Spotting 'forex' fraud.


With financial markets unpredictable, many consumers are

re-evaluating their investment options. Solicitations to trade foreign

currency contracts, also known as “forex,”. Are particularly

tempting. Ads for high-return, low-risk investment opportunities in

foreign currency trading are blanketing local newspapers, radio

promotions and attractive Internet sites. Are these offers too good to

be true?

Sometimes, they're. While much forex trading is legitimate, the

Commodity Futures Trading Commission (CFTC) reports a sharp rise in

foreign currency trading scams. How does one sort through the offers to

select a reputable operation? The CFTC and the Better Business Bureau

offer the following warning signs of fraud to those who are considering

forex investment opportunities.

* “Too good to be true”. Claims. Get-rich-quick schemes are actually lose-everything-quick schemes. Be particularly cautious if

you've recently acquired a large sum of cash. Retirees make easy


* Offers that predict or guarantee large profits. Such claims are

false! No person or business has a crystal ball that can predict the


* Offers that promise little or no risk. If the company claims that

written risk disclosure statements are routine formalities imposed by

the government, beware! don't fall for promises that your investment is

“secure”. That there is a “maximum”. That you can

lose per day.

* Pressure to invest funds that you can't afford to lose. The

currency futures and options markets are volatile. They contain

substantial risks for unsophisticated customers. Reputable companies

will permit you time to evaluate their offer and make an informed


* Unwillingness to provide a performance record. Always obtain the

company’s track record. Verify that data with other sources and

someone whose financial advice you trust. Even the glossiest of

brochures can contain false information.

* High-pressure tactics to send or transfer cash immediately. Phony

currency trading firms have seized upon the Internet as an inexpensive

way to reach potential customers. Many such firms aren't located within

the U.S. and don't display any information identifying their location.

Once you transfer your funds offshore, it becomes very difficult or

impossible to recover your investment.

* Reluctance to provide credentials or background information. Do

not deal with anyone who won't give you requested information about

their expertise, experience. Industry registration or relevant

association membership details in writing.

Prior to purchasing any “forex,”. Check whether the

company is registered with the CFTC ( or is a member of the

National Futures Association ( Other sources of helpful

information include your state securities commission (,

Attorney General ( and Better Business Bureau


If in doubt, don't invest! If you can not get solid information

about the company, the salesperson and the investment, why'd you

want to risk your money?



Leave a Reply

Your email address will not be published. Required fields are marked *