Brokers beware: Scammers from binary options brands and warehouse brokerages targeting genuine FX firms with bogus marketing tools
A very disturbing and potentially damaging conflict of interest is manifesting itself in that binary options and low-end warehouse brokerages are moving toward selling leads on false pretenses. FinanceFeeds details how this works and advises all brokers in all sectors to avoid any such offers completely
“The price of greatness is responsibility” – Sir Winston Churchill
A somewhat unpleasant direction that some of the less than salubrious entities within the affiliate marketing and binary options world are taking is now manifesting itself.
As the oxygen supply that has been feeding the vultures of the binary options business rarifies at last, and the global regulatory authorities and governments have taken steps to banish it from the shores of many nations, the shadow that it has cast over the genuine electronic trading industry is at last fading, however the perpetrators are not going to simply lie down and go away, they will quite simply morph into something else.
Ordinarily, this would not matter, because a diversion from binary options into some other implausible business venture would mean that the association between binary options and the genuine electronic trading industry would be removed and we can all be free from the incorrect association by regulators and the public with something that bears no resemblance whatsoever to our industry.
Whilst this may well happen, there is a very important caveat to be very wary of, and that is the onset of bogus affiliate networks and lead provision offers by those who are well versed in recycling and stealing leads, who then package it into attractive colors and branded packages and attempt to hawk the leads to brokerages.
FinanceFeeds advises all brokerages to avoid such schemes completely.
Within many firms, the marketing methodology and amount of resources committed to ensuring that traders remain customers is a key aspect of the entire business model, especially within regions where many brokerages offer similar products and are vying for the same audience.
Unfortunately, as with many competitive sectors, there is always a new scheme which sets out to dupe those wishing to maximize their business, however this week, FinanceFeeds has conducted substantial research into the latest of such schemes, that being fraudulent affiliate marketing networks which make claims of bringing qualified new customers as ‘first time deposits’ (often referred to as FTDs), under what is known as ‘make-money affiliate networks’.
There has recently been a surge in the number of such ‘make-money affiliate networks’ which are aiming their services directly and solely at retail FX brokerages, however absolutely all of them without exception are operated by former binary options and warehouse FX figures in Israel.
FinanceFeeds investigation involved speaking to the affiliate marketing departments among many retail FX firms, and in particular with executives who have a detailed understanding of how traffic buying and conversion works within an online FX business.
One particular executive explained “I realized quite early on what this is about. Most of these networks boast that they can bring several thousand FTDs (first time deposits) to brokerages, however the FTDs never go to the actual platform. Instead they stay within some kind of designed website, which is operated and owned by the make-money affiliate marketing network itself. It then connects via an API connection to the FX company’s system, and even regulated binary options firms are asking customers to bring FTDs via these networks, saying things like bring $250 and you can be a millionaire. This is absolutely crazy.”
Indeed, such a system is encouraging brokerages to cause their clients to be involved in a semi-pyramid scheme, by asking customers to make a deposit into a live account, then connecting the make-money affiliate marketing system to their own real trading platform and telling the client that he can be an affiliate by bringing leads from these make-money affiliate networks, all of which never deliver.
One particular example of this is a network called BOA Elite, which according to our sources, is owned and operated by Leon Okun, a co-founder of SpotOption and former senior executive at the company.
Research into this matter by FinanceFeeds shows that BOA is charging $500 CPA on each, and is operating in this particular fashion.
BOA Elite boasts that it is “the largest affiliate network for financial products” and that it can “invite you to gain access to over 60 binary options and FX brands promoted under one roof.”
Affiliate marketing departments within FX firms could easily be taken in by this, and according to our research some already have been, which is concerning.
FastCash.biz is another example, which makes claims t bring $10,000 in first time deposits per month for retail traders that want to become affiliates of brokerages. This is known as a ‘converting funnel’ by those who orchestrate it, and is indeed the same principle as BOA Elite’s ‘make-money affiliate’ system, also operated by former binary options employees from Israel.
Clicksure, also operated from Israel, makes a claim that “advertisers receive access to a powerful SaaS solution (software as a service), which gives them insights to optimize their campaigns and helps them make more intelligent marketing decisions.”
