Manipulation of software
The owner of a site can manipulate the trading software to generate losing trades. It is for instance possible to distort prices and payouts. Reportedly, there are also fraudulent platforms where the expiration time of a binary option can be arbitrarily changed by the software to ensure that the binary option will not expire in the money. This makes it very important to investigate brokers before you deposit money to them. I recommend that you read reviews online and compare binary options brokers (click the link to visit the site i use) before you register at a new broker. This guarantees that you choose a well established trustworthy broker. Example of good brokers include 24Option, AnyOption, Banc De Binary and Etoro.
Within this category, we find fraudulent sites that refuses to process a customer’s withdrawal request. A withdrawal can be flat out denied, or simply stalled indefinitely.
Among the cases reported to U.S. authorities, the most common scheme seems to be one that targets customers who have already made one deposit to the site and are encouraged to do a second one. It works like this: After having made one or several small deposits, the customer is contacted by phone by someone who claims to be a broker working for the site.
The customer is encouraged to make a new deposit – one much larger than any of the previous ones. Sometimes the encouragement has consisted of promises of a certain return. Later on, when the customer has tried to make a withdrawal, the withdrawal request has not been honored by the site. At the same time, the site has refused to reply to the customer’s emails and telephone calls. This scheme takes advantage of the fact that if a customer has already made one or several deposits to a site and experienced no problems with trading and withdrawals, the customer will be more willing to risk making a large deposit.
Identity theft is always a risk when you hand out personal information – online or offline. Many binary options trading platforms follow rigorous security protocols to prevent money laundering and other illegal activities, but this practice also means that a fraudulent platform can collect a lot of sensitive information from unsuspecting customers. A platform may for instance ask for photocopies of your driver’s license and passport, as well as credit card information and copies of at least two utility bills, all under the guise of adhering to anti money laundering regulations. Of course, if you can use this information to prove who you are, a scamer can also use it for fraudulent purposes.