“Mind The Gap!” – The life and times of a man on the move Episode 19

Making up the rules instead of following them, a detailed talk with an insider about chargeback sites, don’t let your batteries get hot, and confidence in the leadership of a large FX firm

In this weekly series, I look back on what stood out, what was bemusing, amusing and interesting during my weekly travels, interesting findings within the FX industry and interaction with an ever-shrinking big wide world. This is purely observational and for your enjoyment.

Monday: The PIP squeaked 

For those who think Ethics is a place next to Suthex, there appears to be a new and somewhat banal method of attempting to appear credible, and it should be borne in mind by everyone, retail brokers and traders alike.

Nowadays, with so much international awareness regarding the perils of opening trading accounts with unregulated brokerages with offshore registration and no recourse should something go wrong, which in the world of unregulated white label brands it often does as their execution methodology is often misaligned with the expectations of customers, those not prepared to go the hard yards and run a brokerage properly are resorting to some very odd lengths.

This Monday, one of these new methods was demonstrated to me by a member of staff at a brokerage in Cyprus, who explained “This is unbelievable. People are making up their own regulators now.”

Showing me the link that prompted this exclamation revealed an inarticulate attempt to bamboozle the unexpecting, and whilst almost humorous in its incoherence, is an important matter.

Yes, to those in the know, an absurd name and poorly conveyed message would be probably the subject of bar room derision after work – “hey, have you seen this! Pffft” I can hear the sneering now, but if you are a novice trader whose first language is not English and you live in Vietnam, Thailand, Indonesia or India, have no previous experience of working within an environment that has a strong and developed financial markets economy with a retail customer base that demands high quality from well organized national providers, then it is far from funny.

This particular attempt to sway the public onto the wrong path goes under the peculiar name of PIPSEC, which equally confusingly stands for Private Investor Protection for Securities and Exchange Independent Registration for Financial Service Companies. What? Exactly.

Who??

On the website, which has managed to register a .org domain name so that it can appear to the untrained eye to be a genuine trade organization, there is a leading sentence which stands out. It reads “Dear users! Due to the big amount of fake organizations which use PIPSEC brand in illegal way and offer refund services, we want to pay your attention that the only official domain of PIPSEC agency is PIPSEC.ORG”

As a child, I was always quite rightly told that anyone who says “trust me” is someone you cannot trust. This opening gambit verifies this good advice by metaphorically yelling it through a megaphone.

To compliment these front page oddities is an official-looking roundel, which at first glance appears to be not dissimilar to that of one of the world’s most highly regarded and well organized securities market regulators, the United States Securities and Exchange Commission, and it even uses the words “Securities and Exchange” in its branding.

Among the myriad of spelling errors on the first page, there is a description of what a PIPSEC registered (note the word registered, not regulated) firm offers, and at this point shows a clever means of the creator of this site being able to facilitate the bashing of competitors by listing “non-PIPSEC” registered companies. This means that sales agents of the brokerage that created this site can call retail customers, boast of “private investor protection” and then show them that pretty much every other firm does not have it.

There are no links to search the register, and it claims that it is operational in Switzerland (not possible, Swiss firms are only able to be governed by FINMA, the Swiss Banking Authority, otherwise it is illegal), Sweden, Germany and another place, which despite being very well traveled, I have never heard of, called ‘Italya’. Again, European nations are subject to MiFID rulings on infrastructure and are regulated under ESMA rulings, anything else is illegal.

There is one firm listed, with a proud picture of its certificate, as being registered by PIPSEC, that being an entity called Bonum Change OU. Just when you thought you’d seen the most confusing and chuckle-inducing names, this appears.

Making their own rules – literally! And what a name…

Bonum Change OU boasts of its PIPSEC registration and demonstrates its name on a certificate. Nice half an hour’s use of Photoshop.

This sort of practice is very difficult to police, because once again it highlights the zeal which bona fide companies in proper jurisdictions have to demonstrate when adhering to proper regulations such as those in Europe, Australia, North America, Hong Kong, Singapore and the United Kingdom – basically the only regions in which proper retail financial services markets exist and prosper – compared with the flagrant disregard for anything that resembles proper practice by those with their operations on an island and owners in a totally different place.

