The Financial Conduct Authority (FCA) has issued a warning to investors to be cautious when tempted to invest in online investment opportunities. The cause for concern on behalf of the UK regulator stems from recently derived data, which illustrates that investors lost an average of £87,410 per day, over the course of 2017.
According to the warning, fraudsters target potential investors through online methods including social media. One method that is often implemented is uploading images of luxury items to attract attention, and to lure individuals to invest in questionable, unregulated companies.
The companies then use various tactics to reduce or even eliminate the chances for investors to yield profits or withdraw funds. Some of these tactics include modifying market prices in the trading platform (or website), creating unreasonable payout clauses in their terms and conditions, or going as far as simply refusing to pay back their money.
One of the underlying conclusions reached by the FCA specifies that scammers’ target audience is changing, due to changes in their marketing strategy. Whereas in the past, many scammers would use call centers and cold calling tactics, many have now shifted toward social media and other online marketing methods to reach potential investors.
FuturoCoin - Stable Project For Upcoming MonthsGo to article >>
The FCA study shows that 13% of individuals under the age of 25 are likely to trust an investment offer via social media, relative to just 2% of those over the age of 55, making the younger crowd more than 5 times as likely to be successfully victimized.
Moreover, 23% of respondents said that their trust level in an investment company or brokerage rises after reading online reviews and customer testimonials. However, such tools are extremely easy for fraudsters to fake, and should not be trusted without proper verification.
Meanwhile, 11% confirmed that they normally do not perform any steps to check the status of a company before investing with them. The FCA has launched a campaign under the name ScamSmart, urging existing and prospective investors to check its website to ensure that a company is not on the FCA Warning List, and to confirm compliance with regulatory restrictions put in place to protect investors and the industry as a whole.
The binary options industry has received a great deal of scrutiny over the past few years. While some of the claims were directed toward the overall functioning of the industry, others were the result of fraudulent companies around the world that knowingly scammed investors. The FCA has been vigilant in its agenda to reduce fraud pertaining to binary options. Toward the end of last year, the regulatory watchdog announced that it will be taking over regulatory responsibilities in the industry. The decision came on the heels of a report that revealed that a total of 2,605 investors have been scammed for a combined £59.4 million since 2012.
Binary options have been at the forefront of global regulators’ agendas due to the high level of complaints issued on behalf of investors. Some regulatory bodies have taken steps to ensure that the industry is dramatically hindered in its ability to scam clients. Meanwhile, the Israel Securities Authority has issued a complete ban of binary options, and has outlawed any related activities, even for markets outside the country that currently permit binary options trading.