How to Identify Fake Brokers and Forex Fraudsters on the Internet?

This is an article from Stepanova Alina, a legal advisor, and a financial advisor. In her post, she explains how to safely make transactions, use bank cards, and trade at the Forex market. 

They hack e-wallets, steal money from bank cards. They are “hooked” on the stock exchange and lure into financial pyramids — every day, financial fraudsters come up with the new tricks that you need to be able to recognize.

In this article, I have described all the main types of financial fraud schemes on the Internet and the ways to protect yourself against them. Forewarned is forearmed!

What is Internet fraud?

You receive a text message or a call from your bank: “Your card is blocked and you need to provide its details”. Or you receive an email from the tax service, Pension Fund, or collectors – you are offered to open the attached files and find out the details. The mail service writes that the account is hacked and you need to follow the link and change the password. Or a friend on the social network asks to transfer money to an unknown number/account. And sometimes, a message comes up about an unexpected winning and you just need to send a small sum for the sign-up. Do not believe it. All of these are fraudsters’ tricks.

Bank cards frauds

To use your card, fraudsters must know the digits, the expiration date, your name, and the CVC or CVV code. To do this, they often put skimmers – special overlays on the card slot of the ATM and set video cameras over the keyboard.

What should I do?

• Inspect the ATM before withdrawing money.
• Use ATMs inside Bank offices — they are protected better.
• Do not show the card to anyone.
• Cover the keyboard with your hand when you are entering the PIN code.
• Set limits for withdrawials.
• Choose cards with a contactless system (Paypass, Paywave). And make purchases without taking the card out of the wallet.
• Find out the security codes for the ATMs you use. The combination of symbols prevents malicious software from accessing your card’s data.

Fake brokers and Forex fraudsters

These fraudsters promise you a high income with no risk. But be aware: trading on the Forex currency market always involves risks. Fraudsters make the situation even worse. To enter the market and start trading, you need to sign a contract with an intermediary — a broker or dealer.

If you are caught up by a fraudster, they send you to a fake site with a trading terminal. Now the money you transfer goes to them, not to the broker account. The fraudster would help, give advice, and at first, you make money. But you can’t withdraw it — you are getting either a system error or the message that the server is overloaded. Suddenly, the course changes and you lose everything. And the broker offers to recoup: to take a loan and deposit a new amount to the account of the fraudsters.

Another type of scam is free traders courses where they promise to teach you Forex trading in a couple of days. A tricky contract is attached to the courses: the client agrees to the risk of losing everything in an “unforeseen situation” and is ready to pay a fine for terminating the contract.

How to protect yourself from forex fraudsters?

Investigate the Forex website you are going to work with. Read the federal laws on transactions in the Financial Market, as well as the other ones that might apply. Choose the broker who works from your country – if something happens, you can file a case against them. Check the broker’s license on the criminal bank website.

Find out what is written about the broker on independent forums. Stay alert when all the reviews are laudatory, and there are no negative ones at all.

Explore the brokers’ blacklist

• Avoid brokers who promise a stratospheric profit within a short term and actively advertise themselves: they send out newsletters and link to colorful websites.
• Do not take loans and avoid brokers that offer to do so.
• Choose not to deal with free courses of traders, analysts, and advisors.
• Read the contract carefully.

Financial pyramid schemes

If you are offered to invest money at high-interest rates, they guarantee income and ask to bring friends – perhaps you are dealing with a financial pyramid. It is growing due to new participants. The top of the pyramid is the organizers, who quickly earn money and hide. And the lower classes give money and end up with nothing at all. Pyramids can disguise themselves as investment projects, credit organizations, financial services centers, management companies, cooperatives.

How to protect yourself from financial schemes?

• Check the company’s license. As a rule, you can find the corresponding directory on the official website of the local government. If the company does not have a license, it means that you are dealing with a fraudster.
• Check if the company is listed as a tax resident. Especially if it was registered not long ago.
• Don’t make any pre-payments.
• If the company claims to invest your money in construction, oil production, and other high-yield projects, ask for the documents that could confirm this.
• Read the contract carefully. If you understand that the company is not liable to you (or this item is written in a veiled way), leave.

There are a lot of fraud schemes. But all of them are based on the humans’ fear for themselves and their beloved ones, the desire to get richer and live better. Remember the basic rule: each time you get a dubious offer, do not respond immediately. Check all the information. And only then act. Well, if you are cheated, collect all the evidence you can find (SMS messages, phone numbers, contracts) and write a statement to the police.

General financial security rules:

• Carefully check the information.
• Try to find unknown phone numbers on the Internet. You can use “phone number + scam/fraud” for the search.
• Call your bank back at the phone number shown at the back side of the card.
• Use a search engine to find an official website of the organization and check their domain names.
• Remember the number your bank uses to send you text messages. Do not respond to messages from other numbers.
• Never show or send to anyone your personal data, the card details, or codes.
• Do not send money to strangers. Even if the person says they transferred some money to your card by mistake. Contact the bank, check your card transactions, and get your account details first.
• Install the Mobile Bank app of your bank and enable 3-D secure. Text messages about all money transfers will be sent to your mobile as text messages, as well as the transaction confirmation codes. This way you will always be aware of the account status.
• When you receive an email with an anonymous greeting, a strange sender’s address, with links and buttons in the body of the message, delete it without downloading/opening files, images, and clicking clinks, as they are from fraudsters. Once again: Do not follow any links. Do not open file attachments. Do not send text messages.
• Install antivirus software on your computer.
• Tell your elderly relatives and teenagers about Internet scam schemes and share the rules points written above.

Stepanova Alina

legal advisor, financial advisor

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