Trading and investing: how to avoid fraud?

Do you think you or a loved one is the victim of an online scam? It is important to remain vigilant when interested in trading because the financial environment can unfortunately be home to many scams.

➑️ In this article we will list the various common scams in the world of trading and investing and how to protect yourself from them.

Investment fraud: some numbers

In 2015, the AMF received more than 1,600 complaints from savers who were victims of trading fraud, particularly on Forex and binary options. This is 26 times more than in 2010.

🚨 Likewise, 1 in 5 French people (22%) have already been contacted by fraudsters and almost 6% of our citizens have already sent money to scammers. Thus, 2.5 million French people say they have been victims of fraudulent online investments.

In the end, savers in 2020 would have lost almost 4.5 billion euros in France, and this amount continues to rise with the democratization of online investing.

πŸ’‘ In an effort to combat this scourge, the AMF provides you with its blacklists that gather more than 1,200 websites or companies that are not authorized to offer their services in France.

The various scams linked to trade and investment

Fake brokers

Unscrupulous individuals or companies can pose as legitimate brokers and trick you into investing money. They may offer you unrealistic returns or charge high fees without providing any real services.

➑️ We check the approvals of all the brokers we choose in our comparisons.

Fake bank advisors

In 2024, many reports of fake bankers have surfaced. People pretending to be employees of your bank ask you to validate a transaction or connect to your personal area.

🚨 These fraudsters have managed to recover your personal data (name, address, bank account or credit card number) and use it to trick you. Additionally, some people testify that they can even spoof your bank’s phone number.

Once they have been able to take control of your account thanks to their deficit, they then take the opportunity to empty it, by transferring your money to accounts abroad for example.

πŸ’‘ Remember that a banker will NEVER ask you for your bank card code, your online account login details or to validate a transaction via SMS by receiving a security code.

Dodgy automated trading systems

Some programs claim to be able to trade for you automatically and generate miraculous profits. Beware of these systems that promise quick and easy profits with no risk.

When it’s too good to be true…

Fraudulent trading signals

Scammers can sell you trading signals that are supposed to be foolproof, but are actually randomly generated or based on outdated data.

➑️ Find the brokers that offer the best trading signals in our comparison of the best brokers and stockbrokers.

Training in fake trade

Unscrupulous individuals or companies may offer you expensive trading courses that provide no real value or essential skills.

In short: they sell you dreams. Performance is often unrealistic and impossible to verify. Furthermore, their technical analysis has never proven their effectiveness, and they do not hesitate to lie about their own performance.

➑️ Our training is free and will teach you the basics of investing in the stock market.

Fake managed accounts

Some people or companies may claim to manage your trading account, but in reality they are swallowing your money without making any trades.

And when it comes to recovering your capital and/or your winnings, there will definitely be a problem: Tax to be paid, missing document or something that can save them time.

Ponzi and pyramid schemes

Fraudulent schemes can promise you high returns by tricking you into recruiting new investors. In reality, the earnings of new investors are used to pay the earnings of old investors.

➑️ We tell you more about the Ponzi pyramid here.

Fake trading platforms

Online trading platforms may appear legitimate, but they may be set up with the aim of stealing your personal and banking information.

For example, they may promise you significant winnings (obviously fake) and ask you to pay 30% more to pay taxes before they can get them back.

➑️ As a reminder: The taxation of securities accounts.

Identity theft

Malicious individuals may pose as trusted brokers or companies to trick you into investing money with the sole purpose of recovering your personal information.

They will then be able to access your bank accounts or take out loans in your name before they disappear the money abroad.

Influencers and ads on social networks

🚨 Beware of influencers and all those who advertise via social networks : anyone can advertise. And don’t forget that in order to offer any kind of investment, you must have the necessary certifications. So older people on Facebook for example (your parents or grandparents) are vulnerable targets for scammers.

Unfortunately, the sense of closeness offered by social networks facilitates this kind of scam because we can feel close to a person we follow and trust them as a friend who would share a good tip with us.

