Forex is a buzzword in online trading. Although the term ‘forex’ applies to foreign currency, a market that is not exactly new, the trading trend is often touted as a way to make a lot of money. The reality is the forex market is the largest in the world and among the most volatile.
For this reason, forex scams abound. The volatility of the forex market allows fake forex brokers to claim that the customer lost money in a trade when in fact the broker pocketed the funds. In addition, few new traders realize that it takes learning from losses and mistakes before forex traders actually see high returns for their trades.
However, fraudulent forex schemes promise huge returns for first-time traders. This is an indication of forex withdrawal fraud or the tactic of encouraging clients to deposit more money so they can find a reason not to release funds and steal the money. Those who are targets of forex withdrawal fraud should file a complaint and seek fund recovery from a reputable financial company.
FundRecovery UK will prepare your case and be your advocate. Our professionals have expertise and strategies that will improve your chances of getting your funds back. We consult with clients, assist them with intelligence reports and negotiate with banks and other institutions. Ask us about chargebacks, wire recalls, intelligence reports, and crypto recovery.
What Is Forex?
Forex is concerned with the difference between currency pairs. One reason many people believe they understand the forex market well is that they may have dealt with changing money on travels abroad. Although this, in the broadest strokes, can demonstrate the principle behind forex, the actual trading is fast-paced, technically complex, and is extremely volatile.
For instance, a government may buy a huge amount of dollars if their own currency is getting too strong against the US dollar. Their strong currency may be hurting their exports and they may be seeking a trading deal with US companies that will benefit their own economy. Without this backstory, it is hard to predict that, for instance, the dollar may rise suddenly against that country’s currency.
Those who have experience trading forex may predict that the country will buy up dollars, but this means reading up on news reports. Some countries may want a stronger currency to help their own consumers who will enjoy cheaper imports. Others may want to boost the value of their own products. Forex traders learn to predict these movements only through experience and research.
Sometimes, research will not prevent losses if a currency falls because of an unforeseen event, such as a natural disaster or an election. For instance, during the COVID-19 pandemic, currencies would fluctuate wildly if one country’s number of infections and deaths decreased or if a new strain would suddenly hit another country. One headline story can send a currency soaring or in free fall.
Why Is Forex Fraud So Widespread?
The fact that many consumers believe that forex is easy to understand and the volatility of this large market are two of the many reasons forex fraud is widespread. Since currency is something everyone uses, forex trading can seem deceptively simple. In addition, since forex is so volatile, the false broker can try to convince the client that the money is not available because of a losing trade.
Another reason there are so many forex scams is that forex is so popular. Whenever there is a huge trend, there are plenty of fake alternatives to fool people looking to jump on board. This is true of any product, whether it is shoes, electronics, or trading services. When shopping for anything online, always look out for schemes and fraudulent versions of the desired product or service.
What Is Forex Withdrawal Fraud?
There are many types of forex scams, and although each is unique, they tend to behave the same way. One of the most common is forex withdrawal fraud. This occurs when the broker uses aggressive tactics to convince people to trade with them. They may use cold calling, spam, or other tactics. Social media is also a popular place these unregistered brokers find new clients.
The advantage of social media is that it gives these unethical brokers access to a large number of people. These targets might have searched for forex, found the page, and read about promises to double their money in a matter of days or guaranteed returns.
These brokers may not bother starting a fake website or making incorrect claims about licensing. People who lack knowledge about forex trading may be willing to take advantage of deals advertised on social media without researching the broker first.
The pattern of forex withdrawal fraud is similar to casino scams. The broker will make impossible promises of returns. Even people who feel a bit skeptical about these claims may decide to take a chance and see what happens. Others may believe the guarantees of returns are realistic and could even stake their savings on risky investments promoted by false forex brokers.
Once the forex broker has the attention of the potential client they may do one of two things. They could try to pressure the customer to deposit a huge sum of money at once. The other possibility is that they will make a modest request for an initial deposit, show a fake return from one trade as a kind of bait to encourage traders to make larger deposits.
In some cases, the broker may even return a small amount of money to the client to inspire confidence. This can lure customers into a false sense of security so they will make a large deposit into their brokerage account.
What to Do If You Have Lost Money to Forex Withdrawal Fraud?
Consult with Fund Recovery UK if you are trying to retrieve your funds. Talk to us and we will map out a strategy with effective tools and methods to maximise your chances for fund recovery. Our professionals have a strong working relationship with banks and regulators and understand how to make a claim persuasive and successful.