With online Binary Options trading, investors can gain or lose their funds when investing in binary options. Investors can thus gain or lose when an option moves up or down over a given period. Binary trading was first approved by the U.S securities and exchange commission in 2008. Binary options trading mostly operates through websites that don’t comply with U.S. regulations, this thus poses a risk to investors. Many unregulated sites are used by criminals outside the U.S. to commit fraud.
Information coming from the FBI
The FBI has stated that binary options trading fraud is a major problem.
In 2011, the U.S Internet Crime Complaint Center received four complaints; each loss reported averaged $20,000. Between 2011 and 2016, the center received multiple complaints with millions of dollars in reported losses which are only a portion of the losses as some victims do not report cases of fraud. This type of fraud constitutes 25% of all the fraud complaints received by European countries. According to the FBI, binary option scammers steal $10 billion annually worldwide.
How fraudsters are defrauding members of the public.
- Fraudsters may ask for copies of the victims' personal information such as credit cards and utility bills which are used to steal the victims' identity.
- Fraudsters refuse to credit customer accounts. They also ignore customer communication and may freeze their accounts and accuse them of fraud.
- Fraudsters manipulate trading software so as to generate losing trades.
How to avoid being a victim
Ensure the options trading website has registered with the Securities Exchange Commission.
Do not invest in an opportunity you do not understand. Investors are also advised to use due diligence before transferring their funds or personal information to such websites. A list of sites that defraud funds from the public appears on the Commodities Futures Trading Commissions' website.
The FBI says that this type of fraud is hard to solve because criminals involved are sophisticated and operate in multiple countries.
