Don’t Lose Twice: BaFin Warns Against Follow-Up Scams

Scam artists exchange lists of previous victims and call them promising money recovery for an advance fee.

The Federal Financial Supervisory Authority (BaFin), an independent German regulatory institution, today warned victims of binary options fraud against companies or persons that approach them claiming that, for a fee, they can help them recover their losses. The German watchdog also red-flagged the activities of RichmondFG, a company that appears to be offering forex and CFDs in Germany without complying with its financial legislation.

The alert notes that scam artists buy and sell lists of 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.

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This type of activity is known as a ‘recovery room’. Although some government 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 these offers may be fraudulent because it is often very difficult to track down the person or group that has scammed them.

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Yet another unregulated broker

According to the BaFin, RichmondFG is not an authorized investment firm or credit institution in the country and is thus not allowed to provide banking or investment services in or from Germany.

In order to prevent such fraudulent practices, BaFin has issued several guidelines which encourage potential investors to be wary of promises of disproportionate returns. A guaranteed investment with a high return that considerably exceeds the market return is often too good to be true, it says.

BaFin has also advised the public to always verify the company’s identity (identity details, country of establishment, etc.) and to never trust a company if it cannot be clearly identified.

In its capacity of supervising the financial market and enforcing compliance with rules and regulations, BaFin has issued a series of advisories in recent years, most recently when it announced specific details about its retail forex and CFDs trading stance. The watchdog was focusing on brokers that do not provide negative balance protection, exposing clients to unlimited losses.

BaFin operates as a watchdog for financial trading, securities, and the financial market in Germany, overseeing a variety of assets and compliance issues for traders and consumers.

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