Forex Scam Watch 2017: The latest capers that could rain on your parade

Chris Lee

If there is a prescient lesson to be gleaned from the past twelve months, then it has to be to never underestimate what could happen when you least expect it. Election results… Regulator ambushes… Populist movements… Central bank shenanigans… and lastly, never underestimate the lengths that criminals will go to steal your hard-earned capital. At, we try to keep you informed of the latest forex fraud and scam threats, in keeping with the notion that fraud prevention begins with awareness.

The criminal element in our society is global by nature, benefits from high tech, and is very well funded in its pursuits. The odds are that you will come in contact with these shady characters, either by direct solicitation, subtle email tricks, or by the latest mal-ware ruse. In any case, you will need to be skeptical on the front end when approached, not later down the road after the hook has been set. There is already quite enough happening in 2017 to keep us on our collective toes, but the crooks are also rolling out their new plans. Many are revamped versions of old successes or clever new ideas designed to deceive. This article is an update of the latest tricks of the fraud trade.

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What is the overriding fundamental force driving innovation in the fraud world?

If you had to choose one thing that has changed the playing field as far as new tricks in the fraudster’s arsenal, it would have to be technology in its many forms, including the Internet, online access capabilities, and smart phones. The world is wired, so to speak, and not in a totally secure fashion. One only has to listen to the political wrangling on the current global stage to understand that hacking has become an industry unto itself. If governments cannot block today’s hackers, then consumers at large are set up to become unsuspecting victims, now sooner rather than later.

Cyber-warfare is raging. Initial targets may have been banks, but the tentacles quickly moved to incorporate brokerage houses, network providers, and anyone else connected to the financial services industry. The theme is the same – attack the network at its weakest point where there is the highest potential for success, a basic tenet of strategic planning that applies to any effort of a commercial nature, even for the criminal element of our society. Why do hackers try to penetrate large databases? The goal is to acquire as many bytes of personal identity information as possible and then to “monetize” these ill-gotten bytes, i.e., turn the data into cold hard cash.

If governments cannot shield themselves from the onslaught of hackers, then what can we do to protect ourselves? The Dutch went so far as to convert to a paper hand-counted ballot process in their recent election to thwart the possibility of electronic compromises. No one is suggesting that we must return to “pen and paper” days to communicate with friends and business partners, but awareness is the key to preventing modern fraud. The major concern today, however, is that your private information may have already been compromised at some point outside of your direct control.

From a purely forex trading perspective, if a crook has your private ID login credentials, then the next step is “monetization”. He might attempt random transfers or withdrawals of funds in your brokerage account, when you least expect it. He could also use the latest trick up his sleeve by encrypting your files and access software in your device, while demanding a ransom be paid within a given time limit or his mal-ware will destroy its “hostages”, a process known as “ransom-ware”. The immediate protection advice is to change your passwords frequently, back up all files on a timely basis, as well, and resist the temptation to click on links that seem too good to pass up.

What are the various “flavors” that prevail amongst today’s fraud offerings?

Crooks like to stay in the shadows, and the anonymity of the Internet provides an enormous amount of shade. We tend to give our trust away far too easily these days, without first checking our gut. In the “old days”, if you will, you might become quickly skeptical when a stranger approached you with an odd request. Your brain was wired to be suspicious on sight, but what happens when you cannot see your foe? Studies have shown that our brain is not our best ally in these online situations. We easily open our “virtual” doors to complete strangers, a tendency that crooks are trained to recognize.

Today’s assortment of fraud offerings seems to congregate around three guiding principles: 1) Personal ID theft; 2) Aggressive sales and marketing tactics; and 3) Quick monetization. Variations on these central themes may be termed different “flavors”, but a review of recent fraud headline news does present a host of examples that can demonstrate how these basic storylines have played out in the world around us. Hopefully, these stories will promote awareness and ensure that you do not become a victim, as the warning pledge on our web page banner suggests.

#1 – Personal ID Theft: The “virtual” door to your kingdom may be wide open.

