Brokers Scam Tactics

Brokers Scam Tactics

The internet has made shopping, socializing, and investing money more convenient, but the web is also a breeding ground for scams. The ability to create a fake identity without an actual location and disappear with customer data and funds unfortunately is not difficult for those who have a talent for trickery and broker scam tactics.

To stay safe while trading online, it is important to be familiar with common types of broker scam tactics and to stay away from brokers who use them.

1. Faking Credentials

The single most important way to avoid getting scammed by a broker is to examine the broker’s credentials. This means not being satisfied that a broker is licensed, but to examine this license and ask the following questions: 

  • Is this license from a reliable regulator?
  • Is it up to date?
  • What locations are covered in the license?
  • What kinds of trading are covered in the license?

Paying attention to the quality of the regulator is of particular importance. Regulators in the West Indies and other parts of the world may not provide significant inspection or oversight, so brokers can get away with scamming clients. Keep in mind, though, that even if the license is from a solid regulator, it may be counterfeit.

2. Agressive Manner

Legitimate brokers rarely make cold calls. Think about it. Those who are offering a high-quality financial product do not want to look desperate or use tacky tactics. Not only are questionable brokers often aggressive to attract new clients, but they may be pushy about pressuring existing clients to make certain trades since they get commissions per transaction. They also could be pushing an asset that they own, which is common in pump and dump scams.

3. Extravagant Promises

A healthy return for a stock portfolio is about 10% per year. Brokers who offer double, triple or more than this should be suspect. Hyped up guarantees are signs of scams for many types of products, including investment services.

4. Fake Fees

It is normal for brokers to receive commissions for trades. However, these should be a reasonable amount, should be stated clearly in the terms and conditions, and should not be adjusted unless there is something in writing that clearly applies to all clients. One broker scam tactic is introducing fees suddenly that have not been stipulated or raise them without explanation.

5. Fine Print Traps

Amazingly, traders can do hours of research online to locate a broker, think carefully about what kind of trading vehicle they prefer, and earmark a large amount of money to invest and still not take the time to read the terms and conditions before signing with a broker.

When it comes to broker scam tactics, the devil is in the details. Read the terms and conditions carefully. If something in the fine print doesn’t seem right ask Scam Survivor to check out the broker and see if they are legit.

6. Make it Difficult for Clients to Withdraw Money

This is one of the most common and most distressing broker scam tactic. When clients are denied access to their own money, either through an outright refusal, the pressure to make additional investments or with the condition of exorbitant fees, they can feel certain that the broker is a fraud.

7. Stopping Communication

If a broker simply stops communicating, that could be a sign that he is about ready to run off with clients’ money. The sign of a legitimate broker is transparency and a willingness to communicate with clients. When a fake broker has run out of excuses and evasions and just stops talking, get a third party like Scam Survivor involved.

Can You Get Your Money Back from a Fake Broker?

People often lose hope when brokers refuse to release their funds. However, Scam Survivors experts have the training and the industry experience to find scam artists, discover their true identities and return customers’ money. 

Consult with us if you have fallen victim to a fake brokers scam. We have the tools and the insight to track down the thieves and get your money back.

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