In the past years, a lot of investment offerings and opportunities have come to being. Although there is a variation with the success and complexity of these money making opportunities, the Forex market is now one of the fastest growing industry, all thanks to the wonders of technology. In fact a lot of leading Forex brokers have submitted reports that they had up to 500% increase of new retail customers. Nevertheless, even as the Forex market is blooming, along with it blooms the incidences of Forex scams.

Where Can You Find These Scams?

Surprisingly, you can find these scams almost everywhere in different forms of media. They can be online or offline, in newspapers, on the radio, and television. Sad to say the number of investors that have fallen victim to these scams keeps on increasing and most of the time they lose all of their money.

How Do They Work?

There are several ways in which a Forex scam can work. Here is one good example.

You just heard of a new foreign currency trading opportunity that involved minimal risk on the radio. Due to curiosity, you decided to contact the firm, and later attended some seminar that the firm presents for first timers. You were very much convinced by the seminar that you wrote them a check for $100,000.

After some months, you receive false statements from the firm saying you have had significant returns on your initial investment of $100,000. Of course, you were happy not knowing that the statements were fraudulent and have now decided to attend another seminar and invest more; so you wrote them a check of $700,000. Short while after your second investment, bad news comes when the Securities and Exchange Commission has filed a complaint against the firm for having fraudulent activity. Thus, the firm’s assets were all frozen including the $800,000 that you invested.

Authorities appointed a receiver to distribute the firms remaining assets. Since a pro-rata basis was used to distribute the assets, there is no legal preference that could be given to the victims. Because the firm’s assets are too small to satisfy all the amount of all the victims’ claims, you only get a share of $23,000 out of the $800,000 you have invested.

That is the bitter ending that you could get with a Forex scam. Take note, this is only one kind of operation and there are more in the market that you should be wary of. So, here are some of the signs to serve as a warning to know if the investment you are getting into is a fraud or not.

Its 101% Risk Free! Yeah Right!

If you encounter a Forex firm which promises you that investing into their company is totally risk free or involves little risk, then it would be better to be off with them. Forex trading is really profitable, but this is because of the fact that it involves a high risk of loss, which is inevitable to have along the process. This industry is highly volatile and if good money management is not practiced, you can lose most of your capital in just a few days. Hence, risks are always part of the game.

Large Profit Guarantees

You should be wary of firms that guarantee you large profits. You should understand that these are simply tactics for you to be enticed with what they have to offer and believe that it is safe to invest with them. Claims like these are untrue; since even the best traders can’t guarantee that they can gain profit whatever the season is. This kind of market is really unpredictable. Thus, be suspicious if a claim like this is offered to you.

Use of Employment Ads

A lot of firms make use of employment ads so that they can attract individuals that have capital to use their system in trading. These employment ads usually appear on the Internet and in newspapers and say that their firm is looking for trainable individuals that they could teach about trading in the foreign currency market by the use of firm capital. After replying to this kind of ad, the person supposed to be trained is then convinced to invest with the company, which is actually a scam.

Is the Firm a NFA or CFTC Member?

It is important that you research the company you are signing up for. Make sure that the firm is registered in the National Futures Association (NFA) or the United States Commodity Futures Trading Commission (CFTC). A lot of scam artists claim that they are affiliated with these organizations. However, it would be better if you check out with the NFA or CFTC first to know if what they are saying is true.

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