If you have some extra money to invest, be careful! Many fake brokers advertise their services–often aggressively—on the internet. A large number of these fake brokers don’t pass the professionalism smell test. They may hawk their wares so aggressively, make annoying cold calls or announce their lack of credentials through sloppy content filled with typographical errors.
Unfortunately, not all fake brokers make it clear who they are. It may take close observation to detect a fake broker. This may mean looking carefully at their licensing and researching the standards of various financial regulatory entities. It is important to investigate a broker thoroughly before signing up and giving them money.
Unlicensed Fake Brokers
The first thing to look for with any broker is that they are licensed. There is no reason to work with a broker who is unlicensed when there are many reliable and regulated brokers to choose from. In addition, some regulatory agencies, especially those in the West Indies, are quite lax.
Even those who are focused on making a lot of money in commissions rather than serving clients can get some kind of license. If they do not, that is a major red flag. Brokers without licenses are not real brokers, plain and simple. They are often easy to spot.
Fake Brokers without Proper Licensing
It may not be so easy to spot brokers who do not have adequate licenses. The fake broker may demonstrate that he or she has a license, but this license may not cover forex trading, for example, or binary options. Also, they may not be licensed to work with clients from certain regions. Too many people just let these details slide, even if they are noticed, and this is usually a mistake.
Fake Brokers With False or Revoked Licenses
Many fake brokers are operating with a counterfeit license. With technological advances, it can be simple for unscrupulous parties to make a document look real. Regulators are on the lookout for fake brokers claiming to have licenses from their regulatory agencies.
Another problem is fake brokers who still operate as brokers after they have had their licenses revoked. They may have the original document, but it takes some digging to realize that these brokers have had their licenses stripped from them because of violating regulations.
Fake Brokers Who Are Not Really Investing the Money
It may be shocking to realize that a fake broker is not investing the money at all. They may be keeping your funds or spending them and making money charging commissions. These fake brokers are intent on getting their clients to make as many transactions as possible to generate more commission fees.
When working with these scam brokers, the best-case scenario is they will return the money when you request it with only a modest return. When you do the math, you will realize they made more in commissions than you did in fake “returns.” Particularly greedy fake brokers will disappear with all of the money. This is called a boiler rooms scam and happens when fake brokers set up shop only to disappear with clients’ money when they are about to ask for a withdrawal.
Signs of a Fake Broker
All of the above practices are signs of a fake broker, but most of them can only be discovered when customers have already invested money. Here are some signs that should be red flags before you sign up:
- Their license is out of date or looks fake
- Their license is from an offshore or unreliable regulator
- They are not licensed at all
- You can’t find any information about them on the web
- You find negative reviews on the web that they are a fake broker (reviews aren’t always accurate but often they are).
- They are aggressive about getting you to trade as soon as possible
- They pressure you to make specific kinds of trades
- They do not communicate consistently
Can You Get Your Money Back from a Fake Broker?
People often lose hope when they lose money to fake brokers because they seem impossible to track down. 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.