The Financial Conduct Authority (FCA) has issued a warning about scammers using social media platforms such as Facebook, Twitter & Instagram costing victims £87,000 a day to these types of scams. The scammers are advertising all kinds of “make quick money here” and “get rich quick” by offering services to trade in forex, binary options, cryptocurrencies such as bitcoin, etc.

A survey has been completed and it has been confirmed that those under the age of 25 are more likely to fall for this scam compared to those over 55.

An investigation was carried out back in December 2017 which revealed the secrets of binary options scams, revealing it to be the biggest investment con in Britain.

We must all recognise what an investment scam looks like, so I have clarified this below.

Most often than not, pictures are posted on social media showing luxurious items such as watches, cars and piles of cash. This is to catch the victims eye with such a luxurious lifestyle, and make you want to invest into the company offering this.

The FCA have released some examples of how social media has been used to garner interest in binary options investments.

The investigation revealed last year, after promising high returns, that investors often find prices are distorted, they can get tied in with extreme pay-out clauses, have their account closed and be faced with refusals to have their money paid back.

In 2017 alone, Action Fraud reported that investors lost £87,410 a day to these kinds of schemes.

I also believe we should all understand what binary options are.

A Binary option is a financial option in which they payoff is either some fixed monetary amount or nothing at all. They are ofte known as “all-or-nothing” options. They allow you to make a bet on the expected value of anything that can be measure in financial terms such as stock prices, currency, index, etc.

Whilst returns can be high, the risk is too. Binary options became a regulated product earlier this year, so UK firms offering binary options must be authorised by the FCA.

Authorisation means that the deals will be subject to the regulatory regime for investment products, complaints can be referred to the Financial Ombudsman Service, and eligible consumers will have access to the Financial Services Compensation Scheme.

If you invest with a company that is not FCA-approved, you will have none of this security. So you must check before any investment is made.

You will also need to know how to check if an offer is real…

The FCA now have a campaign known as “ScamSmart”, and this is aiming to help consumers spot and report investment and pension scams. Together with this, the FCA has put together a warning list of unauthorised binary options.

I strongly recommend you discuss all opportunities with your financial adviser before making any decisions, or alternatively, if you do not have a financial adviser, then check out the FCA as they will have all up to date information on all approved binary options and regulated firms,

The FCA advises the following three steps to avoid scams:

  • Reject any unsolicited investment offers – whether you’re contacted online, via social media or over the phone.
  • Check the FCA Register to see if the firm or individual offering the investment is authorised.
  • Get impartial advice before investing.

I hope this blog has been useful as we all need to be more careful with what seems to be very attractive “opportunities”.

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Blog published by Mike Coady.

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