Forex Scams Australia: How to Spot and Avoid Them
Forex trading is a legitimate form of investing money to make a profit from the fluctuations of currency pairs. However, it is also a high-risk activity that requires a lot of knowledge, skill and experience. Unfortunately, there are many scammers who prey on unsuspecting traders and lure them with false promises of easy money and guaranteed returns.
Here are some of the most common types of forex scams in Australia, and advice how you can avoid falling victim to them.
Scam #1: Fraudulent Finfluencers
One of the latest trends in forex scams is the use of social media platforms, such as Instagram, Facebook and TikTok, to promote Ponzi schemes or pyramid schemes. These are fraudulent schemes where the scammers collect money from new investors and use it to pay returns to earlier investors, creating the illusion of profitability. The scammers often pose as successful traders or financial influencers (finfluencers) and show off their lavish lifestyles, luxury cars and exotic vacations. They claim that they can teach you their secrets or trade on your behalf for a fee or a commission.
However, these schemes are unsustainable and will eventually collapse when the inflow of new investors slows down or stops. When that happens, the scammers will disappear with your money and you will lose your entire investment.
Some of the red flags that can help you spot a fraudulent finfluencer are:
- The promise of high or consistent returns with little to no risk.
- A lack of transparency or verifiable proof of how they generate their returns.
- Pressure to join quickly or miss out on a limited opportunity.
- A requirement to recruit others or refer friends to join the scheme.
- Fake testimonials or endorsements from celebrities or other traders.
Scam#2: Expert Advisors
Another common type of forex scam is the sale of scam expert advisors (EAs) or trading robots. These are software programs that claim to automate your trading strategy and execute trades on your behalf according to predefined rules. Some EAs can be very expensive, costing thousands of dollars, and promise to generate huge profits with minimal effort.
However, most of these EAs are either ineffective, unreliable or outright fraudulent. They may use fake or manipulated backtesting results to show impressive performance history that does not reflect real market conditions. They may also have hidden fees, commissions or malware that can compromise your account security or personal information.
- Avoid buying or renting EAs that are too expensive, as they may not be worth the cost or may increase your risk exposure;
- Read customer reviews and feedback of the EA you are interested in, as well as other products from the same developer. Pay attention to negative reviews and complaints.
- Be skeptical of smooth and rising growth charts, as they may be fabricated or unrealistic.
Test the EA on a demo account before using it on a live account, and monitor its performance and behavior closely.
Scam #3: Unregulated Forex Brokers
The third type of forex scam is the use of unregulated forex brokers or CFD brokers. These are brokers that operate without a valid license or authorisation from a reputable regulatory body, such as the Australian Securities and Investments Commission (ASIC). Unregulated brokers may offer attractive trading conditions, such as low spreads, high leverage or bonuses, but they may also engage in unethical or illegal practices, such as:
- Manipulating prices, spreads or execution.
- Interfering with your trades or closing your positions without your consent.
- Refusing to process your withdrawal requests or imposing unreasonable fees or conditions.
- Stealing your money or personal data.
Some of the Ways You Can Avoid Unregulated Brokers Are:
- Always check whether a broker is regulated by ASIC or another reputable regulator before opening an account with them. You can verify their licence number and status on the regulator’s website.
- Avoid brokers that are based in offshore jurisdictions with lax regulations or no regulations at all.
- Avoid brokers that contact you unsolicited via phone, email or social media and offer you unrealistic deals or incentives.
- Avoid brokers that ask you to send money to third parties or unknown accounts.
Conclusion
Fundrecovery Australia is staffed by forex experts who use specialised technology and methods that are designed to uncover information about unregulated forex brokers. We consult with clients, launch an investigation, and compile reports that can help you succeed in recovering your funds.