The company claims that it has the technology to allow advertisers to gain access to over 400,000 affiliates without needing to manage affiliate payments, and that it allows firms to promote high converting products with weekly payouts.
The most recent example of this to have surfaced is a scheme called Diamond Software Generation & Lead Generation.
This is an equally dangerous scheme, and is being operated by Israelis who are associated with Hello Diamonds, a division of Hello Markets.
FinanceFeeds has spoken to various brokerages that have been approached by this entity, the CEO of one such brokerage having explained to FinanceFeeds “This is a big threat and it seems get a strong response from the same problematic companies that have been running less than proper businesses. The company behind this particular scheme is Hello Diamond and they have many sales people targeting all companies. It seems that their model is a type of MLM (multi-level marketing) scheme with some kind of false allusion to diamonds. As people who care for the Israeli reputation I think we all need to help stop this before it become the next bad industry.”
Hello Markets has recently demonstrated that it is enabling the viewing of all of its affiliate data, as demonstrated by FinanceFeeds recently.
In January this year, FinanceFeeds reported that, following a series of tests conducted by FinanceFeeds in conjunction with several affiliates and white label partners of platform provider Hello Markets, the company’s CRM data had been publicly available and displayed the entire databases of affiliates by just copy pasting a URL.
As a result, we discovered that all affiliates could access the data of brokerages which are white label brands of this particular platform provider / market maker without any restriction whatsoever.
Hence, brands which use this platform risk having their own intellectual property displayed publicly, which in turn means that other brands could simply copy and paste it into their own databases.
FinanceFeeds has studied this in detail, and has performed several tests with regard to this, as well as drawing on the experience of several affiliates. Bearing in mind the company’s ability to sell leads, which is a conflict of interest, it does beg the question as to why this is possible, and why when the matter was raised and replicated, it was not resolved.
Both FinanceFeeds and the affiliates that we approached were able to replicate this several times, in a very simple copy/paste action relating to some of the source code from the Hello Markets platform which can be simply exported and pasted to a different part of the portal, exposing every CRM record in the system.
Stealing leads from other firms
For many years, industry players viewed the FX and Binary Options “businesses” as commercial revenue generating enterprises thus are the next best thing to the now saturated gambling industry. As a result, the market quickly became populated with those who understand almost absolutely nothing about financial services but enjoyed the view that it is a financial services product, therefore added a lot more legitimacy vs. traditional online gambling.
Affiliate marketing, lead buying and recycling customers from gambling to binary under the same roof is very common. Now, with the nefarious nature of the low-rent binary options industry having had its very dirty laundry aired publicly, in mainstream news sources and now at the hands of the Israeli government, where the Chairman of the Israel Securities Authority Shmuel Hauser has been veciforously outspoken with regard to his disdain for the entire business whose fraudulent actions he considers to be a danger to the entire economy of the nation, vowing that he would expedite laws to make international sanctions possible to close the loophole that firms have long been using in Israel, that being to register their businesses offshore, and target customers in various locations outside of the region in which the company is based, often using fake names and fake location details.
The interesting thing is that to fully understand how rotten to the absolute core the binary options business really is, a brief look behind the scenes will reveal that not only do firms willfully steal money from people who think (quite wrongly) that they are investing in a financial product, but they all steal from each other too.
FinanceFeeds has conducted an investigation which delved into the depths of the marketing protocols of many binary options firms, deducing that far from legitimately purchasing leads, or investigating where a client may be relevant for a specific product (if there can be such a thing with OTC binary options!) the practice of stealing leads from other brands and recycling them is rife.
It is widely recognized that many binary options brands have also interests in poker and gaming sites, and then when the gambler has lost enough money, the brands transfer the lead to their binary options desk and try to convince the gambler that he should not gamble, but instead trade the financial markets, which is a blatant and outright attempt to mislead. The likelihood of the client being offered a live trading market is as likely as the binary options salesman’s real name is John Smith from London.
