Binary options fraud involving education gathers pace
“They set him up with webinars, he was thinking he was getting educated, understanding the system, the market…”, says Tomas, son of 61-year old victim of binary options fraud.
The story of 61-year old Fred Turbide, of Edmonton, Canada, who took his life in December 2016 after suffering hefty financial losses over binary options trading, is an example of the horrific consequences of binary options fraud.
Mr Turbide’s family recently shared their sad experience in a video interview with the Alberta Securities Commission, in which some of the key fraudulent tactics used by binary options fraudsters are mentioned. Amid these is the active solicitation of potential customers by offering them educational services, creating the illusion of understanding and the ability to master the market.
In the video, Tomas, son of the victim, tells of this approach being used by the binary options firm to lure his father.
“They set him up with webinars, he was thinking he was getting educated, understanding the system, the market… He really felt he was in a really good position to make a bit of money out of it”, says Tomas, son of the victim.
To assess the scale of this “pro-educational” approach FinanceFeeds has checked a number of blacklists of binary options firms. The so-called RED List, or Registration Deficient List, composed by the Commodity Futures Trading Commission (CFTC), for instance, currently features 111 names of binary options and FX firms that are foreign entities acting in an unregistered capacity, that is, they have no permission to target US customers. All of the binary options firms featured on the RED List are offering “education” services to their customers.
A number of catches come along with these offers. The most common ones concern the quality of the “trading manuals”, webinars, seminars, as well as the price to be paid for such services.
When trying to access such services, FinanceFeeds’ Managing Editor was several times redirected to trading platforms where she had to execute trades in order to get access to binary options classes. It turned out she did not have to trade much – as the program was trading on its own, showing messages of trades opening and closing, and options expiring. Let’s also note the heavy volume of malware that gets automatically installed on one’s computer should a person make the mistake of opening a binary options trading platform.
This problem was underlined by French financial markets regulator AMF in its latest mystery shopping tour targeting FX/binary options brokers. Whereas pretty much all of the companies checked by the mystery shoppers advertised educational services on their websites, the adverts were often misleading. Half of the tested companies did not in reality provide the education services advertised. Moreover, the information was not adapted to the level of knowledge of the specific client.
Canada’s authorities are now proposing a ban on advertising, offering, selling or otherwise trading a binary option to an individual. The period for public comments expires on May 29, 2017 in Alberta and Quebec.