There are three things certain in life: death, taxes, and scammers trying to take people’s money. Financial scams are common, and we are bound to see many different types of scams in our everyday lives. If money is involved, there will be countless scammers trying various methods to scam as much money as possible.

Most people are familiar with some of the more well-known scams, such as Pyramid schemes, Ponzi schemes, and property scams. Unfortunately, Forex scams are becoming increasingly common, especially as the industry moves to the digital space. These scams can be difficult to spot, but it’s important to be cautious. In this guide, we will discuss common Forex scams and provide tips on how to recognize and avoid them.

Common Forex Scams List:

  • Fake Signal Providers
  • Social media scammers
  • Caller scammers
  • Scammers taking control
  • Fake or unregulated brokers
  • Fake help provider companies

Fake Signal Providers

Fake signals are one of the most common types of scams in the forex trading market. In order to make quick and informed decisions, traders use various charts, analyses, and patterns to identify upcoming trends and find signals indicating the best time to enter the market. However, only some people possess the expertise to conduct this intensive research process. Such people resort to different methods to succeed in the FX market, and this is where fake signal providers come into play.

If you have ever seen people selling betting odds in sports gambling, then you can easily understand the concept of fake signal providers. These individuals disguise themselves as experienced traders and offer lucrative forex market signals that supposedly generate good profits. However, in reality, these signals are fake, and traders who purchase them end up losing both their signal money and the money they invested in believing these signals.

To avoid falling victim to these scams, the best option is to learn how to conduct your analysis and rely on yourself. However, suppose you need to be more capable of doing so. In that case, only trust signals are provided by established and reputable traders who have a large following in the FX market.

Fake and unregulated brokers

One of the most infamous fraudulent schemes involves fake and unregulated brokers who target unsuspecting individuals. These websites can be classified into two types, and it’s important to discuss each type in detail.

Fake Brokers

Fake brokers are fraudulent brokers that deceive traders into believing that they are legitimate brokers. They do this by copying the design of reputable broker websites and using URLs that are very similar to the original ones, often with just one letter changed or by using different domain extensions.

These types of scams target unsuspecting victims who think that they are joining a well-known broker with a good reputation. The scammers usually use one of two methods to defraud their victims. One way is by tricking users into depositing funds into their accounts, after which their accounts are credited with fake balances that cannot be withdrawn, or they are not credited at all, and the traders realize that they have been scammed.

To prevent falling victim to scams, always double-check the website link, even if you typed it manually.

Unregulated Brokers

It is important to be aware of unregulated brokers when trading Forex. Forex brokers are required to operate within certain legal frameworks and are subject to regulation by governmental agencies. These regulations ensure that brokers follow specific rules and laws and prevent them from engaging in illegal activities.

If you come across a broker with attractive offers such as low fees, low spread, and enticing deals but with no regulatory body, it is likely a scam. Some of these dishonest brokers may even claim to be regulated, but in reality, they are not. To avoid falling prey to these scams, it is important to thoroughly check the regulations of each broker you consider working with.

In some cases, fraudulent brokers may provide false information to deceive their clients. Therefore, it is important to double-check the information provided. In case a broker claims to be regulated, ask for their registration code. You can verify the code by visiting the regulator’s website and checking whether the code is valid and if the regulator really regulates the broker. If the code is valid, you can then double-check the URL to make sure it is legitimate before depositing your funds.

Social Media Scams

Social media is a popular platform for scammers to reach a large number of people. With almost 5 billion users worldwide, scammers often use Instagram to scam people through Forex trading. Many Instagram accounts pretend to be millionaire Forex traders, featuring photos of luxurious cars and watches, expensive restaurants, and hotels. They claim to help people make money and provide links to their paid courses. However, these courses offer no real value and are just a scam.

To avoid these scams, it is important to do your research before buying any courses. Don’t trust someone just because they have a famous Instagram account. Check the legitimacy of the person and their courses before investing any money.

