your pocket but also in your heart.

Scary right?

So, how do you make sure that you can trust your broker? How do you know that the investment is authentic? How do you avoid becoming a mere statistic?

What can you do to protect yourself?

Your first step should be to do some virtual digging. You should start by looking at the regulators. The FCA has a fabulous resource called scamsmart which will help you identify current scams, clone firms or shady brokers.

Take the time to check their authenticity before you invest. Actively save yourself from heartaches and fend off those bad investments.

A Step-by-step guide to avoid untrustworthy brokers and scams

1. Check the broker’s regulator 

The first thing you need to do is to check with the broker’s regulator to ensure that they are indeed regulated.

Every state has a securities regulator, and some countries such as the USA have even more than one.

If the broker has multiple financial regulating bodies, then you should check with each of them to be double sure.

Many firms are regulated  in The UK, Cyprus and The USA. The financial regulatory organization maintaining uniformity in trade within the United Kingdom is the Financial Conduct Authority (FCA).

The financial governing body in Switzerland is the Swiss Financial Market Supervisory Authority (FINMA). Whereas the organization’s counterpart for the USA is the Financial Industry Regulatory Authority (FINRA). Whilst for Cyprus where many European brokers are based, the regulator is CySec.

So if you wanted to check that the broker is regulated in one of the above mentioned countried you would go to the following sites:

For FCA regulated brokers

For FINRA regulated brokers

For CySec regulated brokers

For FINMA regulated brokers

The regulators here are not limited to the ones mentioned. Each state has a dedicated regulator. Bear in mind that some regulators have better reputations than others but if you stick to the regulators above you should be safe.

2. Check regulators for broker warnings. 

Brokers are governed by strict laws of conduct. If there are warnings on the regulator site about the conduct of a broker then this should be a red flag. If the brokers are constantly breaking the rules then you should probably avoid.

3.Confirm the authenticity of the regulator. 

It is not enough that the broker is licensed to operate, the regulator must also be be reliable. Regulators such as FINMA and The FCA have incredibly high standards with regards to customer safety and both have an ombudsman [mediator] to help with broker problems.


4. Get information from impartial review sources

Doing unofficial research can also be helpful. Another good idea is to check reviews on reputable sites such as google reviews or Trustpilot. Here you will read unbiased reviews which should help you formulate an idea of the firm.

Impartial reviews also allow people to post complaints. again, many negative reviews could signal a poor firm [or disgruntled customers] but it will help you formulate a general overview of the broker.

5. Check fraud awareness sites

You may also visit helpful sites like Forex Peace ArmyAction FraudFraud Intelligence, and Citizens Advice to have access to numerous sources of reliable data. The more information, the better.

Another excellent source is the FCA scamsmart which guides you on the pitfalls to avoid when choosing an investment opportunity. It also has an excellent directory of up-to-date scams and lists of scam sites and brokers.

However, please be mindful that not everything you read online is true [unless it comes from reputable sites and sources] such as FCA/FINMA. Some may be misleading, so be wise while you research and apply common sense.

Being up to date with news from reliable media sources is a layer of protection from shady brokers and suspicious investments. It is most likely that they have duped a few people before you. Read up and get updated. Knowing the ever-evolving tactics in advance is also a smart way to maintain your safety.

6. Do not assume that all polished websites are authentic.  

The advancement of technology brings about the development of perfect-looking websites that are incredibly simple to make.

Because of this, scammers can make a site in next to no time and start scamming faster. The FCA has a list of clone sites that they are aware of but it’s very difficult to keep up with them.

So how do you know which sites are real or not?

Because the sites can look identical in every way it’s incredibly hard to tell just by looking at the site. To be able to tell, you will need to dig a little deeper.

First check the URL of the site. It’s important that the URL matches what is on the broker regulator for the site. Again the FCA has a list of scam brokers with their associated scam URLs.

You will often see sites taking the guise of genuine sites like and they will add something like This is a sure tell way that you have a scam site.

The safest way to ensure that you have the right URL for the broker is simply to copy and paste from the regulator.

Ultimately the best way that you can avoid scam brokers is to be extra vigilant and apply plenty of due diligence before committing to depositing your funds.

Once you ensure that the broker’s regulator is reputable and that the URL is on the broker site you can then look a bit closer at customer reviews and so forth.
If you follow the steps above then you will be in a much better position to make an informed choice to make better decisions with your money.

So, what will you do to protect yourself from becoming a scam statistic?