Fraud, cheating and scam is absolutely not funny to talk about but it’s necessary to think about it when it comes to binary options. It doesn’t help to close your eyes and to hope that everything is O.K.. There is a lot of money involved in the binary options market and there is always a residual risk to get ripped-off. Luckily, binary options fraud and scam is the exception and very rare.
By far the most important step when it comes to avoiding fraud is choosing the right partner. The most important step is choosing the right brokerage company. 24Option, for example, is one of the most reputable brokers: International brand, good support, high returns and excellent VIP program.
Dubious or scam?
There is a huge difference between a dubious broker and a scam broker. A dubious broker is characterized by unfair business-to-consumer commercial practices like very high fees for withdrawals, bad support, … These are characteristics for a dubious and unreliable broker and unfortunately there are many of them out there in the field of binary options.
Scam brokers are different. The business model of these brokers is solely fraud and cheating. From the very beginning, they don’t want to earn money in a honest way but they want to rip-off their customers. For example a broker could simply refuse to pay your Cash Out. The good news is that these companies are very rare and there is a simple reason for that: Binary option brokers which are operating in a honest way make very good money. If a broker really wants to cheat it’s a very short-sighted plan: Well, in the short-term the broker makes more money for sure. However, the reputation of the broker would be lost in no time.
How to spot scam brokers?
It’s very difficult to recognize scamming brokerage companies because there isn’t something like a black list. It’s very hard to collect evidence about illegal practices and you can’t solely trust traders’ complaints without evidence. Occasionally the broker has the right to close a traders account because of illegal activities like money laundering. If the broker refuses to pay the Cash Out the trader sometimes feels cheated even-though it was the trader who cheated in the first place.
Here is a short checklist to avoid scamming brokers and dubious companies:
- There has to be a contact page on the website where you can find the headquarters address. Your warning bells should ring if you can’t find the “companies” address on the whole website.
- Is the broker licensed and regulated? Where is the broker regulated? Don’t trust any broker which doesn’t provide information about regulation. If there are serious issues it’s the regulating authority you have to go to.
- The English website of most brokers is usually very good when it comes to language. If you speak another language you should check the website in this language too (if the broker operates in this country). If the website is translated very badly chances are good that the broker is just interested in more customers without offering good support.
- Just type “xxx broker scam” into Google. It’s a very good way to find complaints about a specific company. However, take care of the “bad loosers”. Trading is tough and a lot of traders loose money because they simply can’t beat the market. Many traders and many traders’ egos have to find someone to blame – this is usually the broker.