What are Binary Options?
Even on the surface, binary options are a
very risky bet.
It’s an all-or-nothing proposition in which you bet on the performance of an underlying asset – a currency or a stock, for example. The deal promises quick money: you are supposed to receive a predetermined payout, sometimes within minutes or even seconds. Or you lose your money altogether. But in many instances, no actual trading takes place – the pitch is just a con to steal your money.
How They Work
Binary options scams typically use social media, online ads, chats, unsolicited texts, and cold calls.
They place ads online, typically directing you to a well-designed website that seems legitimate. Or, genuine-sounding automated robo-calls prompt you to stay on the line to speak to a “trader.” Scammers work from scripts to sound friendly and professional, but they are trained in high-pressure sales tactics.
The experienced “trader” will bait you with free or bonus money to open an account. Then they ask for your own money via credit card, pre-loaded card, or money transfer – with promises of easy, impressive returns. In reality, it’s often all fabricated, with a small initial success meant to build trust, but nothing may actually be traded.
Once you try to withdraw money from or close your account, or if fraudsters believe you’re catching on, the “trader” will ignore your phone calls and emails. In fact, they may use your credit or personal information to access even more funds without your knowledge. After they steal as much of your money as they can, they disappear.
No individuals or firms are registered to sell binary options in Canada.
This should be a clear sign to stay away from them. The majority of binary options operations are based in out-of-reach places overseas with few or no financial regulations. It’s common for firms offering fraudulent binary options to hide from authorities, regulators, and their victims with a variety of aliases and misdirection techniques.
The fact is, you never know who you are dealing with. These criminals are aggressively targeting Canadians and others around the world, swindling them out of billions of dollars. Victims have been defrauded of their life savings, RRSPs, and money set aside for post-secondary education.
- send money to anyone you know only from an unsolicited call, email, or advertisement
- allow yourself to be rushed or pressured into making a decision
- give out sensitive personal information online or over the phone. For example, passport, banking, drivers license or utility bill information
- send money offshore to an unregistered firm
- research an investment before making a commitment
- make sure the firm and/or individual you’re dealing with is registered here
- check statements (e.g., bank, credit card) regularly to make sure there are no unauthorized purchases, or charges from vendors you do not know
- be wary of those promising high returns on low-risk investments
- report investment fraud to your local securities regulator
- get a second opinion from a registered financial adviser, lawyer, or accountant
Binary Fraud Victims
If you become a victim of binary options fraud, here are some steps you can take:
- 1Cancel your credit cards and debit cards.
- 2Contact your provincial securities regulator.
- 3If you have provided the binary options firm with your banking information, contact your bank to advise it of this.
- 4If you have provided the scammers with passport information, driver’s licence, or utility bill information, contact the appropriate issuer(s) to advise them of this.
- 5Tell a close friend or family member of your involvement. Keeping the fact that you have been victimized a secret, only adds more stress to a difficult situation.
You can be a victim of fraud more than once
Once you’ve been the target of a scam, you may be targeted again. In fact, 25%2 of fraud victims are defrauded a second time. This is known as ‘revictimization,’ or a ‘recovery room’ scam. Here’s how it often works:
- 1The person who scammed you keeps your contact/personal information, or sells it to someone else.
- 2After some time has passed, you’re contacted again—either by the first scam artist or by a new one.
- 3The caller explains that they can help recover some or all of your lost money, but you’ll need to pay a “transaction fee,” “administration fee,” or “tax” first. This is usually a significant percentage of the amount you originally invested.
- 4When you pay this fee or tax, they will cut off contact and you won’t get your money back. Don’t send money— report the scam to your local securities regulator.
2 Canadian Securities Administrators. October 2007. 2007 CSA Investor Study: Understanding the Social Impact of Investment Fraud.
THERE ARE NO INDIVIDUALS OR FIRMS INVOLVED IN BINARY OPTIONS REGISTERED TO OPERATE IN CANADA
In the Media
Binary options are an important matter and being reported by several news agencies.
Here are just a few of them.
Provincial watchdogs join to target ‘get rich quick’ binary options scams
March 2, 2017
Provincial market watchdogs are joining forces to try to shut down the mechanisms used to entice investors into binary options trading schemes, a growing problem based on a model regulators say is largely fraudulent.Read More >
If it sounds too good to be true... Canadian securities groups sound scam alarm
March 2, 2017
You know the bad guys are getting good when securities commissions across the country form a task force to educate and protect Canadians. That’s what the Canadian Securities Administrators have done to combat the explosion of binary options scams.Read More >
Tragedy, then a crackdown: Regulators fight options scam
March 02, 2017
Edmonton business owner Fred Turbide sent his last messages on the afternoon of Dec. 21, 2016, begging a broker at a binary-options trading company to repay his huge investment losses from a fraud scheme.Read More >
Binary options — the latest investment scam that's costing victims everything
March 03, 2017
Canadian securities regulators have started a task force to raise awareness and protect Canadians from the latest investment scam, so-called binary options that can cost investors everything they have.Read More >