In the world of finance and investing, there have always been some trouble makers. And ironically, they often succeed at coaxing people into their fraudulent traps.
Apart from the high volatility, scepticism also hovers around the cryptocurrencies due to fraud. A study highlights that out of ten, every one person in the US would fall for such trading scams in a year.
But the attackers do not always use the same ways to trap people, apparently just like there is a range of digital assets available in the market. The unethical actors also have a range of ways to carry out their unethical activities.
Let’s Have A Look At The Varied Types Of Trading scams:
Advance Fee Schemes
Advance Fee Schemes are basically when the attackers disguise themselves as traders and take out money from the folks with a promise to trade and make profits.
The targets of such a trading fraud are those who have recently lost their investment money, and they often get along thinking they may earn from this.
As the name suggests, these are the unregulated brokers, and there is a chance they can run away with your funds. This type cannot necessarily be counted as a scheme, but people still need to be aware.
Software scams are those that comprise Forex Robots or Expert Advisors developed by attackers. The programs assert that they can automate Forex trades. The creators utilise false statistics to coax the victims to purchase the product. Newbies to the market should be aware of such fraud types.
We call it a boiler room fraud when an individual or a group of individuals set up a fake company. They sometimes even rent an office or create fake websites. They call for potential investors in their company or some other one and offer high returns.
And after fulfilling their unethical wishes, they run with the funds leaving the innocent investors with massive losses.
Pump And Dump Scam
This is one of the most popular and the most common types in the trading industry, including cryptocurrencies. In this case, the attackers do not directly take out money from people.
What they do is that they first buy a considerable amount of any particular investment, for instance, a newly rolled out cryptocurrency. Following this, they disguise themselves as analysts with insider information. And then use their strategies to promote the investment and promise high returns.
After gaining the money, they then sell or dump their large share for higher prices, reducing the investment price. Which ultimately results in the investors incurring high losses. They don’t tell them beforehand that they own some shares of the company. Social media has become a primary tool for such kinds of fraud.
Signal sellers are those scams which involve an individual or a company that sells information to innocent folks on what trades they should carry out. They manage to coax people as they assert that the information is professional forecast based and is guaranteed to make money.
Fake guru scams are also popularly known as Investment seminar scams. This type comprises self-proclaimed millionaires who claim that they have the mantra to make profits in the stock, forex or crypto sector. They actually show their life to be quite luxurious and often show that it is all due to their profits in the respective market.
They would do absolutely everything to gain the trust of potential investors, like a paid seminar, textbook or course. But then folks got to know how to differentiate between the fake and the real ones. There are some out in the market with some really helpful advice also.
Bucket Shop scams are somewhat similar to boiler rooms, but the attacker needs to prepare a lot for this. But then they get much higher profits from folks. What they do is the attackers develop a platform that would copy the performance of the top most broker’s programmes.
A few might even copy a whole website of a top broker, eventually disguising themselves as a real deal.
Ponzi & Pyramid Scheme Scam
Ponzi and Pyramid schemes, similar to other types of scams, usually initiate with a swindler promoting an investment opportunity and, in turn, vowing high returns for a direct payment.
Here, the initial investor would see benefits that motivate them to share the scheme with their acquaintances. But though the incoming money would be coaxing, the investment actually does not make them money.
Instead, they are actually being paid the amount that themselves have invested in the entity while the attackers take a share of the cut every time. These schemes run long enough as more folks join in, but eventually, when the investors run out of money and disappear, they leave the victims with absolute zilch.
Whereas Pyramid schemes are those where the investors are told to recruit others into the investment opportunity and benefit from it. And they are promised that the ones recruiting the most would be higher at the pyramid earning more.
Manipulation of Bid/Ask
These types of scams are less prevalent now, given that folks can see the trading data online. But these scams comprise having spreads between seven to eight pips, which is normally 1-2 pips which highly surges the risk for the investors and traders.
Recognising Trading scam, Here’s How?
By far reading this article, you might wonder that the attackers can crawl almost everywhere and how would you save yourself. Well, every problem comes with a solution. All you’ve got to do is educate yourself and know the signs of being targeted because the crawlers would try distinct ways. It’s better to be safe than sorry.
Legit Vs Illegit
The new investors and traders need to ensure that they trade through a regulated broker only. Because if at all you get along with an unregulated one, there is no chance to defend yourself when they run away with your money.
Get In Touch With An Expert Or Professional
If you have even a bit of doubt that you’re being trapped, you need to get in touch with an industry expert who can help you to identify the weird or strange things and advise you accordingly.
Look Over Their Prominence
Things have been smoother with technology; you can go for a google search for Broker reviews. If Fact even websites are there for comparisons now. And if there is no mention of them anywhere in the sector, then you know who they are!
Cross Check The Regulations
It is good to play safe, so check what regulations are there for traders in your country to know what is legal or illegal. Plus, if the potential attacker enables you with regulatory details, cross-check them with the regulator’s official website.
No Blind Trust On the Call Centres
The brokers who follow the law would never call you before having your consent. And if someone is calling you and asking to invest while you did not give them prior consent, then it is a fraudulent call.
Fell Into A Trap? Here’s How To Untrap
- Report the instance to your country’s official authority concerning cyber crimes and scams.
- Block the ongoing transaction by contacting your bank and try to recover your funds.
- Change the passwords which you shared with the attacker.
- Get in touch with an expert for their advice.