Canada’s Financial Ombudsman warns binary options present systemic risk as chargebacks fail

Maria Nikolova

Canada’s OBSI says banks involved are not at fault for the failure of chargebacks requested by binary options fraud victims because the banks followed the normal chargeback policies and procedures.

Nearly one year after the Canadian Securities Administrators (CSA) announced a ban on binary options, Canadian residents continue to experience the terrible consequences of getting involved with this type of risky products. In a recently published Bulletin, Canada’s Ombudsman for Banking Services and Investments (OBSI) warned that binary options present a systemic risk.

OBSI says it has received numerous complaints from investors who used their credit card to purchase binary options. These investors later disputed credit card charges related to these transactions. They believed that because they did not receive the promised services (such as the ability to withdraw their investment capital) that the issuing credit card company should allow a chargeback or reversal of the charge.

In the cases OBSI investigated, the chargeback was refused by the credit card company. The Ombudsman found that the banks involved were not at fault for the failure of the chargeback request because they followed the normal chargeback policies and procedures. It was the policies of the payment card network operators that prevented the consumer from recovering any disputed charges.

As a result, OBSI could not recommend that the banks compensate the cardholders. The Ombudsman identified this as a systemic risk and reported it to the Financial Consumer Agency of Canada.

Canada’s ban on binary options covers all sorts of such products. It applies to binary options, regardless of the specific name. This means that the prohibition covers (list is not exhaustive) “all-or-nothing options”, “asset-or-nothing options”, “bet options”, “cash-or-nothing options”, “digital options”, “fixed-return options” and “one-touch options”. The legislation prohibits advertising, offering, selling or otherwise trading a binary option with or to an individual.

In April this year, the Investment Industry Regulatory Organization of Canada (IIROC) warned Canadian investors not to be fooled by fraudsters attempting to illegally sell binary options under the guise of legitimate investment dealer firms regulated by IIROC.

Read this next

Digital Assets

Midas launches investment strategies for the ‘crypto winter’

Midas.Investments has released three new investment strategies on its custodial CeDeFi platform, creating new opportunities during the ‘crypto winter’.   The platform merges diverse approaches to digital asset management into single-click products to let investors gain steady profits in any market conditions — including the ongoing bear market. a custodial CeDeFi platform, CeDeFi: Unlocking the […]

Digital Assets

Bitcoin.com Wallet adds several ERC-20 tokens

The product expansion includes representatives of the DeFi world, the Metaverse, and the largest stablecoins.

Market News

Savvy Investors to Profit Whether the Stock Market Rebounds or Not

Equities have gone up enormously since the low. SP500 has gained 13.88% since June 17. In August, the indices drifted sideways. On Wall Street, veteran investors expect a move in either direction.

Industry News

Wall Street-backed MEMX obtains SEC approval for options trading platform

The company has raised more than $135 million in funding from 18 stock trading and investing heavyweights, including BlackRock, Citadel Securities, and Morgan Stanley.

Industry News

Amundi US launches ESG strategy that seeks to outperform S&P 500

Amundi’s Responsible investing team includes more than 45 specialists, and its ESG analysis covers more than 13,500 issuers across debt and equity.

Industry News

Verto launches embedded FX payments solution

The Verto API automates currency conversions, tracks payments and exchange rates in real-time, and is being launched in the follow-up of a $10 million in Series A funding last year.

Industry News

SEC awards over $16m to whistleblowers after another successful enforcement action

The program is 10 years-old and has arguably played a critical role in the Division of Enforcement’s ability to effectively detect wrongdoing, protect investors and the marketplace, and bring violators to justice.

Digital Assets

Ripple submits most succint explanation of Hinman issue in XRP lawsuit

It might be useful to get up to date as this could be the end of the road for the SEC.

Retail FX

TradingView integrates first Brazilian broker, Órama Investimentos

Órama offers all kinds of investment products, from fixed income to crypto-related funds.

<