Global broker Octa offers some tips to spot and avoid scams and fraud as a trader
Traders and investors, in particular, are being exposed to financial malpractices like never before. Kar Yong Ang, a financial analyst from Octa, a global broker with extensive experience in the financial markets, offers some actionable tips that can help traders avoid scams and fraud.
This August, about 400 Malaysian investors lost roughly 100 million RM collectively to a supposed investment scam scheme. Victims started putting their funds in the scheme as early as 2016 through a site posing as a legitimate investment platform and even received due payments until 2022. However, following 2022, they received no more revenue on their investments, with the alleged operators giving various excuses.
Victims were promised profits on their investments, and some even signed contracts specifying monthly returns. However, they lost control over or access to their funds after transferring their capital. It is worth noting that scammers used fake e-brokerage licenses to gain the victims' trust.
This case reflects a broad trend: cybercrime in general and financial scams and fraud in particular are on the rise both worldwide and in Southeast Asia. Given that, both seasoned and aspiring investors and traders should look out for potential signs of scams and fraud and do everything they can to protect themselves from malefactors.
Below are some of the most popular schemes targeting traders.
1. Ponzi and pyramid schemes
Malefactors can promise high profits without risk, paying early investors the returns from new investors' contributions. The scheme starts to collapse when the number of new investors exceeds that of existing ones.
Recommendations: avoid offers containing unrealistic promises. Opt for brokers that have been on the market for many years and provide transparent deposit and withdrawal procedures.
2. Broker fraud
Some brokers engage in unethical or illegal practices, such as unauthorised trading, churning (excessive trading to generate commissions), or offering fake investment products.
Recommendations: choose experienced brokers with internationally recognised licenses and global reach. If a broker successfully meets the strict criteria of multiple regulatory bodies, it is more likely to be legitimate, and you will be safe trading with it. For example, Octa, a global broker since 2011, is always fully transparent about its trading conditions and its financial transactions with clients. The broker's exposure to high international standards allows it to provide a secure and fair environment to its clients regardless of the region so that you can focus on trading and not get distracted by security concerns.
3. Fake trading platforms
Scammers create fake trading platforms that mimic legitimate ones. Traders deposit money into these platforms, only to find out later that the platform doesn’t actually exist or refuses to allow withdrawals.
Recommendations: when you see the broker’s logo online, double-check the domain name. You can use the broker's domain-checker extension to identify the authenticity of its local page. Always assume that fraudsters will be using some version of the brand name to try and trick you. Check the authenticity of brokers' social media pages: their legitimate accounts are usually listed on their official website. Unfortunately, multiple copycats appear daily, so it’s important to stay vigilant, especially when engaging with Telegram and Facebook groups.
4. Signal-selling
Fraudsters can sell trading signals, urging investors and promising guaranteed profits based on fake expert analysis. These signals can be random or deliberately wrong, and traders can lose money by following them.
Recommendations: don't be led by self-proclaimed social media gurus, and do your research before trusting any source of trading insights. Avoid experts who urge you to act right here and now while selling their insights—this is a red flag since they can use the sense of urgency to press you into making a rash decision.
5. Phishing and spoofing
Scammers use fake emails, websites, or phone calls to trick traders into revealing sensitive information such as login credentials or personal data. They may also hack legitimate trading platforms' databases to steal funds or personal details.
Recommendations: when receiving any communication allegedly coming from your broker, it is always a safe bet to reach them through the contact details specified on their site and continue the dialogue through this channel. Also, be sure to trade with an experienced broker that ensures high security standards through strict know-your-customer procedures and efficient customer support.
6. Social media and celebrity endorsement scams
Sometimes, scammers use modern technology to create fake endorsements from celebrities or social media influencers. This way, they can lure traders into fraudulent schemes, often related to cryptocurrency or high-risk investments.
Recommendations: beware of unrealistic promises and try to check the official special media pages of the celebrities in question before making any hasty decisions. Refrain from sharing your personal information and research the company that is allegedly collaborating with the celebrity. You may also want to contact the company, asking them to verify the endorsement.
While the variety of tactics used by fraudsters in the financial sector constantly grows, there are solid and time-proven methods that will help you significantly reduce the risk, if not render yourself immune to it. By applying the approaches listed in this article, you will be able to become more aware of the malefactors' arsenal and avoid many of their tricks altogether. Hashtag: #Octa
The issuer is solely responsible for the content of this announcement.
Octa
Octa is an international broker that has been providing online trading services worldwide since 2011. It offers commission-free access to financial markets and various services used by clients from 180 countries who have opened more than 52 million trading accounts. To help its clients reach their investment goals, Octa offers free educational webinars, articles, and analytical tools.
The company is involved in a comprehensive network of charitable and humanitarian initiatives, including the improvement of educational infrastructure and short-notice relief projects supporting local communities.
In the APAC region, Octa received the ‘Best Trading Platform Malaysia 2024’ and the ‘Most Reliable Broker Asia 2023’ awards from Brands and Business Magazine and International Global Forex Awards, respectively.
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