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Scam Alert – Binary Options investment scams – 9 January 2018

Norfolk Trading Standards are again receiving contacts regarding Binary Option investment scams.

Therefore we are taking the opportunity to repeat warnings and advice from Action Fraud regarding the offering of Binary Options as investment scams.

Binary Options are called ‘Binary’ because there can be only two outcomes – win or lose.  To trade, all you need to do is bet on whether the price of something will rise or fall below a certain amount - if it is correct, you win and get paid.  If not, you lose all of the money you originally invested.

You can choose various commodities to trade in such as gold, oil or stocks.  The value of a Binary Option is made up from the value of the asset you want to trade.  For example, you could bet at 2pm that the value of gold will either increase or decrease in price by 2.05pm.  You are not buying or selling the gold, just predicting whether the price of it will rise or fall.  Time periods involved tend to be very short (5 or 10 minutes) but some firms offer longer periods to bet over.

Fraud occurs when Binary Trading Platforms:

  • Offer a higher than average return on an investment
  • Refuse to credit customer accounts
  • Break all contact with the customer
  • Manipulate software to distort prices and payouts

There are many legitimate Binary Option Traders but currently none of them are regulated by the Financial Conduct Authority (FCA).  At present binary options are regulated by the UK’s Gambling Commission, but only if the firm has remote gambling equipment located in Britain.  If this is not the case, any binary options that the firm offers will not be regulated either by the Gambling Commission or by the FCA.

Action Fraud offer the following advice around Binary Option scams:

  • If you’re considering any type of investment, always remember: if it seems too good to be true, then it probably is
  • If you get a call out of the blue from someone offering investment opportunities, be wary; if in doubt don’t be polite, just hang up
  • If in doubt, where you think a firm offering binary options may not be trustworthy or legitimate, do not transfer money to them or provide them with your bank details
  • Be mindful of any bonus structures and clauses preventing you from withdrawing funds
  • Make sure you have read and considered conditions set out by the company making it mandatory to “turn over” your original deposit over a multiple amount of times before you can withdraw your money
  • The Gambling Commission advises that UK consumers should research the market carefully before participating in such activities.  The Gambling Commission offer advice on their website
  • Check whether a company holds an operating licence by searching the Gambling Commission public register of licensees

If you think you’ve been the victim of an investment scam you can report it to Action Fraud on 0300 123 2040 or via their online reporting form.

If you need advice about scams you can contact our partners the Citizens Advice consumer helpline on 03454 04 05 06 or via their online reporting form.

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