Financial Scammers Flock to Social Media

09/22/2017 4:08 am EST

Focus: COMMODITIES

Dan Rutherford

Director, Office of Customer Education and Outreac, U.S. Commodity Futures Trading Commission

Use CFTC SmartCheck to verify that the company or person you’re about to give your credit card to is properly registered and in good standing, advises Dan Rutherford of the Commodity Futures Trading Commission.


Get Trading Insights, MoneyShow’s free trading newsletter »


(Sponsored content) You might be curious about new trading opportunities. You might even take to Facebook and find an online group focused on discussions of binary optionsforex, and/or trading  “signals” or systems that tell you when to buy and sell.

You see a lot of group member activity, including links to educational seminars, demo platforms, and binary options signals services, which provide alerts for promising trading opportunities. Curious, you click on a link and find yourself on an account registration page.


Advertisement


Before you sign up, take some time to research the platform or service. The decision to trade should be a thoughtful process that sheds plenty of daylight on the players with whom you invest.

While some web platforms offer legitimate futures and futures options trades, others operate illegally. By law, firms that offer trades of futures or options on futures to U.S. residents must be registered with the Commodity Futures Trading Commission (CFTC).

Use CFTC SmartCheck to verify that the company or person you’re about to give your credit card to is properly registered and in good standing.

Many unregistered binary options or forex platform operators are based offshore, where they may not be held to the same standards as U.S. firms. You’ll find a number of these platform operators on the CFTC’s RED List, a list of foreign entities that appear to be conducting business in a manner that requires registration but are not properly registered with the CFTC. We recently added more than 70 names to the list, and we’re continually investigating leads.

We’ve also seen an increase in websites that have a polished veneer but that pocket your money outright and don’t make trades at all.

These sites cover a range of topics from binary options and precious metals to foreign exchange (Forex) trades. They take pains to appear legitimate by promoting themselves through online ads, creating apps for smartphones and other devices, and establishing a strong social media presence.

Setting up shop through a legitimate app provider or social outlet makes these players that much more difficult to spot. Further, they are neither endorsed by service providers nor compliant with CFTC regulations, which can leave you without any recourse if a company takes your money.

chart

You can help protect yourself and others. If you see a suspicious trading platform promoted on social media, contact the CFTC at consumers@cftc.gov. Red flags include promises of big profits with little or no risk, claims of exclusive knowledge or information, and refusal to execute withdrawal requests or reply to customer questions. 

If you suspect a trading platform is operating illegally or perpetrating fraud, submit a tip to the CFTC.

This article is provided for general informational purposes only and does not provide legal or investment advice to any individual or entity. Please consult with your own legal advisor before taking any action based on this information. This article was prepared for the Commodity Futures Trading Commission’s SmartCheck program.  

Related Articles on COMMODITIES