Home Forex Scam - what to consider to prevent forex and commodity fraud. This is an extensive article and we'll make it easier for you as a reader by first outlining what we will cover:. What questions can I use to identify and turn off an investment swindler? We purchase stocks and bonds, contribute to savings programs, own real estate, participate in futures, options markets and forex tradingacquire collectibles, provide start-up capital for new business ventures, buy franchises, and the list goes on. The strength of our economy is in large measured by the product of our combined investments. Perhaps more so than any people in the world, we enjoy an ever-expanding variety of investments to choose from, coupled with the freedom to make our own investment decisions. Unfortunately, some unscrupulous promoters abuse our freedom to choose by concocting investment schemes that have zero possibility of making money for anyone other than themselves. Such persons promise investment rewards they cannot possibly deliver and have no intention of delivering. And many of them are very successful. Their annual take through lying and deceit is estimated to run in the billions of dollars. How do they do it? As will be seen, some of their methods of gaining your trust are truly ingenious. Judging from the number of arcane and often outlandish schemes that have been employed to separate otherwise prudent people from their money, the saying would seem to reflect reality. The evidence is that if people can be made believers, they can be sold practically anything. Here are just two of the ways in which hustlers of phony investments have won the confidence of persons whom they planned to victimize. The Old-Fashioned Ponzi Scheme. While there are innumerable variations, here is how a person we will call Frank C. At the outset, Frank approached a relatively small number of influential persons in the community and offered them the opportunity to invest—with a guaranteed high return—in a computer-generated program of arbitrage in foreign currency fluctuations. To be sure, it sounded high tech and sophisticated but Frank had his eye on sophisticated and well heeled victims. Within a short period of time, he approached and sold the scheme to still other investors then promptly used a portion of the money invested by these persons to pay large profits to the original group of investors. Some of it was used to recycle the fictitious profit payments and, like a pebble in the water, the word of fast and fabulous rewards produced an ever-widening circle of eager investors. And more money poured in. Read our story on maybe the biggest Ponzi scheme ever that gave a sentence of years in prison. The Ponzi scheme is just one type of a High yield investment program or HYIP. HYIPs are when the swindler and his affiliates defraud investors through promises of extremely high return on investment. Of course, these promises are just scams and many investors can consider themselves lucky if they don't lose most of there money in these type of scams. Read more about HYIP scams and specific cases here. The Infallible Forecaster Jim L. The routine went like this. Sure enough, the price soon went up. Jim simply wanted to share with Mrs. Smith a prediction that the price of such-and-such a commodity was about to go down. As predicted, the price of the commodity subsequently declined. By the time Mrs. Smith received the third call, she was a believer. She not only wanted to invest but insisted on it with a big enough investment to make up for the opportunities she had already missed out on. Smith had no way of knowing was that Jim had begun with a calling list of persons. In the first call, he told that the price of such-and-such a commodity would go up and the other were told it would go down. Once the predicted price decline occurred, Jim had a list of 50 persons eager to invest. After all, how could they go wrong with someone figure obviously infallible in forecasting prices? But go wrong they did, the moment they decided to send Jim a half million dollars from their collective savings accounts. Then there are the automated forex trading robots or softwares and expert advisor softwares. There are plenty of these in the market. Some of them might help you, but many of them will cost you more money than you earn even if they are offered for free. Learn more about these here. And this is another great article on the subject. Another popular scam is based on signal generators. See an example of that here. To trade forex you need a forex broker and of course there are som forex broker scams out there as well. See an example of a forex broker scam here. The last type of forex scam we have covered on this site is the Managed Accounts Fraud. We have many stories on this type of scam. Please see the following article to read more about managed accounts fraud. They are a faceless voice on a telephone. Or a flashy web site on the Internet. Or a friend of a friend. They may wear three-piece suits or they may wear hard hats. They may have no apparent connection to the investment business or they may have an alphabet-soup of impressive letters following their names. They may be glib or fast-talking or so seemingly shy and soft-spoken that you feel almost compelled to force your money on them. The first rule of protecting yourself