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FCA: Brits lose GBP 87 000 to binary options scams per day

 Brits lose an average of GBP 87 000 a day to binary options scams, said UK’s financial services watchdog the Financial Conduct Authority (FCA) in its latest advisory.


In the publication the FCA urges the public to be vigilant to the threat of online investment fraud. The watchdog warns that fraudsters offering investments in binary options, contracts for difference (CFDs), forex and cryptocurrencies (such as Bitcoin) often promote themselves online and via social media channels, such as Facebook, Instagram and Twitter. They promise high returns and use images of luxurious items like expensive watches and cars and yachts to lure the people to put money in the scam.


After that, they usually distort prices on their website or refuse to return the clients’ funds using all sorts of excuses and citing impossible withdrawal conditions or simply shut down the client’s account and disappear with the money.


According to the FCA, both the promotional channels and the profile of victims are changing. Now the online ads have overtaken the scams done via telephone and younger people are more likely to fall for the enticing offers. Quoting data of Action Fraud, FCA says that people under the age of 50 are far more likely to become victims of binary options fraud promoted on some social media network.


Earlier this week the largest social media platform Facebook announced it is banning ads of binary options, ICOs and cryptocurrency investments across its network and partnering sites, including Instagram.


As people have become more skeptical of investment-related cold calls and consumer habits have changed, we have seen investment fraud moving online and to social media”, said Mark Steward, Director of Enforcement, FCA.


Worse still, the younger people are more likely to believe the testimonies on the scammers’ sites and to not conduct any check or research on the company and the offer. The FCA notes that the scammers often create highly professional looking online investment platforms that feature fake customer reviews, logos, and statements, to lure in prospective investors.


'While their websites and profiles appear to be professional, they are all too often run by fraudsters who fix prices and pay-outs, or in some instances don’t really place trades at all, before disappearing with innocent investors’ money“, Steward noted. “Before investing online, check you know who you are really dealing with and check if they are authorised by the FCA. Find out how to avoid scams on the ScamSmart website, and if in any doubt – don’t invest.”


Until the beginning of this year binary options companies were under the supervision of UK’s Gambling Commission and were largely unregulated. Since January 3, 2018, however, the FCA took over the oversight of this type of investment services and now its strict requirements apply to binary options brokers. Since then, the FCA has published a list of 94 binary options companies operating in the UK without the appropriate license.


TAGS: uk  fca  binary options  cryptocurrency  scam 
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