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Online Trading Scam

9 Jun 2023 - Forex Litigation - Min Read 6 min
Online Trading Scam

Online trading scams are so widespread that they have attracted the attention of law enforcement agencies and legislators worldwide.

In Italy, official estimates from the Postal Police indicate that €93 million was stolen through online trading scams in 2022 alone. This phenomenon has been on the rise even after the quarantine period imposed by the Covid pandemic, which somewhat justified the rush towards alternative activities.

While scammers had pulled off scams totaling €46 million in 2021, the figure has doubled in just one year, indicating a bleak future.

Scammers manage to gain the trust of potential victims by promising lucrative investments in a short period of time.

Those who fall into the trap find it difficult to break free from the influence of the scammers, who make them believe in significant profits that need to be verified, continually demanding more money to unlock them.

The preferred method of scammers is through phone calls, but the actual scam occurs online when investment positions are opened.

How Safe Is Online Trading?

No form of online investment is 100% safe, and online trading is no exception. The main risk lies within the easy access.

All that is needed is a computer or a phone and small sums of money to start trading.

To become a trader, one should study rather than expect to get rich or believe in promises that seem too good to be true.

By being cautious and not driven by greed, online trading in any form can be done safely.

 If one seeks a reliable guide rather than a guru, then online trading is secure. While people may hope for excessive winnings or wallets full of immensely valuable cryptocurrencies, the reality is quite different. More credible are less exaggerated profits, as investors should expect consistent and moderate gains from online trading.

How Does The Online Trading Scam Work?

The scammer ensures that the victim perceives a profit following the initial investment, creating an ever-increasing expectation of success.

False profits are the best way to “retain loyalty” the victim and create a mental trap that leads otherwise sensible individuals down the wrong path.

Essentially, the online trading scam works as follows:

  1. Scam brokers encourage investing small amounts.
  2. The small investments yield extraordinary profits.
  3. Scam brokers encourage investing larger amounts to meet the standards of better clients and earn more.
  4. Profits continue to grow, and at this point, the victim naturally wants to withdraw some funds.
  5. These alleged profits are never available for withdrawal, and when explanations are sought, it turns out that paying taxes/commissions is necessary to cash them out.
  6. Paying taxes/commissions does not unlock anything.
  7. Realizing that something is amiss, the victim tries to at least recover the initial invested money.
  8. Greedy scammers continue to demand additional funds with increasingly imaginative excuses to unlock the withdrawal.
  9. Scammers who have already moved on disappear, ceasing to respond to the client.

As explained by the Italian Postal Police: “Do not fall into the further trap of fraudsters who, under the pretext of unlocking refunds for what has already been ‘invested,’ request payment of additional sums of money: it is a real extortion.”

What To Do In Case Of Online Trading Scam?

If you have been a victim of an online trading scam, you must report it immediately.

The competent authority in Italy for receiving such reports is the Postal Police. Additionally, if circumstances warrant, you can submit a complaint to CONSOB to request the blocking of the website.

Whether it is a suspicious situation or a confirmed scam, it is important to contact the appropriate authorities as law enforcement plays a crucial role in combating cybercrime.

Police agencies worldwide collaborate to stop as many scammers as possible and seize the money they have wrongfully obtained. If companies are authorized, the work of law enforcement is easier, but if scammers are located in tax havens, especially without licenses, it will be difficult to bring them to justice.

If you want to know how to report a trading company, you could rely on a lawyer who is active in the field and who may try to recover the defrauded money.

The more people report the same scam, the easier it is to stop the scammers and seize their assets.

At that point, it is easy to understand how to recover lost money in trading.

The seized money and assets could be part of a future distribution among people who have been victims of fraud and have filed a regular complaint, as is the case with investor compensation systems.

Our lawyers will help you make informed decisions and find the support you need.

How To Recognize an Online Trading Scam?

Learning to recognize an online trading scam is possible by paying attention to a series of clues.

We specifically discussed how to recognize a forex scam, but it is always good to be cautious and pay attention to specific signals when investing in Forex or cryptocurrencies.

Before investing:

  • They persistently call, even aggressively, to convince you of the goodness of their offers.
  • They promise extremely high returns.
  • They guarantee ultra-convenient bonuses (but the redemption often involves restrictive conditions).

After investing:

  • There is no way to withdraw your money.
  • They demand payment of taxes and fees to unlock the earned money.
  • The phone calls cease, and there is no way to trace them.

The Scam Within The Scam: Fake Debt Recovery Law Firms

A terrible habit of scammers is to try to target their victims again, pretending to be able to help them recover their money.

When they contact their victims again, they present themselves as lawyers, as well as bank officials, financial regulatory authorities (FCA, Consob, etc.), or investigators.

Of course, they are aware of the fraud they have committed, the amount of money victims have deposited, and many details, but this knowledge stems from the crime they have committed.

Do not trust those who call you to recover your money because professionals do not act that way. Moreover, they will ask you for money to unlock the money they claim to have already recovered.

Scams Run on Social Media And Dating Apps

Beware of those who propose investment on Tinder.

If, while engaging in a new acquaintance on a dating app, you are offered to invest, your new acquaintance is not who they claim to be.

The scam, known as the Tinder Scam or Honey Trap, is particularly heinous because it is a deception that requires time.

The scammer pretends to be romantically interested in the victim and gains their trust. When the time comes, they propose an investment in Forex or crypto assets, guaranteeing extremely high profits.

Furthermore, they appear willing to lend money and partially finance the investment.

If you accept, you will bitterly regret it because those funds, which are not real, will be demanded back with interest.

How To Determine If A Trading Company Is Reliable?

To determine if an online trading company is reliable, first check if it is an authorized broker.

Regulatory authorities worldwide dedicate ample space on their websites to report illegal activities and issue specific warnings against unauthorized or illicit companies.

 You can find this kind of lists and warnings on the websites of authorities such as:

If you cannot find any traces of the broker you want to invest with or have already invested with, it’s a good start. However, for greater security, search their name on search engines to verify that there are no traces of fraudulent activity reported by other users.

When choosing a reliable forex broker, try to trade with those who have a good reputation rather than those who offer sky-high bonuses.

Investing is legitimate, but it is also important to protect yourself.

Only approach authorized intermediaries and use secure and traceable payment methods.

Our lawyers can provide clarification and advice on these matters, so please do not hesitate to request a legal advice from them.

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Calogero Boccadutri

Calogero Boccadutri is the Managing Partner of Boccadutri International Law Firm. He has trial experience in Forex, Personal Injury and Administrative litigation.



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