In fact, geographical knowledge appears to be something of a challenge for many of these representatives, which is interesting considering that they profess to be in an international business. One particular binary options brand was recently encouraging its sales team – all of whom had fake names – to explain that they were calling from Dublin, Ireland, UK. Unless I have missed some very important geopolitical news, Ireland has never been in the United Kingdom. We must have all been wrong about the difficulties associated with the reign of William of Orange dating back to 1672.
Lying to customers about the actual product, disguising a gaming platform which is weighted in favor of the house as a financial markets system, about the names and location of the firm and other important matters is one thing, but stealing leads from each other demonstrates the lack of moral standards which run deep.
Recently, many lead buying advertisements have proliferated LinkedIn, which is intended to be a business networking site, not a place to peddle recycled customer data for which the vendor has no intellectual property rights.
My experience of explaining the rules of intellectual property to many binary brand owners has resembled attempting to explain to a hedgehog how a hot film mass airflow sensor works. The answer, and I quote verbatim, from one particular large binary options brand that also has a lead buying and gaming business was “We target people who are addicted to gambling. We look to get leads from all sources and funnels, and if people working here can bring leads then this is better.”
What this particular binary options brand owner was alluding to was that they like to employ people who have worked at another binary firm, who before leaving, have copied the database onto a memory stick in order to bring it to another firm.
If the internal procedures do not respect the intellectual property of other businesses, legitimate or not, then there is little hope for any morality toward product or customers.
Another nasty trap is the plethora of entities now selling leads on the internet, with very garish marketing campaigns aimed at attracting the attention of hungry binary options brand owners.
Affiliate marketers – likely ex-binary options sales staff – selling stolen leads
In October last year, FinanceFeeds approached three of these entities, however we believe that they are all connected and that it is a band of former binary options salespeople who have stolen leads and are now offering them on the open market. “Ping Me For Leads” stated the front page slogan on the messenger used by one particular entity. Hmm, how inviting. I might just do that….
Our conversation began with one particular sales person stating “Let me explain how we qualify leads. We have a call center in house, where we qualify leads, and for each lead you get fully verified details, (no wrong numbers, duplicates etc.), they will be all in a position to invest, they expect to get a call and to be made an offer to trade from your sales team, and all leads are qualified in an individual campaign for each client and are branded (we introduce your brand, promotions etc.)”
(Editor’s note. I had to straighten the English out here. Normally, the addition of the abbreviation sic. would be enough, but to comprehend what was an incoherent written sales pitch, I needed to adjust the English significantly. John Smith? Yes, and I’m Captain Cook.)
The salesman was then asked by FinanceFeeds how the leads are acquired. “We get them from our funnels – financially related seminars, webinars, e-books etc”. I would love to know what the “etc” is. Sounds fascinating. Perhaps it is an acronym for ‘entirely, totally corrupt’.
When asked how lead sales people safeguard the leads that they are selling to ensure that they are not stolen, the salesperson backtracked, admitting “We target all of the regions that are popular, however these leads are not fresh and this is the main issue.”
We asked if they had been used by other binary options brands, to which the answer was “Yes exactly.” Make of that what you will.
The price we were offered was 22 euros per lead, and were asked how many we would like to start with.
The company maintained that “Every lead that you receive will speak to our call operators, who will introduce your brand, promotions, offer etc (more etc, interesting) and we will explain the next step which is a sales call from your sales team. Only if they agree this is counted as a lead and we set up a time-slot for the phone call.”
This practice has become so widespread that the platform providers are aware of it. One particular executive within a platform firm once explained that automation is perhaps a means of removing the high pressure sales from the binary options business, a question that FinanceFeeds posed to CySec Chairman Demetra Kalogerou in the summer of this year, her having concurred with this line of thinking.
However, this particular platform developer explained that it is not only the high pressure sales that could be rooted out by automating platforms and removing staff from offices, but the theft of leads by employees in binary options brand call centers and resale of such leads to other brands using the same platforms and selling the same ‘product’.
The two caveats to bear in mind with regard to these systems are that brokers could fall foul of these tactics, sign up to this type of network, and lose money yet gain no new clients, and that retail customers of brokerages could be persuaded to become ‘affiliates’ in their own right, to find that actually they have money taken off them and no deposits from the network would arise.