Want to trade in forex? This is how to protect yourself from scammers

Everybody with a few rands to spare wants to invest in forex, but this is exactly how thousands lose their hard-earned money every year: investing in forex that turns out to be a scam, leaving them with no way to get their money back.

Forex is the largest financial market in the world by trading volume, with an estimated daily turnover of over $6.5 trillion.

Nobody can blame you for wanting a piece of this pie, but if you look at how often the Financial Sector Conduct Authority (FSCA) warns consumers about dodgy scams, it is clear that there are scammers out there – a lot of them.

Just a week ago the FSCA warned the public about a trading company that promises investors returns of up to 40% per week, despite not being registered with the FSCA and not being allowed to provide financial services to the public.

A few days ago, the FSCA again warned consumers against a scheme that promises returns of up to R448 800 from an initial investment of R48 500 within four days.

Most of us would read these warnings and wonder who would fall for these ‘investments’ that are clearly too good to be true. The answer is many people do.

ALSO READ: FSCA warns against FXnonstop offering 40% returns per week

Scammers always trying new things

Unfortunately, as the numbers of traders increase annually, scammers also come up with tricks to lure unsuspecting investors. This is why it is vital to be knowledgeable about forex trading before going into it, Tebogo Sehaole, business manager at Octa, says.

According to the latest survey report from global forex trading platform, OctaFX, 82.4% of people dealing in forex trading have been exposed to one or more of various types of forex scams. The research also found that 41.9% of the respondents got scammed due to their expectation of easy money.

Most traders come across fraudulent offers on emails, advertising, blogs, social media influencers and platforms, SMS, phone calls and messages on WhatsApp or Telegram.

Sehaole warns that scammers frequently target novice traders, exploiting their lack of experience and understanding of the market.

ALSO READ: What South Africans should know about online Forex trading

Red flags to watch out for

He highlights these most common tactics scammers use and the red flags to watch for:

• Guaranteed profits: no legitimate broker will promise a fixed or guaranteed profit
• Unregulated brokers: always verify whether a broker is registered with the FSCA
• Unsolicited contact: be cautious when brokers or individuals contact you out of the blue on social media, WhatsApp, or Telegram. Legitimate brokers do not solicit clients in this manner.
• Pressure tactics: scammers often pressure traders to act quickly, claiming that an ‘exclusive’ opportunity is about to expire.

ALSO READ: Watch out for old and new scams that can cripple your life

Practical steps to stay safe

He says Octa recommends that you follow these practical steps to stay safe:

• Verify email addresses: most fraudulent offers come in junk/spam mail. If you are suspicious about an email address, you can put it into a search engine to confirm.
• Download apps from official stores: it is important to download a trading app from official stores. Downloading an unverified app can expose your data without your knowledge.
• Avoid granting access to any third party: never give anyone confidential information about your account. Forex brokers will never ask for personal details.
• Use a VPN to ensure that your sensitive data is safe and it will also provide an extra layer of privacy for all of your online activities.
• Update your apps: by updating your app, you plug every security loophole and upgrade the security features of that app. Your application can only be up to date when you install the latest product updates.
• Avoid visiting suspicious URLs: cross-check how the company’s name is spelt and the format of the URL before filling out forms. This is essential to ensure that the hyperlink does not contain attempts to steal your personal information.
• Log into the official website directly: avoid opening email links or attachments from banks, apps, or portals, especially if the sender insists that you do. Instead, access the official website to complete any required actions.
• Not granting permission to track: be careful about granting access permission to apps on your phone, as this can compromise your security. Minimise the likelihood of data breaches by regularly updating permission settings on your app.
• Most importantly, never share your password, PIN, or account credentials with anyone: it is also important to create complex passwords. The stronger your password, the more protected your data will be from scammers.

Sehaole emphasises that education is vital in forex trading. “Whether you are a beginner or an expert trader, do your research and ensure you choose an authentic forex trading platform to protect yourself against forex scams.”

ALSO READ: Do South Africans open the door for scammers?

How to check if a forex trader is legitimate

You can confirm the status and FSP number of a service provider or someone who claims to be an authorised service provider by calling the FSCA’s toll-free number on 0800 110 443 or do an online search for authorised financial institutions by licence category here.

You can also do an online search for a financial institution that is an authorised FSP in terms of the FAIS Act here.