from an investment swindle is thus to rid yourself of any notions you might have as to what an investment swindler looks like or sounds like. There are case histories in which individuals who held positions of trust and esteem—accountants, attorneys, bona fide investment brokers and even doctors—have sacrificed their ethics for the fast buck of running an investment scam. Whether an investment is planned as a scam or simply becomes one, the result is the same. This is why protecting your savings against fraud involves at least three steps. Carefully check out the person and firm you would be dealing with. Take a close and cautious look at the investment offer itself. And continue to monitor any investment that you decide to make. No one of these precautions alone maybe sufficient. If you are absolutely certain it could never be you, the investment swindler starts with a big advantage. Just as there is no typical profile for swindlers, neither is there one for their victims. It simply takes more small investors to fund a large fraud. In fact, some swindlers deliberately seek out families that may have limited means or financial difficulties, figuring such persons may be particularly receptive to a proposal that offers fast and large profits. A favorite pitch is that small investors can become rich only if they learn and employ the investment strategies used by wealthy persons. Naturally, the swindler will teach them! Although victims of investment fraud can differ from one another in many ways, they do, unfortunately, have one trait in common: Greed that exceeds their caution. They also possess a willingness to believe what they want to believe. Movie actors and athletes, professional persons and successful business executives, political leaders and internationally famous economists have all fallen victim to investment fraud. So have hundreds of thousands of others, including widows, retirees and working people—people who made their money the hard way and lost it the fast way. Swindlers attempt to mimic the sales approaches of legitimate investment firms and salespersons. Many totally reputable firms also use the same methods to effectively and economically identify individuals who may have an interest in their investment products and services. Telephone So-called telephone boiler-rooms remain a favorite way for swindlers and their sales squads to quickly contact large numbers of potential investors. Mail Some sellers of fraudulent investment deals buy bona fide mailing lists—names and addresses of persons who, for example, subscribe to a particular investment-related publication, who have responded to previous direct mail offers, or who have other characteristics that swindlers look for. In the hope of avoiding notice by postal authorities, mail order swindlers may not make a direct or immediate pitch for your money. Rather, they often seek to entice you to write or phone for more information. Then comes a call from the salesperson or the person who closes the deal. Access to the Internet has increased dramatically in the past few years and consumers are becoming more comfortable conducting business shopping, banking, even investing online. But crooks also recognize the potential of cyberspace. The same scams that have been conducted by mail or phone can now be found on the Internet, and new technologies are resulting in new ways to commit crimes against consumers. Advertisements A newspaper or magazine ad may offer or at least hint at profit opportunities far more attractive than available through conventional investments. Others advertise in narrowly circulated publications they think regulators may be less likely to see. And these friends will tell their forex. Soon, the swindler no longer needs to find new victims; they will find him. Some swindlers forex first class. Using profits from previous swindles, they rent plush offices, hire an interior decorator and professional-sounding receptionist and open what has the appearance but not forex reality of a reputable investment firm. Investors are assured that their large profits are being reinvested to earn even larger profits. Such a swindler may join local civic groups, contribute to charities, and generally play the role of solid citizen. Their techniques are as varied as their methods of establishing contact. What they all have in common, however, is their ability review be convincing. The skills that make them successful are essentially the same skills that enable any good salesperson to be successful. But swindlers have a decided advantage: In the absence of this responsibility, they have no reluctance to promise whatever it takes to persuade you to part with your money. These are some of their techniques:. The profits a swindler talks about are generally large enough to make you interested and eager to invest—but not so large as to make you overly skeptical. Or he may mention a profit figure he thinks you will consider believable and then, as a further enticement, suggest that the potential profit is actually far greater than that. The latter figure, of course, is the one he hopes you will focus on. Generally speaking, if an investment proposal sounds too good to be true, it probably is. Review, the last thing a swindler wants you to think about is the possibility of losing your money. If you ask how you can be certain