Detect broker scams

Detect broker scams: How to protect yourself from shady services?

Broker scam is one of the most common crimes on the Internet when it comes to investments. It is often difficult for inexperienced investors to grasp whether a CFD or Forex provider is reputable or not. Is it possible to spot broker scam? The answer is yes and in this post we want to show you how to spot broker fraud and what you should always look for in a reputable CFD or Forex provider.

After all, you should not only avoid scammers, but also raise your own trading to an appealing level. It does not matter whether CFD, Forex or cryptocurrencies are traded. Anyone who invests money on the Internet should always use high quality services.

Detect broker fraud in time

The best protection is to expose fraudsters before they even receive any money or cryptocurrencies. In doing so, investors often cannot distinguish fraudulent companies from reputable brokers. Through tasteful web design or by initiating a personal contact through a supposed customer service representative, the scammers appear convincing.

Basically, one should know that not every dubious provider also automatically pursues fraudulent intentions. For many investors, it probably does not matter whether they are to be defrauded or whether there is an underlying business model that is disadvantageous to them. However, from a criminal and regulatory perspective, this difference is crucial.

Fraudulent brokers or dubious companies?

Dubious providers do not want to defraud their customers directly, but often operate in a gray area. This applies to regulatory issues, but also to the way they treat their customers. Here is a list of problems by which you can identify a dubious broker:

  • Legal notice is available on the website
  • No intention to deceive in the criminal sense
  • No license with BaFin or a license in a distant foreign country (e.g. Seychelles or Marshall Islands)
  • Urge customers to CFD or Forex trading
  • Poor accessibility of customer service
  • Money can be deposited at the bank at any time, but withdrawals are difficult

Often investors feel cheated by dubious brokers, but this has no relevance in terms of criminal law. Instead, it must be ensured that customer interests are enforced. Often dubious providers deny the possibility to withdraw money. Either because of a supposed money laundering check or, for example, because there are problems with the blockchain technology used for cryptocurrencies.

Crypto-Tracing works closely with the lawyer Dr. Maisch, who specializes in such cases. In case of disputes, the lawyer can enforce the claims of the customers in the case of a dubious CFD or Forex broker.

If, on the other hand, it is a fraudulent provider, then one can recognize the broker fraud and act accordingly:

  • No legal notice on the website or entry in the company register
  • Clear intention to deceive, customer friendliness is a pretext
  • Trading with CFD or Forex is often only pretended, the platform is inadequate
  • No approval by BaFin or license abroad
  • Demand high sums and urge to repeated deposits by bank transfer
  • Deposit at the bank or by cryptocurrencies possible, but no withdrawals

As you can see from the list, the scammers are usually concerned with getting as much money as possible. To do so, they push for repeated deposits and as high sums as possible. If the scammer realizes that there is no more money for the taking from his victim, he abruptly breaks off contact and disappears. E-mails are not answered, telephone calls are not accepted. Eventually, the fraudulent website disappears as well, when enough victims have fallen for the scam and become skeptical.

The only thing that helps here is representation by a lawyer who files a criminal complaint and secures as many traces as possible to support investigations by police authorities. If transactions with cryptocurrencies have taken place, then Crypto-Tracing can follow the trail of the perpetrators on the blockchain. The data obtained is summarized in a report for the police and facilitates their investigative work. These private investigations and the criminal report are the precondition to get your money back. You are welcome to describe your case to us via our contact form.

What makes a reputable broker?

In addition to the negative features that help to identify broker fraud, there is of course also a list of criteria that a reputable broker should meet:

  • Legal notice and entries in company registers are available
  • Investors are not urged to trade
  • No high sum of money is demanded, but reasonable minimum deposit amounts are usual
  • Deposits and withdrawals of money are possible at any time via the bank and cryptocurrencies can be easily withdrawn to your own wallet
  • Trading is possible professionally and transparently, therefore with charts, the most common order types and, if necessary, order books
  • There is a license from BaFin or with the regulatory authorities at the respective company headquarters

You should always do research in advance before opening an account. For example, information in the legal notice can be compared with company registers. Official licenses, such as those issued by BaFin, can also be checked on the Internet. The license of the BaFin is certainly a quality feature, but not necessary for a reputable broker. After all, an offer can also be made without BaFin within the framework of the freedom of movement of goods.

Where can I get more information about broker fraud?

On our blog , we regularly inform you about all relevant topics and explain how you can better protect yourself when trading CFD, Forex, cryptocurrencies or other investment products. In addition, it is helpful to obtain information about the respective companies on rating portals.

Most reputable providers are rated by customer reviews on the Internet on TrustPilot , which can be immensely helpful to check what to expect when trading CFD, Forex or cryptocurrencies. But also reviews on Google can give an impression whether the provider is known and reputable at all. However, one should also pay attention to what the reviewers write. Reviews that are based solely on four-to-five-star ratings and do not describe any experiences are worthless for this purpose. They may have been intentionally given by the broker or a contracted company, which makes it more difficult to detect broker fraud.

I have been scammed; how do I get my money back?

Provided that you have fallen victim to a fraudulent broker on the Internet and have lost money or cryptocurrencies, you should contact us. Crypto-Tracing puts you in touch with a specialized lawyer and is also active in blockchain forensics.

Cryptocurrencies are not anonymous and offer no protection for scammers. You can use our contact form to tell us about your case. We will contact you promptly and explain which steps are best in your individual case.

FAQ: Recognizing Broker Fraud

What unusual activities can indicate broker fraud?

Unusually high or opaque trading fees can be a sign of broker fraud. It is important to carefully examine the broker's fee structure and compare it with other reputable brokers. It is also suspicious if the broker unexpectedly freezes accounts or refuses withdrawals, instead requesting additional documentation.

How can I determine if a broker is adequately regulated?

A reputable broker should have all the necessary licenses. Verify the broker's licensing information and whether they are supervised by a trusted financial regulatory authority. Be cautious of brokers that do not provide sufficient or any regulatory information. Additionally, note that regulatory standards may vary in different countries, making brokers based in certain jurisdictions less trustworthy.

How can I recognize fraudulent promotions by brokers?

Fraudulent brokers may entice investors with unrealistic profit promises and exclusive promotions. Be skeptical of offers that sound too good to be true, and verify the broker's credibility as well as the terms and conditions of the promotions. Be wary if the broker advertises using the names of celebrities, as scammers often misuse their names and fame.

How can I check a broker's reputation?

You can check a broker's reputation by searching for online reviews, forum discussions, and testimonials from other customers. Pay attention to any warnings or complaints about the broker and analyze the overall information to make an informed decision.