Binary Options Scams

What are Binary Options Scams?

Binary options scams refer to all fraudulent activity that goes on in the binary options market. Although the term should actually encompass all scam activity perpetrated by any player in the binary options market no matter on which side of the track they are on, binary options scams are used to describe those fraudulent activities perpetrated by the brokers in the marketplace.

Why are so many people all riled up about the scam activity in the binary options market?

How Binary Options Scam Brokers Take Your Money

Most of the complaints that have been filed with regulators have been broker-related scams. The scam complaints can be placed in at least three categories. These are:

  • Refusal to credit customer accounts or reimburse funds to customers
  • Identity theft and manipulation of software to generate losing trades
  • Non-credit of accounts/non-refunds to customers


a) The first category of alleged fraud involves the refusal of certain binary options platforms to credit customer accounts or reimburse funds. These complaints typically involve customers who have deposited money into their binary options trading account and who are then encouraged by “brokers” over the telephone to deposit additional funds. When customers later attempt to withdraw their original deposit or any profits, the trading platforms allegedly cancel customers’ withdrawal requests, refuse to credit their accounts, or ignore their telephone calls and emails.

b) The second category of alleged fraud involves identity theft. For example, some complaints allege that certain Internet-based binary options trading platforms may be collecting customer information such as credit card and driver’s license data. If a binary options Internet-based trading platform requests photocopies of your credit card, driver’s license, or other personal data, do not provide it.

c)  The third category of alleged fraud involves the manipulation of the binary options trading software to generate losing trades. These complaints allege that the Internet-based binary options trading platforms manipulate the trading software to distort binary options prices and payouts. For example, when a customer’s trade is “winning,” the countdown to expiration is extended arbitrarily until the trade becomes a loss.

Resurgence in Binary Options Scams as Pensioners Invest Pension Pots

In 2015, the British government allowed pensioners to take out a 25%, tax-free lump sum from their pension pots. The result? A large amount of people sitting on large amounts of cash, and the temptation of a quick return on capital is too tempting for many. Registering with legitimate looking binary options platforms and transferring funds, they are unaware that many of these firms operate outside of the UK, and are not bound by FCA regulation.

That means that if the money disappears, then there is nothing that can be done.

They often deal with so-called ‘brokers’ who promise significant profits, and encourage naive investors to deposit more and more cash. When customers wish to withdraw their money, the common response is that there is a minimum withdrawal amount, one that is much higher than the amounts actually held with the firm.

In short, the money has been stolen. Examples of alleged binary options scam sites operating in the way include Binary Uno and Tradorax.

For regulated binary options brokers you can trust, see our reviews.

Authenticity of Complaints

Someone reading this would ask: are all these complaints true? Let us take the issues one after the other.

The first category borders on the refusal of brokers to do the following:

a)    Credit customer accounts after monies have been transferred by the customer to the broker for this purpose.

b)    Reimbursement of funds after the broker has cited reasons why the customer cannot do business with the broker.

I know of at least two cases where this has happened with a non-regulated broker operating in the Seychelles. There are other brokers that have been fingered as well. A visit to several online trading forums and binary options online forums will reveal some habitual offenders. Why would a broker tell a trader they were closing his account as a result of what they called “multiple user activity” and then refuse to return the trader’s $1,000? Is it their money to keep? So yes, this fraud type is very real and occurs often.

The second category is a very serious problem. Theft of the card details of traders who attempt to use their credit cards in depositing funds is a real problem, especially with “suitcase” brokers. A brokerage house was shut down by agents in a particular country when it was found to be a husband and wife operating out of their kitchen.

So without a doubt, there is an element of truth in all the issues raised. These frauds do exist in various degrees and to various extents.

Regulators Are Cracking Down on Binary Options Scams

Scam brokers have been operating since 2010, and continue to this day. But regulators are making serious efforts to crack down. Many of these firms offering scam platforms and brokerage services are based in Cyprus, where the regulatory body, CySec, has issued large fines to multiple sites. They include massive 6 figure fines for IQ Options and Options Rally.

How to Avoid Binary Options Scams

Now that we have identified how these scams occur, it is easy to avoid them. If you can read between the lines, most of these scams all border on a failure of regulation. Either the regulation is totally absent or is weak.

Where regulation is absent, traders should simply avoid. Regulation is really all about customer protection. If there is no regulation, there is no protection for the customer and no means of redress. Always avoid any binary options system that promises guaranteed profits, or brokers promising out-sized results.

Traders can avoid 99% of scams by simply choosing regulated brokers.

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