FX brokerages beware! Affiliate marketing networks are now targeting and ripping off retail brokers

Acquiring new customers, and the costs associated with it, is a major concern for many retail FX brokerages today.

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 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.

Binary options brand 24Option has been one of the first firms to stand firm against this, having last week issued a notice to all existing affiliates that there will be no use of ‘make-money funnels’ anymore, which is a good step in the right direction, however as with many relatively new schemes, it can take a few bad experiences before this comes to light, thus it is important to know this information in order that brokerages can protect themselves, their existing affiliates, and their retail customers.

FinanceFeeds will continue to research this matter, however for those interested, our research piece on how binary brokers obtain leads may provide good insight into what kind of background led to the rise of these networks.