Phishing emails may now be “old school”. Crooks have become more creative in developing ways to access your personal identification information. Major database compromises still make for news, but the effort to acquire your ID info has now been enhanced by more sophisticated automation software. Tempting links to trade options or forex are now commonplace, and many of these links may deliver you to a crook’s server that will install the latest and greatest mal-ware, which will report back login and password data. Crooks can use this data or sell it to other crime rings for monetization.

Pop-up ads, flashing ad links, imposter emails, clone websites – these are just a few of today’s innovative approaches. What is worse is that local investor protection programs do not apply, if you are taken in by one of these ruses. How often has this been a problem in the UK in the past year? According to the FCA, “We processed 8,277 reports about potential unauthorised activity.”

#2 – Aggressive Sales and Marketing Tactics: Just say no and forget about it.

Like it or not, the casualty rate in our industry is very high, approaching 65% in traditional forex trading and significantly higher with CFDs and binary options, over 90% by most estimates. Brokers are continually consumed with new customer acquisition, retention of existing clients, and responding to competition that is constantly putting pressure on the first two elements. Regulators are forcing brokers to dispense with high leverage and bonuses, exacerbating what is already a bad situation.

Aggressive cold calling may now be the “new normal” for most all brokers, but the high level of unscrupulous “boiler-room” sales tactics employed in the binary options industry was exposed in 2016. We have written several articles on this subject matter, and regulators have routinely posted what to look out for when and if you receive one of these calls. It does not necessarily have to come from a binary options dealer.

Scammers on the phone, unfortunately, are a risk we must be prepared to encounter, but the FCA, for one, suggests that you watch out for the following tip offs:

  • “Most frauds offer above market returns at seemingly low risk;
  • Fraudsters are good at flattering investors to make them feel good and important;
  • Most deals are offered on condition they are kept secret;
  • Fraudsters talk up their deals by claiming other investors are rushing to take part in the deal;
  • Pressure is put on investors to buy in by telling them the offer is limited and if they do not act quickly, they will miss out.”

Investigative reporters that have infiltrated these boiler rooms have added that callers claim to have worked at prestigious financial firms, speak English, turn up the volume on financial news channels in the background to simulate a trading room, and place calls at a time when they expect you to be online, a time when you are more likely to buy into their scheme. You must learn to say “NO” and walk the other way.

#3 – Quick Monetization: Fleecing has taken a turn to the dark side.

Conmen still favor what are called advance fee or recovery scams, where you have already been fleeced, but for a small fee, you can have these thieves retrieve your funds. NOT! Many regulators, such as the FCA, FINRA, CySEC, and the CFTC, have been warning about agency impersonators and clone firms for some time. The most fearsome quick-monetization scam today, however, is ransom-ware.

Per one report, “Ransom-ware has spread with terrifying speed. This type of mal-ware—short for “malicious software”—accounted for fewer than 2% of emails with malicious links or attachments in the fall of 2015, according to PhishMe, a cyber-security firm. By last fall, ransom-ware’s share had zoomed to a shocking 97%. Total ransom-ware losses in the U.S. hit $1 billion in 2016, up from $24 million in 2015, the FBI estimated.”

More than a majority of cases have started with a phishing email, posing as technical support, typically from MicroSoft. According to this company, “Microsoft will never proactively reach out to you to provide unsolicited PC or technical support.” Once again, be suspicious of any emails, links, pop-ups, or mysterious attachments. Backup your files or use the services of an outside agent that will do it for you automatically.

Concluding Remarks

Don’t be a victim! Change passwords, backup your files, and ignore offers that are just too tempting to ignore. Cyber-crime is growing by the minute, and, if you have not been approached, consider yourself lucky and the exception to the rule. Luck, however, does not have much to do with it. Phishing for personal data has gone way beyond a simple email request. Robo-calling devices can now sift through thousands of phone numbers to search for potential targets. Aggressive salesmen, intent on stealing your cash, will then follow up with well-designed fleecing schemes. Be prepared, and stay skeptical!

In the past, you may have been able to protect your fund balances from attack by withdrawing or transferring them to another account, since the act of “monetization” usually required quite a few months to play itself out. Those guidelines have changed. Ransom-ware now takes monetization to a whole new level on steroids and is quickly becoming the most prominent threat in online fraud. It is time to get familiar with how ransom-ware crooks operate and then to prepare accordingly!

Chris Lee

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