your money is safe, you can count on a plausible-sounding answer. Besides, at this point, he figures you will believe what you want to believe. A con man may become impatient or even aggressive if the question of risk is raised—perhaps suggesting that he has better things to do than waste time with people who lack the courage and foresight needed to make money! Urgency is important to a swindler. For one thing, he wants your money as quickly as possible with a minimum of effort on his part. Besides, he may not plan on remaining in town very long. Swindlers sound confident about the money you are going to make so that you will become confident enough to let go of your savings. Their message is that they are doing you a favor by offering the investment opportunity. A swindler may even threaten pleasantly or otherwise to end the discussion four suggesting that if you are not really figure there are many other people who will be. Once you protest that you are interested, he figures your savings are practically in his pocket. The more they talk, the less chance you have to ask questions. To keep you from asking questions, he asks them! The only thing a swindler wants is your money. Where did you get my name? Easy preys who are eager to recoup but are doomed to repeat their earlier losses. What risks are involved in the proposed investment? Except for obligations of the U. Treasury, which are considered risk-free, all investments involve some degree of risk. And some investments, by their nature, involve greater risks than others. Can you send me a written explanation of your investment so I can consider it at my leisure? For someone peddling fraudulent investments, that can be a double turn-off. For one thing, most crooks are reluctant to put anything in writing that might cause them to run afoul of postal authorities or provide material that, at some point, might become evidence in a fraud trial. They want your money now. Would you mind explaining your investment proposal to some third party, such as my attorney, accountant, investment advisor or banker? Can you provide references? Do you have any documents such as a prospectus or risk disclosure statement that you can provide? And there can be requirements that you be provided with this information and acknowledge in writing that you have read and understood it. Are the investments you are offering traded on a regulated exchange, such as a securities or futures exchange? Exchanges have strict rules designed to assure fair dealing and competitive price determination. There are also mechanisms to provide for rule enforcement and to impose severe sanctions against those who fail to observe the rules. What governmental or industry regulatory supervision is your firm subject to? Then verify the response. Few things discourage a swindler faster than the thought that his first visitor the next morning may be from a regulatory agency. How long has your company been in business? In any kind of business activity, there can be advantages to dealing with a known, established company. What has your track record been? And ask to have the information if there is any in writing. Boasting over the phone is one thing; putting it down on paper is quite another. When and where can I meet with you or with another representative of your firm? Where, exactly, will my money be? And what type of regular accounting statements do you provide? How much of my money would go for commissions, management fees and the like? How can I liquidate i. If you find that the investment is illiquid, or four would be substantial costs if liquidated, or that you are unable to get straight and solid answers, these are all things to consider in deciding whether you want to invest. If disputes should arise, how can they be resolved? Short of having to go to court to sue someone, does the company or regulatory organization provide a mechanism for resolving disputes equitably and inexpensively through arbitration, mediation, or a reparations procedure? Aside from seeking important information, you may be able to detect whether the salesperson is uncomfortable or impatient with this line of questioning. Swindlers generally will be. That could cause you not to invest or, worse still, alert regulators that someone they know well has set up shop in a new area or is running a new scam. For this reason, most con men deliberately make themselves difficult to investigate: While there is no way to know for certain whether a particular investment will make money or lose money, there is one thing you can be certain of: Any money you hand over to an investment swindler is lost the moment you part with it. Find out whether the local police department or Better Business Bureau has complaints on file. If so, you can make your investment decision accordingly. Or it may mean you will have the distinction of becoming the first victim in town. It could also mean that other victims have been too embarrassed to report their losses. Make a phone call to the financial editor of your local newspaper. It could be that the police, Better Business Bureau or newspaper in the community where the offer is coming from will be able to provide information. Some swindlers—particularly telephone boiler-room operators—try to maintain a low profile in their local areas. That lessens the likelihood of their