Similarly, beware of paid Discord groups : the so-called advice is fake and we can see illegal practices like pump and dump (price manipulation). In this case, somewhat like a Ponzi scheme, it will be the last participant in the scam who will be duped the most.

Our 10 tips to avoid fraud

βœ… To best protect yourself from fraud in the trading world, here are some measures you should take:

1 – Lack of information is the investor’s first risk

Before you trust any broker, trading platform or automated system, do your thorough research. Check their online reputation, read our reviews and other users’ reviews. Don’t forget to research information about the company or individual behind the service offered.

2 – Check approvals and regulations

Make sure the broker or trading platform is regulated by a recognized financial authority. Regulators provide some protection to investors by ensuring compliance with standards and investigating questionable practices.

πŸ’‘ Take the reflex to consult the AMF website to check these approvals.

3 – Be careful when faced with promises of high returns

Beware of promises of quick and unrealistic returns. Financial markets involve risks, and no so-called “risk-free” investment can guarantee consistent and high returns.

To give you an idea of ​​the aberration that unrealistic returns can representhere is an example:

  • A trainer gives you a promise to serve 10% per month
  • This means that an investment of €10,000 over 10 years will give you… €927,000,000
  • Yes, almost a billion euros!

However, this example allows me to remind you of the impact of compound interest. You can use this interest rate calculator to assess the credibility of what you are promised.

4 – Focus on training and education

Learn the basics of trading and investing. A solid understanding of financial markets and investment strategies can help you spot potential scams.

🚨 But be careful! Fake training is common and sometimes sold at high prices to appear more “credible”. You can already start with our free 7-day training to get the basics.

5 – Ask for references

If you are considering hiring a portfolio manager or investment advisor, ask for references and inquire about their experience and qualifications.

🧐 And above all cross-referencing information, because it is very easy to create fake profiles on social networks.

6 – Be especially wary of unsolicited calls and e-mails

Be wary of unsolicited calls or emails encouraging you to invest money. Scammers often use these methods to target potential investors.

Likewise, a common technique is to pretend to be an online bank or a well-known neobank (such as Revolut) in order to offer you particularly attractive investments.

But it’s generally enough to go to the bank’s website (or our reviews) to verify that these investments simply don’t exist.

7 – Use secure platforms

If you shop online, be sure to use secure platforms with sufficient encryption to protect your personal and financial information, such as two-factor authentication.
This will also make it easier for you to recover your account in the event of a hack.

➑️ We have checked the security of each platform in our comparison of the best brokers and stockbrokers.

8 – Consult an independent financial advisor

Before making any significant investment decision, you should consult an independent financial advisor. He will be able to give you personalized advice based on your goals and help you avoid potential pitfalls.

9 – Listen to your instinct

If something seems too good to be true, or simply raises doubts, don’t rush into it headlong.

Take the time to think and find out more before sending any euros or your bank details.

10 – Read Finance Hero!

Whether we compare the most profitable investments, the best savings accounts or even the best life insurance, we give you a global vision of your investment options and your best options.

➑️ By following these simple tips and exercising caution, you increase your chances of protecting yourself from fraud and making more informed investment decisions.

πŸ›‘ Never forget that vigilance is essential when it comes to money and that you are the first line of defense for your assets.

Are you a victim of a scam? What to do ?

File a complaint immediately

As explained above, the first instinct is to file a complaint. Whether with the gendarmerie or a police station. In fact, this is not only your only (small) chance to get your money back, but it will also serve to alert the authorities.

Contact AMF

Whether by phone, mail or e-mail, you must notify the AMF so that the organization can add the fraudulent site to its blacklists.

Avoid debt collection companies

🚨 A trend has emerged in recent years: fake debt collection companies. This may be a law firm or a company that purports to specialize in these types of disputes. It is clear that the service is paid for, and one can wonder if those responsible for the fake pages are not behind the same companies.

➑️ And you ? Have you ever been a victim of online trading or investment scams? Don’t hesitate to share your experiences in comments!

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