The Financial Industry Regulatory Authority (FINRA), the largest independent regulator for all securities firms doing business in the United States, today warned investors against companies or persons that approach victims of binary options fraud claiming that, for a fee, they can help them recover the sums invested or the losses incurred on unlawfully operating trading platforms.
This type of activity is typical of the fraud mechanism known as a ‘recovery room’. Although some federal agencies could help people who have lost money, they don’t charge a fee, guarantee money back, or give special preference to anyone who files a formal complaint.
The regulator cautions investors that some of these offers may be fraudulent because it is often very difficult to track down the person or group that has scammed them.
“Following a significant loss, investors may be anxious to get back at least some of their money. This can leave them vulnerable to follow-up frauds that add to existing losses with devastating financial consequences,” said Gerri Walsh, FINRA’s Senior Vice President of Investor Education.
Ploys also include IRS impersonation scams
The alert notes that another scam involves phone calls purportedly from an IRS representative. The caller sounds official, speaks aggressively and demands immediate payment and sometimes he threatens—pay up now or face arrest or some other serious consequence. As such, he asks for your debit or credit card number, or may pressure you to pay with a prepaid debit card
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FINRA further explained that in one instance, an investor who called the regulator described speaking with a man who identified himself as “a representative from the IRS” and told her she must pay a fee for an “indemnity letter”. He claimed the indemnity letter was required because the financial institution she was dealing with in conjunction with her binary options account was not registered with the Securities and Exchange Commission.
While there are many variations of these tactics, the investor should be cautious of any person or organization that claims to know about his binary options accounts and offers to help return money to you
The alert notes that scam artists buy and sell lists of previous victims so that they can call them promising to recover the money that they lost or profits they never received – for a fee in advance.
Red flags for not being scammed again
These recovery scams are simply defrauding the victims one more time, and according to FINRA, consumers should look for some red flags. In most cases victims are contacted by someone impersonating a government official or pretending to be affiliated with FINRA or designated by them to perform investigations or other services.
They use a variety of lies to add credibility to their pitch: some falsely use the name of a real person or firm that is registered with FINRA, or urgent correspondence and high-pressure calls are received from entities or persons claiming to represent companies or government agencies. In addition, once the victim shows interest, a series of official-looking documents are sent to assure the investor that money is waiting in an account and can be recovered for a fee.