Quite simply, those in proper regions who run their businesses properly are continually under the microscope of their discerning customers and of the authorities, as well as spending massive resources on proper R&D and leadership as they genuinely want to get it right and continually move the industry forward in the right direction, yet there is no penalty for those who engage in nonsense such as what I saw on Monday.

The only thing that we can do is highlight this to our colleagues, and hopefully it will then be brought to the attention of customers when retail firms speak to them, meaning that retail traders choose good quality regulated companies with proper expertise and avoid going to anywhere where the PIPs squeak.

Tuesday: The merry-go-round 

It has long been a suspicion by many that binary options bandits who are now out of favor with the law in many regions because what the City of London Police describe as “the biggest internet fraud in history” had been brought to the public attention to a point at which it is now a mainstream issue resulting in many of them doing what most fraudsters do, that being to quickly shut up shop and run away.

Yes indeed, there has been the occasional rather unusual attempt to capitalize even further on the gullibility and rashness of some of those who have fallen foul of it by pretending to help, including employees of a fast food chain who ran their own greasy scheme and were caught out some time ago.

Unfortunately, the very nature of the chameleons that ran binary options brands until recently is that they chop and change very quickly in order to circumvent any enforcement, but their nature does not favor simply stopping these activities and moving on. Most of them have had a checkered history in affiliate marketing, gambling, lead recycling and other underworld behavior, usually operating in cahoots with each other.

What we do know, is that most of those advertisements which aim to ‘recover your funds from binary options fraudsters’ and that often feature dubious testimonials which all follow very similar structures stating that all hope was lost until the non-existent writer of the testimonial discovered this wonderful firm that recovered all the money, are operated by binary options fraudsters themselves as a ruse to extort more money from those that they extorted in the first place.

This Tuesday, I was sent a very detailed account by a former employee of an Israeli binary options firm, which shed a lot more light on the dark world of those who have done considerable damage to our retail industry in many nations and will continue to do so if the authorities continue to be slow and ineffective in prosecuting them.

This particular correspondence was from a former employee of a firm called MyChargeback.com which is, according to this individual’s account, a n online fund recovery website owned and operated by Cactil LLC registered in the USA.

“I just want to share my personal experience as a former worker of MyChargeback.com, a company who says it’s the leader in funds recovery for people who have been victims of online trading scams like forex and mainly binary options. As I thought about who should know about what is really happening there” he said.

“When I first applied for this job, the description of what we were doing was pretty clear and I was happy. Helping victims who have fallen in these vicious traps of online scams like binary options and crypto scams made me feel important and proud of myself at start, but when I came to realize what we were doing really, I couldn’t be more angry and ashamed of it and that I had help them to scam these people who only wanted to get the money they have work so much hard for” said the former employee.

“As mentioned above, the mother company is registered in the US and uses US banks to be more credible but the main operational center is found in Beit Shemesh, Israel” he said.

“That’s where I was working in the “sales” team. The job was to assist and guide all the potential clients who come to us to try recover their funds. We were trained with a sales pitch and also a script as to what information we needed to know from the clients before we can tell them if we could help them or not. Usually the first question were to know how much the client deposited and with which company.”

“The more the client said he deposited with these scam brokers the more we would convince him to choose our services. For the names of the brokers, there were so many! We got instruction the CEO Aaron Lazor and the Sales Manager Rami Klugman to always say that we have lots of client who also reported scams from these companies so they feel they are in good hands, when many times we did not even hear of these scams and we would only start some research after the client agrees to use our services. We would also ask the clients when and how they made these deposits with the scams because chargebacks have some limits in time and for deposits done by Wire Transfers, chargebacks do not apply and bank recalls are way more difficult to obtain!” he exclaimed.

ISA Chairman Professor Shmuel Hauser has done all he can, but ultimately he cannot defeat the widespread mafia activities in the nation over whose markets he presides

“Once we have all this information, we start a ‘give them hope’ speech to the client to tell him that his chances of winning are very high, even if sometimes we know its more complicated. We would also forward these details to the Documentation Team who will then prepare him a standard contract but change just the name and the amount that he will be charged up front for this service. I was told clients have to pay a retainer fee to cover all the research work and drafting of their cases. This fee is not refundable. For several months I worked in this position and I brought in over 500 clients during that time. This was a good time as everybody were aware of the binary option ban in Israel. Due to my high productivity and the things I showed during this time, I was promoted as a Team Leader and I felt very proud of myself. At least until I got access to various emails about and operation meetings which made me realise what this company was really doing!”