Cold Calling

This particular scam is quite popular, and you may have received a call from someone offering you great investment opportunities. If you have, then you have dealt with this type of scam before. 

Scammers use WhatsApp calls to promote Forex scams and persuade people to register on a particular broker’s website and invest in a specific asset. These fraudsters are usually skilled talkers who know how to steer the conversation in their favor. They may make you register an account on a fake broker website that they have created.

To avoid falling victim to this type of scam, you should simply ignore the calls and don’t answer them. If you do answer and realize that it is a scam, hang up immediately and block the number. Never engage in conversation with them, even if you know they are scammers.

Fake help providers

There is a scam that targets people whose other fraudulent activities have already been scammed. This scam involves companies that claim they can help retrieve the lost funds. These so-called “help providers” take advantage of the situation and scam these individuals out of even more money. It’s crucial to be cautious and do your research before trusting a company with your money. Before working with any company, investigate their background and legitimacy to avoid falling victim to these types of scams.

Scammers taking control

Many people, especially those who are not familiar with computers, fall prey to scams while trading in the digital Forex market. Scammers take advantage of people’s lack of experience and pose as support staff for brokers to deceive them. They use confusing technical terms to create the impression that they can help traders execute trades faster. Once the trader is convinced, the scammer gains access to their computer with various types of software and steals their money, all the while pretending to help. This is a common way that people are scammed in the Forex market.

To protect yourself from scams, never grant anyone access to your computer. If you are ever approached by someone claiming to be a member of the support staff, be sure to verify their legitimacy by checking their email or other identifiable details to ensure they are actually associated with the broker.

What to do if you have been scammed in Forex

If you become a victim of the FX scam, there are several steps you can take, although it is unlikely that you will get your money back. Firstly, you should file an official police complaint. While this may yield little results, having an official police report can help you in the long run. If other financial regulators and companies investigate your case, an official report will support your claims.

After completing a transaction, it’s important to contact the support team of all the financial websites, programs, card providers, and banks that you used during the transaction. It would be best if you inquired whether it’s possible to reverse the transaction through a chargeback. If the answer is negative, you can contact the financial regulatory authority in your area. These governmental organizations supervise most financial transactions in your region, and they are the most reliable source to determine if any fraudulent activity has occurred.

How to avoid scams

As explained in the guide, scammers use various tactics, and each one requires a different approach to avoid falling victim to it. However, in this section, we will discuss the fundamental ways to steer clear of scams in the foreign exchange market, which can be useful in most scam scenarios.

  • If something seems too good to be true, it is.
  • It is important to verify the safety of any financial broker or person you deal with on the financial market.
  • It is advisable not to trust a person who offers you a foreign exchange investment opportunity without prior communication or research.
  • It is recommended to use different levels of security for your financial tools.

FAQs on Common Forex Trading Scams

How to identify Forex scams?

When dealing with a broker, it is important to ensure that they have the necessary regulations in place. You can double-check their registration number on the regulator’s website to verify their authenticity. Additionally, it is important to examine the URL of their website and ensure that every letter is in its correct place. If you are dealing with an individual, it is generally not advisable to trust them completely. If you have to deal with them, make sure to double-check all the information they provide.

How do I know if a Forex broker is legit?

It is important to note that every legitimate Forex broker is regulated by at least one government agency. This regulation ensures that the broker is operating within the law and providing fair and safe trading services to its clients. To confirm the broker’s legitimacy, you can check their registration number on the regulator’s website. However, it is essential to double-check the URL to ensure you are on the correct website. Once you have confirmed the registration number and checked the URL, you can proceed with trading confidently.

How can you avoid being a victim of a Forex scam?

One of the most valuable pieces of advice is to be cautious of any offers that sound too good to be true since they usually are. It would be best if you did not believe everything you see and should always double-check everything. When dealing with brokers, it is important to verify their licenses. Moreover, it is recommended that you only communicate with the official support staff who contact you through official channels.