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Beware of Binary Options Fraud: Canadian Securities Administrators

Scam alert from the BCSC
The Canadian Securities Administrators (CSA) warn investors about binary options scams.

The Canadian Securities Administrators (CSA) warns the public about binary options and urges Canadians to protect themselves from these risky, potentially fraudulent, investments.

The CSA created a new website — binaryoptionsfraud.ca — to highlight some of the ways investors can become victims of binary options fraud.

Binary options are sort of a wager where investors bet on the performance of an underlying asset, often a currency, stock index, or share, usually in a short period of time—sometimes minutes or even seconds. When that period is up, the investor receives a predetermined payout or loses their wager.

No firm or person is registered to market, sell, or trade binary options in Canada.

Who is at Risk?

Binary options scams do not target one particular type of investor. In most cases, victims found what seemed like a great way to make money without stopping to consider if what they were offered was fraudulent.

How do These Scams Work?

A large number begin online where fraudulent binary option websites purport to offer legitimate investments. The trading activity and investment returns investors see on these sites is not real. Investors seeking a profit end up depositing money with the website. The fraudsters running the scam eventually shut down the website and take all of the investors’ money. In some cases, credit card and banking information is stolen, which can result in even bigger losses for investors.

How to Spot Binary Options Scams

It’s important to understand the signs of an online investment scam, but be aware you may also hear about binary options through telemarketing phone calls, media advertising, and conversations with friends and family.

Binary options scams typically show some or all of the Fraud Warning Signs, including:

  • Claims that the options are low risk and provide high returns in a short time period
  • Marketing the so-called investments as offshore and tax-free
  • Free money and other incentives to open a new account
  • Pressure to register now and take advantage of an exclusive opportunity

Most binary options websites shield their true identities from authorities, regulators, and potential victims. Even if a site says it’s based in Canada, there are a number of ways to disguise its actual location.

You may see posts about binary options on Facebook, Twitter, or other social media sites. Use the same caution you would have when receiving an unsolicited phone call, even if your friends and family appear to have liked or shared the update with you.

Protect Yourself from Binary Options Fraud

You can protect yourself from binary options fraud in the following ways:

  • Don’t visit websites offering binary options and exotic derivatives
  • Don’t listen to people who claim to be advisors or experts offering binary options
  • Never send money to anyone you meet via an unsolicited call or email
  • Never pay for an investment with a credit card
  • Check your bank statements and online accounts regularly for signs of fraud
  • Always research an investment on your own before making a decision
  • Conduct a background check on any individual that approaches you with an investment
  • Use aretheyregistered.ca to check an individual and firm’s registration

If you have lost money as a result of a binary options scheme, beware of further contacts and communications claiming you can recover your losses. These efforts are called revictimization schemes, and they can result in more lost money.

Report a Concern

If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Contact Centre at 604-899-6854 or 1-800-373-6393 or through e-mail at [email protected]. You can also file a complaint or submit a tip anonymously using the BCSC’s online complaint form.

InvestRight.org is the BCSC’s investor education website. Subscribe to receive email updates from BCSC InvestRight.

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