As the number of foreign exchange and binary options brokerages has soared in recent years, the industry puts itself under the crosshair of various schemes. The latest warning about a relatively unknown one was issued by the Financial Services and Markets Authority (FSMA) of Belgium.
The watchdog has issued a warning against a new type of forex and binary options related fraud. After customers of broker services lose their money deposits, a set of unknown entities activate a scheme to allegedly return funds to those unfortunate traders.
The activities of unknown fraudulent entities can be widely facilitated these days, as we are relatively close to the Swiss National Bank debacle which caused millions of losses for traders at various brokerages.
Persons and allegedly corporate entities, who present themselves under a variety of pseudonyms and/or holding different professions such as lawyers, financial analysts, accountants, financial advisors and others.
Data Collection and Financial Assistance
From an industry insider’s perspective there can be two main ways in which perpetrators of the “recovery room” scam can gather contact data.
The first type is most likely related to unregulated malicious forex and binary options brokers who use their databases collected from clients in order to make cold calls and offer their services after knowing that the victim has lost money trading.
Blockchain Key Players to Gather in Bloconomic Expo 2019Go to article >>
The second type is related to a more typical information gathering tactic used on the web. There have been a number of cases in which unknown entities solicit personal email and phone contact information from online forums and blog posts.
When such posts are related to proposing help and assistance to traders who lost money during the recent Swiss Franc debacle, we have the perfect environment for collecting personal data. The event has caused a small number of traders at select brokers to lose money.
It ain’t a “boiler room”, it’s a “recovery room”
Similar practices have already gained fame and have a specific name – “recovery room”. Typically, victims are contacted after they have already been scammed. The caller presents himself/herself as capable of recovering the losses incurred in the initial scheme only to extort more money.
Usually initial contact is made through a cold call or email. So all we can say is stay away from unsolicited offers. The common denominator for pretty much all “recovery room” schemes is that the financial payment is requested before the service is rendered.
The FSMA highlights that any consumer who has been a victim of an unauthorized trading platform or of investment fraud in general should be aware that fraudsters may try to target them again or resell their personal information to third parties.
Cloned firms are also a hub where identity theft is a common feature of the type of fraud known as “cloned firms”: scammers use the identity of an existing person or company in order to give the appearance of trustworthiness or legitimacy, thereby persuading investors.
The FSMA strongly warns the public to avoid replying to any unsolicited offers of services claiming to recover losses incurred through trading and urges clients who have lost money trading against transferring money to any bank or other payment services accounts.