Spotting Fraud

Because much of your trading on Forex will be done through secure connections online or by phone rather than face to face, you need to be skilled in spotting fraud transactions. Forex fraud has become highly prevalent, since many investors have no way of knowing in advance whether or not they can trust the party at the other end of the transaction. How can you spot fraud when you enter into a business investment deal with a party you’ve never even met?

First of all, be wary of rapid Forex fraud. You’ll find several opportunities all over the internet pushing a high pressure sales pitch. You’ve probably run across many sites already stating that if you don’t invest quickly, you’ll miss out on the chance of a lifetime. Rather than simply buying in to a telephone sales pitch or a “million dollar opportunity” online, always be sure to investigate the actual scheme for legitimacy.

Also, even when you’ve determined that the investment is legitimate, there are rules to abide by and things you should never do. Do not make a check out to an advisor or sales representative personally. If you are part of a business transaction, you should either be filtering your money through some sort of escrow account or directly purchasing your stock or other investment. If you are using an investment advisor or broker of some kind, they should be able to provide a legal business name to which you can provide payment for commissions, as well as a legitimate business address for the firm.

Other signs of fraud include the request by a representative to “ease your responsibility” by having transaction confirmations and account statements mailed to them rather than to you. While you may wish to have a financial investor or other specialist handle your investments for you, all statements and transaction information should come straight to you so that you can quickly and easily verify that everything is done to your satisfaction and nothing is being stolen or skimmed off the top.

Forex fraud settlements can be long and difficult because once your money is out of your hands, you have no idea where it will end up. In fact, most foreign exchange fraud settlements only occur if there is ample documentation retained on the part of the cheated individual and some sort of slip is made by the scam artist, leaving a paper trail. These are both lucky breaks, and most of the time authorities are never able to nab Forex fraud artists because the money trail grows cold after leaving the country, ending up in unnamed and untraceable foreign accounts.