I am aware that most of these toe-rags use naive young people who come from proper countries such as Britain, Canada or America and are not used to an entire nation which profits from crime and fraud. The orchestrators do this for two reasons – the first being that a civilized Anglophone voice and a Western name sounds much more plausible than a heavily accented Israeli, conjuring up images of those ridiculous ‘arm-wrestle’ handshakes, verbal threats to anyone who doesn’t follow his version of the world, silly unbuttoned shirts and a career of ducking and diving whilst playing backgammon in the street.

The second is so that the orchestrators can hide behind the identity of those who genuinely but mistakenly thought they were doing something worthwhile, and then let them carry the can for it when the (admittedly very slow) law enforcers swoop.

“The way this company operates is just disgusting, they advertise being able to recover funds from binary option, forex, cryto and other OTC brokers, they knew how many people fell into these traps and would be desperate to get their money back. MyChargeback.com would then use the same sales pitch I learned to convince clients that the only way they can have a chance of recovering anything is by using their services and paying them upfront. They make most of their money like this. Then they would just let a few days pass and send the client a threatening email template to be sent to the brokers. Sometimes, the brokers who are unregulated mostly would just refund them the money to avoid trouble and MyChargeBack would then take their 25% commission from the client while all they did just send a threatening template. This was described as simple business so I did not bother much about it” he said.

“If after these email the broker did not return the money, they will then send the client a template case by just filling in the client’s details and also the transaction details. I myself saw cases where the same letter was sent to 3 clients with only the personal details changed. These guys charge you an up front and non-refundable fee for time they will spend on building their ‘’cases’’ and in research while they already standard templates ready and they will not even spend time on studying any aspect of the whole case” said the former employee.

“Many times the banks would reject the chargeback claims because that it wasn’t sufficient to prove any offence committed by these brokers under the card scheme rules (Visa&Mastercard) and sometimes client would even complain on social media about the bad service they had. In these cases the company would just blame the banks for refusing their case, when it is highly probable the case itself contained lots of mistakes and they would propose an alternative solutions (for example pre compliances) which would usually cost clients more money but with still less chances to see their money back.”

“In addition, when the dispute team gives its green light, the sales team would try to “upsell” the client by telling him our experts now see he has little or no chance with chargebacks (when at start we always say his case is strong) and they them try to sign him up for another procedure call pre compliance, whereby we are actually going after the scammers bank instead of going after them directly. But again this is very hard and very difficult to win. However, MyChargeback doesn’t care at all since the client will have to pay them even more money to go for this option. Many times clients did not agree and were furious as they felt lied to, they were not wrong. After I learned how this part works, I started feeling really bad about how they were forcing out even more money from innocent people who have already been scammed.”

“I also discovered that the more a client has invested money via Wire Transfer and also some via card, the more his initial retainer fee will be because they would still sign him up for the chargeback recovery process even if its more much difficult to recall Wires. And by setting the initial retainer fee much more higher, they will already make some profits on the client’s head even if they know there is very little chance the client will get all his funds in the end. Of course the client would not know that.”

“The most shocking thing I saw during my time there was that these people, who the clients pay to look out after their best interest, are not ashamed to offer settlement offers to these scam brokers for their own interest. When the cases are complicated, the dispute team would often propose these brokers to refund the client only a part of his deposits with them to avoid the chargebacks and also give MyChargeback a commission on this. On their side MyChargeBack would convince the client that he doesn’t have much chance with chargebacks because of some excuses and would make the client accept the settlement even if that would mean the client is getting only a part on his deposits” he said.

Ultimately the dejected former employee concurred that these entities are misleading people with a lot of misinformation on their website where they say “your most important assurance is that upon a successful recovery, your chargeback goes directly to your bank account and not to us − we trust you to pay us once your case is resolved!” However, this is not the case, since in order for them to even consider your case, you will need to provide them with a retainer fee that you will never get back.

“Their marketing team is also very active on the internet and they have people on all the main binary option or forex blogs or discussion website. They use different accounts to write many good reviews that they were scammed by brokers and then MyChargeback help them get their money back. They are also affiliate with many of these review website which post good client stories about MyChargeback” he concluded.

