You may have a friend, roomate, or relative trading online. It could be forex, cryptocurrency, or stocks, but more people are trading than ever before.
The growth of stocks and trading in 2020 defied expectations. With so much uncertainty and so many people out of work, one would think that the markets would tumble. But, instead, trading volume increased? Why?
Online trading opportunities increased during the early days of the COVID-19 pandemic. People were at home with little else to do. They watched Netflix and maybe attended some online classes if they were students, but many wanted to dip their toes into the trading waters. So why not learn how to trade stocks, forex, and cryptocurrencies?
While some people searched for yeast starters for their homemade sourdough bread, others wanted to make serious dough with online trading apps, platforms, and deals on social media.
So did people make money? Some did, and some didn’t. Legitimate trading opportunities and real brokers often don’t provide the returns excited on social media. However, the deals that promised to make traders double or triple the amount they invested in a short period often turned out to be scams.
You or someone you know may have lost money to fake forex brokers, crypto scams, or social media trading schemes. If this has happened, don’t despair of getting your money back. Fund recovery is not only possible; it is often successful if you have the right professionals on your side.
MyChargeBack gives guidance to consumers trying to recover their funds from unlicensed brokers, merchant disputes, crypto scams, or other types of fraud. Talk to MyChargeBack professionals and get started on fund recovery.
Types of Trading Scams
As online trading increased, so did online trading scams. So it stands to reason that when something becomes popular, fake versions will come out of the woodwork and try to lure customers looking for the real thing.
By the fall of 2021, CNBC reported that Americans had lost $586 million to trading scams since the beginning of the pandemic. Of these, the most common were crypto scams followed by forex scams. Common types of schemes included the following:
- Phishing scams
- Romance scams
- Social media imposter frauds
- Ponzi schemes
- Benefits Theft
- Fake Brokers
- Phony ICOs
Any scheme a person could dream up was hatched during the pandemic and is still going on now. For example, phishing scams are designed to get information from people by pretending to be someone else and asking them to input their bank account information, social security number, or other sensitive data.
The culprit will pretend to be from a utility company, bank, or government office, and instead of providing a secure form, they will take give a counterfeit form and use the data or sell it.
One special type of phishing is catfishing, common in romance scams. Pretending to be someone looking for love but instead going after the other person’s data or money is the essence of a romance scam, and it breaks pocketbooks and hearts.
Social media imposter scams involve someone pretending to be a celebrity encouraging people to make quick trades. For example, a 17-year-old in Florida pulled off a huge bitcoin social media scam by hacking the Twitter accounts of Barack Obama, Bill Gates, and others and offered to trade bitcoin on behalf of people who surrendered their crypto codes. Because they believed they were talking to a public figure, they gave the scammers their trust and their bitcoin.
One ruthless scam involves fraudulent people pretending to be from the government and asking for data verification before releasing their COVID, unemployment, or social security benefits. When people give over this information, their benefits are stolen.
Ponzi schemes are common and involve a fake broker funding client withdrawals with the deposits of other clients. As a result, no trading goes on, and they eventually disappear with the money. Fake brokers often are involved in Ponzi schemes, and that is why it is important to work with a regulated broker.
Also, beware of fake ICOs. These are initial coin offerings for new types of cryptocurrency that come onto the market. In most cases, ICOS is not genuine. Invest in a new crypto coin only through a licensed broker or platform.
Warning Signs of Trading Scams
The following are red flags that signal a potential trading scam:
- Unregulated broker
- Unrealistic promises
- No contact information
- Does not answer trader questions
- Demands deposits only in cryptocurrency–don’t accept credit cards
- Aggressive manner
- Keeps demanding unexpected fees
- No clear terms or conditions
- Makes excuses for not releasing funds
- Stops communicating
TheseInstead, investing warning signs are essential, but the highest priority is to look for a regulated broker. Anything that goes amiss with a regulated broker can be discussed with the brokers’ regulator. Research the broker carefully to ensure the license is up-to-date and genuine and make sure they are easy to communicate with.
How to Choose the Right Online Broker
The following are qualities you should look for in a broker:
- Clearly stated terms and conditions
- Provides plenty of information about who they are and their credentials
- Clearly outlines all fees, commissions, and spreads
- Does not have a high minimum for withdrawals or withdrawal fee
- Sets realistic targets for returns
- Communicates well
Checking a broker’s license and being able to contact them with questions when you need to are essential aspects of any reliable broker’s services.
What About Fund Recovery?
If you have lost money to a broker or an online trading scam and are confident that the people involved are fraudulent, do not delay but seek fund recovery services. It is essential to act quickly before money can be laundered.
Speak to our experts about the fund recovery process and what steps they can take to help you recover your funds.
If you have lost money to a cryptocurrency scheme, seek fund recovery assistance right away. Consult with MyChargeBack experts and get started with your fund recovery claim. We have extensive working knowledge and relationship with regulators and the dynamics of crypto recovery and can improve our prospects of getting your money back.