The Commodity Futures Trading Commission (CFTC) released a document this Wednesday warning retail customers about the dangers of financial scams on social media.
Many of our readers will be familiar with these people, such as FXLifeStyle, who often pose as ‘educators’ that can help their ‘pupils’ make loads of cash.
“Fraudulent profiles can be easy to spot if you know what to look for,” said the CFTC in the warning document.
“They typically flaunt wealth or brag about their huge ‘win’ percentages. Photos of exotic vacations, sports cars, and mansions are common. Details or verifiable facts about the person’s background, credentials, and experience are scarce.”
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Scamming the scammed
Such scammers, the CFTC added, commonly offer products such as binary options, bogus trading signals, and phony educational courses.
“Frauds often occur incrementally,” noted the CFTC. “First, you register on the fraudster’s website with your email address. You receive a welcoming email with an invitation to join a webinar or receive personalized help during your free trial.
“The introductions are designed to build rapport and get you to commit an initial payment. Once you’re invested, the pressure increases. If you appear to make money, you’re pressured to invest more; if you lose money, you may be offered additional classes, upgrades, or ‘loss insurance.'”
Finishing off its warning letter, the US regulator warned against the follow-up scam. As Finance Magnates has reported before, these are scams that target people who have already been scammed.
Hucksters will go after their prior victims, claiming that they are suing the company that scammed them. Of course, there is a condition attached to this – they have to pay for the legal services.