Yes indeed, there are a plethora of these comments on every forum in the world. Be careful out there, but where are the impotent law enforcers?

Wednesday: IG Group’s new CEO begins with confidence – a great sign!

One of the world’s most recognized and established retail FX & CFD companies, IG Group, continues to go from strength to strength.

Just a day after FinanceFeeds announced the appointment of Ms Felix, who has been a non-executive director of IG Group since 2015, she began on her committed leadership journey.

Confidence and strength: June Felix

Ms Felix is of high commercial caliber, as until the recent sale of Verifone Inc., she was President of Verifone Europe and Russia with responsibility for the operation of the business throughout those territories. Prior to her role at Verifone, she held various executive management positions at a number of large multi-national businesses. These include Citibank where she was Managing Director of Global Healthcare Citi Enterprise Payments, and IBM Corporation where she was Global General Manager for the global Banking and Financial Markets industry sector. June has also worked as a strategy consultant at Booz, Allen & Hamilton, in strategy roles at Chase Manhattan Bank, and as CEO of Certco, a risk management technology firm.

Thus, a learned professional with 25 years of experience, and this is exactly the type of leadership that we in the FX industry should welcome among all companies, let alone the long established industry leaders.

Professionals with this much experience do not make rash decisions, however Ms Felix began to demonstrate not only a new era in leadership for IG, no mean feat after the extremely successful business that had been steered by former CEO Peter Hetherington whose 24 years at the firm positioned him as a pinnacle of the retail sector, and rightly so.

It was of great interest to observe Ms Felix’s inauguration and therefore clear that she would commit to more than her remit, something that came to fruition on Friday, when she personally purchased 17,000 shares in the publicly listed company.

That’s confidence. Confidence sells and this type of personal commitment to a company by its newly appointed leader should be something that IG Group’s existing staff, and former leaders should reflect on with satisfaction that they have done things how they are supposed to be done. That’s properly.

Thursday: Check your laptop batteries!

Most modern laptop computers and pretty much all tablets and smartphones use the ubiquitous Lithium-Ion type of rechargeable cell, however there have been some models on the market over recent times with Lithium Polymer (Li-Po) batteries, rather similar to those found in radio control model aircraft.

I thought about this this week, largely because, as a model aircraft enthusiast myself, the constant reminders that Li-Po batteries can be very dangerous is always part of consideration when storing and maintaining radio control equipment.

As a hobbyist, I have to adhere to strict rules about power storage and safety. We can take the same procedures in the workplace too

It is policy within most radio controlled model aircraft clubs to be insured to fly models, and to ensure that batteries and charging equipment are safely stored and disconnected after charging.

I have often thought that if hobbyists and clubs continually discuss this and circulate material relating to it, why is it not common practice within the modern commercial world? Many laptops are left on in offices overnight with the power supply connected, meaning that, given the charging time of a modern laptop computer being approximately 1.5 hours from empty to full battery, overcharging and therefore overheating of the polymerized plastic components that form the cell divisions is possible.

Incidents relating to the more common Li-Ion batteries are rare, however when I was at IBM several years ago working on a mainframe middleware project for Ulster Bank (now part of RBS Group) a colleague of mine had to run down to his car and get the powder-filled fire extinguisher out to clear a fire which started in the Li-Ion battery pack of his HP laptop whilst working from home.

Said colleague was a hardware engineer and a permanent staff member of IBM whereas I was a contractor, thus he knew the procedure and acted quickly to use a powder extinguisher, however had a laptop fire such as that been experienced by an administration department, maybe it would have been more of a concern.

I raise this because on Thursday, a friend of mine from the model aircraft club of which I am a member sent me a photograph from another club nearby, after a Li-Po battery was placed on charge for just 20 minutes unattended.

Here is the result:

I recommend keeping all batteries disconnected when not in use.

Friday: I should not let this become a habit

Just as I can still envisage the chins of many of those who know me well descending toward the floor upon last week’s announcement under Friday’s ‘activities’ that I had done the unthinkable and taken a day off, the same applied this Friday. I promise this will not be the formation of a habit, and you all have my full attention henceforth!

Wishing you all a super week ahead!

 

 

 

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