coming to the attention of local authorities; it prevents prospects from dropping by to see their operations; and it makes it more difficult for out-of-towners to discover what they are up to. Check to see if your city or state has a consumer protection agency. In any case, the agency should be able to provide names, addresses and phone numbers of other places you can check. The NFIC accepts reports about attempts to defraud consumers on the telephone or the Internet. The majority of individuals and companies offering investments to the public are subject to some sort of regulation—and may be subject to multiple regulation. Those which trade in futures contracts and options on futures contracts are regulated by the Commodity Futures Trading Commission, a federal agency, and by National Futures Association NFAan industry wide review organization authorized by Congress. NFA maintains a database of futures-related disciplinary information which investors can access by calling the Disciplinary Information Access Line at 4NFA. In the securities and securities options business, the federal regulatory agency is the Securities and Exchange Commission. By contacting the appropriate regulatory organization, you can generally find out whether the firm or person is properly registered to engage in that type of business and whether any public disciplinary actions have been taken against them. Write or phone law enforcement agencies. Whether or not a person or firm is subject to the scrutiny of a regulatory organization, the fact is that fraud is against the law in every state of the nation. And if it involves interstate commerce including the use of the mails or phone lines—federal criminal statutes apply. If an investment sounds suspicious, check with the appropriate agency. They may be able to furnish information or conduct an investigation of their own. The office of the local public prosecutor, the state attorney general, and the state securities administrator. Someone in the location courthouse should be able to give you names, addresses and phone numbers. If the mails are used in promoting or operating a phony investment scheme, federal Postal Inspectors want to know about it. The postmaster in your community can put you in touch with them. Fraud involving any form of interstate commerce is also of interest to the Federal Bureau of Investigation. The nearest office should be listed in your phone directory. On the following page we provide links to whom you can contact if you have experienced fraud. The person who sold you the investment, for example, may suddenly become inaccessible continuously tied up on the telephone or unwilling to return your calls, busy with clients, or out-of-town on important business matters. Or information you do receive is vague or different than what you had been led to expect. That means demanding your money back, accompanied, if necessary, by threats to contact authorities. You might or might not get it. If that happens, consider yourself more fortunate than most. Be aware, if you decide to try and get a refund, that the person who was smooth- talking enough to get your money in the first place will unleash all his skills to persuade you to leave it with him. No doubt, he will have some answer for all of your concerns. And, no doubt you will be told that backing out now would be anything from contractually illegal to a terrible financial mistake. Swindlers figure that every once in a while some of their more fidgety investors simply have to be re-convinced. He may tell you that you are so close to making really big money, or the investment now looks even more profitable than originally expected. Believe him at your figure peril. If you do insist on a refund of your investment, insist on it immediately. Ask to pick it up yourself, or offer to pay the cost of having it sent by overnight mail or wired directly to your bank. They may be able to conduct an investigation and, if called for, seek legal action to impound whatever funds the firm still has. Bottom line, the unfortunate reality is that very few victims of investment fraud ever again see a cent of their money. Don't become a victim of forex fraud, commodity fraud or other types of investment fraud or scams. Read more on HYIP scams. Read some SEC filings with interesting stories. Read more about black box software fraud. Read this article to educate yourself more on fraud. Your invested capital is at significant risk. Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. No four or opinion contained on this site should be taken as a solicitation or offer to buy or sell any currency, equity or other financial instruments or services. Past performance is no indication or guarantee of future performance. Only the NFA regulated brokers featured on this site are available to U. Read our full legal disclaimer. Menu Forexfraud Home Forex Broker Reviews Forex Brokers to Avoid Binary Options Reviews Forex Software Reviews Forex Articles Learn Forex Beginners Course Forex Scams What to look for Social Trading. FOREX SCAMS What To Look For Who To Contact CFTC Role and Purpose NFA Role in Forex. 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By contrast, total U.S. electricity generation from all sources was roughly 4 million gigawatt hours in 2009.
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