Stock trading is one of the most popular and common ways people interact with financial markets. With a broad range of financial trading platforms and brokerage services available online, it’s easy to find a company that works for you. However, with this great variety of choice also comes a greater risk. While many online brokers work completely within established regulatory frameworks set by several countries, there are those who prey on unsuspecting or inexperienced retail traders with scams and fraud attempts.
It’s surprisingly easy to fall for a scam, but it’s incredibly difficult to get restitution and closure if you do. Unfortunately, many scams in stock trading appear completely normal, with websites that exude respectability and returns that sound too good to be true.
Once you fall for a scam, however, you’ll be left with few options to recover if you’re unfamiliar with how the process works. Luckily, there are services like PayBack which help you get back your lost funds easily. Additionally, it helps to know what to look out for. Read on below to learn about common stock trading scams, and how you can avoid them.
If you’ve fallen victim to a stock trading scam, you can relate to the harrowing experience involved with trying to recoup your funds or gain any sort of closure from the mess. Trying to solve the problem on your own is not impossible, but it is quite difficult. It also may involve gathering documentation and records you’re unfamiliar with or completing legal processes you’re unaware of.
PayBack helps you expedite and simplify the process with a team of experts trained in dealing with fraudulent stock trading platforms and getting results. The service starts by collecting the details of the case, gathering all the required proof and documentation to make your case before directly confronting these companies and their stakeholders so you don’t have to.
Even with this assistance after the fact, however, it’s still best to preempt scammers and know when you’re being targeted. Here are some of the most common scams to keep an eye out for when you’re trading stocks online:
Stock Trading Education Scams: one common way scammers prey on unwary and inexperienced online traders is by offering expertise and success. Online trading platforms often provide educational courses, but in some cases they’re simply there to extract more money from you. The way these scams operate is quite straightforward:
You’re contacted for an educational stock trading course that promises to make you an expert and guarantees you incredibly high trading returns.
You sign up for a short three-hour course for a relatively low amount of money.
The «course» starts off normally, but quickly devolves into a sales pitch for a more expensive «experts-only» course that promises the real advanced secrets.
This continues with upselling, with a $200 course turning into a $5,000 weekend retreat, resulting in no real educational content provided and no expertise gained.
Refusal to Process Withdrawals: When it comes to unregulated brokers, one of the common ways they’ll separate clients from their money is by simply refusing to process their withdrawals. This scam is never outright—brokers will never explicitly say they refuse to give you your money. Instead, they’ll usually attempt one of these excuses, hoping to dissuade you from proceeding:
The company will claim that they can’t verify your identity and require an indefinite number of documents for «proof», getting more complex every time.
You’ll be required to deposit additional fees to gain access as a form of verification.
Support staff will counter your requests with obscure terms and conditions that may not apply to your specific case.
In the worst of cases, companies will simply stop answering calls and other communications attempts.
Signal Service Scams: For inexperienced traders, having the advice and insight of a trading veteran can be invaluable. Scammers take advantage of this by offering «signal services» which give traders advice, professional forecasts, and other exclusive tips and insights for a fee. The problem is that in many cases, these «experts» don’t give you reliable, or even actionable information. Instead, you’re simply paying a fee every week or month for information you could discover on your own.
Automated Trading Scams: Algorithmic trading and trading bots are both useful tools that help traders stay on top of the market and gain returns without having to be experts or connected all the time. While there certainly are good options and reliable programs, many times scammers will take advantage of this trend to offer automated trading platforms that promise to deliver eye popping returns. This can include an abnormally high return rate («get 80% ROI on your investment!») or promises that have no proof to back them up.
Despite these major risks for aspiring online traders, stocks are still a worthy investment, and can be handled appropriately if you’re working with the right brokers and online platforms. When it comes to avoiding scams, however, the best defense is knowledge, and especially having the right tools to discern the real investing opportunities from the fake, fraudulent ones. Here are some factors you should seek out when determining whether an online trading opportunity is a scam:
They make financial and ROI claims that can’t be backed up or justified. With so many platforms available for stock trading, differentiation requires quality. Some scams draw in customers by making outlandish claims about their returns and success rates, but don’t provide any real evidence or track record. If you can’t easily determine whether the claims are true, it’s likely a scam.
They employ aggressive tactics to get you to invest. Scams in online stock trading only work when unsuspecting traders are separated from their money. Most scammers will cold call or email you repeatedly. They’ll start off friendly, but always give you a hard sell, and will ratchet up the pressure if they sense any hesitation. Real traders and experts understand the risks involved and avoid making assertions or demands for your money.
They have a very minimal presence online. The good thing about today’s internet is that you can find almost anything in a few seconds. When you can’t it’s an indicator that something may be off. Before giving your money to a company, search for reviews, comments, and information about it online. If you can’t find anything, or only find suspicious sites, it may be better to look elsewhere.
Stock trading is a great way to diversify your investments and grow your wealth, but it doesn’t come without risks online. If you fall victim to a stock trading scam, you have options available to recover your money. Look for services like PayBack which can expedite the claims process and help ensure that you recoup your lost funds. Moreover, gain some closure and maintain alertness for red flags. Keep an eye out for suspicious claims, aggressive sales tactics, and ghost websites with little to no information. By staying safe, you can capably avoid scams and trade with ample peace of mind.