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True Fraud Stories: The Truth Behind Binary Options Fraud, Episode 1

This document summarizes a video by the CFTC about binary options trading scams. [1] The video includes real victims who were defrauded by such scams. [2] The scams often involve fake trading platforms and brokers who employ aggressive tactics to get victims to deposit more money until their funds are drained or they can no longer access their accounts. [3] Victims are encouraged to contact the CFTC if they suspect they have been targeted by a binary options scam.

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Benjamin Nicolas
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60 views2 pages

True Fraud Stories: The Truth Behind Binary Options Fraud, Episode 1

This document summarizes a video by the CFTC about binary options trading scams. [1] The video includes real victims who were defrauded by such scams. [2] The scams often involve fake trading platforms and brokers who employ aggressive tactics to get victims to deposit more money until their funds are drained or they can no longer access their accounts. [3] Victims are encouraged to contact the CFTC if they suspect they have been targeted by a binary options scam.

Uploaded by

Benjamin Nicolas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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True Fraud Stories: The Truth Behind Binary Options Fraud, Episode 1

Introduction
The following is the transcript of a CFTC video that shows how binary options trading scams can unfold.

Video
This video includes real investors who were defrauded by a binary options trading scam.

Welcome to part one of our series, The Truth Behind Binary Options Fraud.

I didn't really know what binary options were. I had heard of them, but I didn't know what it was about.

Online, it was the latest craze and everybody was talking about them.

I thought that, "Well, you know, for $300 I could get involved." It wasn't gonna be a lot of money.

The assumption was made by me that these guys were on the up and up.

It was all just a made up scheme to actually defraud the investors.

Binary options trading is a yes/no proposition. You choose a position based on your prediction about
market conditions. Depending on the outcome you either receive a payoff or lose money. Unlike other
options, there are no shares to exercise. Like many investments, binary options can be a risky form of
trading. But not all binary options trading is fraudulent. They can be legally traded on regulated
exchanges in the United States. But there are many other websites that operate illegally and commit
fraud. This video focuses on those that operate illegally. Here are some of the ways they operate.

One night you're home on your computer. You see an ad on a search engine, receive an email or see a
comment on your favorite investing website. The offer sounds interesting, sophisticated. Fraudsters may
begin by creating professional looking websites that resemble legitimate trading platforms. On these
sites investors can quickly and easily open accounts, fund the accounts with their credit cards, place
binary trades and manage gains and losses. But are you really trading at all?

The website itself was great. So really on the surface it looked like a great operation.

The reality, the trading software is often fake and so are the resulting profits you think you're making.

Next, fraudsters use search engines, emails, and popular investor websites to advertise their amazing
trading system. Even posting fake testimonials and reviews on their websites and social media.

Customers might be randomly searching the internet looking for various investment opportunities. And
they see an ad from a binary options firm, promising high rates of return with limited risk. They see the
trading screens and they see what looks like an opportunity that they can make some money in.

They also hire call operators trained in aggressive sales tactics and complicated market speak. With
everything in place, the fraudsters can set their plan in motion.
You've got a broker that's calling you. You've got, you know personal attention happening. You know
they're excited that you're part of their platform.

Rather than scare off prospective investors with asks for incredible sums of money, these fraudsters
often start small. You can open an account online for only a couple hundred dollars and try it out. When
you see a modest gain in your account or attempt to withdraw the funds, the real pitch begins. It's a
death by 1,000 cuts approach, employing a number of tactics to increase the amount of money you
hand over to them.

Here are some tactics fraudsters commonly use:


 An expert broker calls, offering to help you make even more money by trading for you.
 They offer to match the dollar amount of your next trade, if you increase your investment to a
certain amount.
 They offer an insurance policy, so that your losses are covered.
Collectively, these tactics compel unsuspecting customers to believe that placing more money into this
operation will make up for losses, or increase gains. What's really going on? The credit card you used to
open the account is being drained. In some cases, the fraudsters have committed identity theft, running
up charges or selling your information to other criminals.

There was a woman, supposedly one of the supervisors involved, got on the phone to me, called me and
said, "You can't tell me that you don't have any more money available on some credit card." I said,
"That's it, I'm maxed. "I have no available funds." It turns out they actually initiated some withdrawals
on some of my credit cards that put them over my limit. I didn't even know the credit card company
would do that, but they did.

In some cases, your money is being shipped overseas, lining the pockets of those running the operation.
When your money is gone or you try to withdraw your funds, suddenly you hit a road block.

Here are a few common victim experiences you should be aware of:
 One, you can't access your account or withdraw your funds. If they require a few for any reason
that enables you to withdraw, do not give them more money.
 Two, your broker has suddenly left the company and they can't honor the terms he or she
offered, including the insurance you purchased.
 Three, you experience radio silence. They stop returning your emails and calls.
If you experience any of these, you should contact the U.S. Commodity Futures Trading Commission, the
CFTC. The CFTC works to protect market users from fraud and market manipulation. They may be able
to help in the even you suspect you've been targeted by a binary options scam.

No matter how enticing a deal or an investment may seem, it's important to remain skeptical, ask
questions and always ensure that the binary options exchange or broker is registered with the CFTC.

We just walked you through how a hypothetical fraudster builds his operation to fool smart investors. In
our next episode, you'll see how dangerous these worldwide operations can be to individuals like you.

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