Broker Withdrawal Scam
Onlne trading is attracting both new and seasoned traders. One thing clients expect from a broker, no matter how well or badly the trades go, is to have the ability to withdraw the remaining funds in their account.
However, many traders experience forex withdrawal problems. Not allowing traders to withdraw money is a sign of fraud, and is seen in forex trading scams, crypto scams, and other types of fraud.
What should you do if you are experiencing broker withdrawal? If the broker is still communicating with you, it is important to demand your rights. If they have disappeared, the first priority is filing a complaint and contacting CryptoComplaint for advice about fund recovery.
CryptoComplaint experts provide consumers with information about financial services and can assist people who have been affected by CFD scams, crypto scams, forex trading scams, and other forms of financial fraud. Our team has the resources to provide guidance to consumers and get them started on the fund recovery process.
What Are Broker Withdrawal Scams?
Broker withdrawal scams, as the name indicates, are frauds that involve the broker seeming legitimate long enough to attract clients, convince them to deposit money into account only to hold onto that money, and refuse to release the funds.
Few brokers do this blatantly. They may hide behind unconvincing excuses or may hide their identities altogether. What is frustrating is that, up to that point, the broker may have had a professional-looking website, offered plenty of advice, and seemed to have had a solid trading platform. The client may have had a streak of winnings but then suddenly, the broker will not allow withdrawals when the client asks.
If the broker is still communicating with the client, they are likely to make the following excused to avoid releasing funds:
- The trader can greatly increase their returns if they keep money in the account rather than withdrawing it
- There is a policy against withdrawing funds until a certain amount of time has passed
- There is a very large withdrawal fee that is a set amount and it is not worth withdrawing money until the trader has made more money
- There is a technical or logistical problem that will be resolved
Most likely, if the broker identifies a technical or logistical problem with withdrawal, they will block the trader from access to the site so they cannot follow up. Although it is true in some cases that a trader can make more money if they keep a certain amount in their account, not allowing withdrawals is a step too far.
Many of these “rules” about not withdrawing until a certain amount of time has passed are made up on the spot or are not printed on the site. Scam brokers may charge an incredibly high fee for withdrawals that is not worth the trouble unless the client has made many thousands. With scam brokers, the clients will never see these returns.
Anatomy of a Broker Withdrawal Scam
A typical broker withdrawal scam begins with a very warm welcome. The broker may be quite communicative at first and reach out to the potential client by email, cold calling, texting, or social media. The broker will claim that they can create incredible returns on client investments and to benefit, they must sign up now.
The client will make a few trades and may make some money, according to the proprietary platform the broker uses. The broker will urge the client to deposit more money for even larger returns. The client may continue to make more money and decide that it is a good idea to take some off the table.
They will ask to withdraw some money, but the broker will tell them that it is not to their advantage to do so. The broker will identify an upcoming opportunity that they need to take advantage of now or risk losing all of their money. The broker may also claim that there is a huge fee for withdrawal and it is not worth taking money out until they have made a large sum.
At this point, the trader may feel suspicious, but there doesn’t seem any way out if the broker will not withdraw their funds. They may experience a feeling of denial that they are not really allowed to withdraw their own money, and may instead tell themselves the broker knows best. This allows them to avoid the problem.
However, if the trader starts to behave assertively and insists that they should be able to withdraw their funds, the broker will cut off access and communication. They may cite a technical problem or inform the client their account has been shut down because of security concerns. In many cases, the broker will disappear entirely.
Ways to Recognize Possible Broker Scams
Broker scams, whether they are forex trading scams, crypto scams or other frauds, usually have the following traits:
- Unregulated brokers
- Exaggerated promises
- Aggressive marketing through cold calling and spamming
- Only offer their own trading platform
- No transparency ahead of time about accounts, procedures and fees
- Will get into arguments with clients
- Claim that an account was shut down or may disappear
If you see any of the above signs in a broker, it is best to stay away. Do not work with an unregulated broker or one that makes impossible promises of huge returns. A reliable broker should not advertise through cold calling or spam. Proprietary platforms are fine, but they should be offered along with other options. Research all rules governing accounts, fees, commissions, spreads, and other charges before signing up.
Have You Been Affected by a broker withdrawal scam? Talk to CryptoComplaint Experts
Consult with CryptoComplaint experts immediately if you have lost money to a CFD scam, a forex trading scam, a crypto scam or another type of fraud. Our team can provide solutions and advice on how to seek restitution and recover from fraud.
CFDs were once reserved for high-end traders who held brokerage accounts in 6-digit amounts. Times have changed and now virtually anyone can trade CFDs, as long as they are located in a country that allows them.
The downside of this development is that there are unfortunately numerous CFD scams that rob consumers. It is important to be on the alert and aware of signs of CFD scam which are similar to forex trading scams and crypto scams.
CryptoComplaint experts provide consumers with information about financial services and can assist people who have been affected by CFD scams, crypto scams, forex trading scams, and other forms of financial fraud. Our team has the resources to provide guidance to consumers and get them started on the fund recovery process.
What Are CFDs?
CFD is an abbreviation of “certificates of difference.” The process of trading CFDs involves a contract made with the broker based on the traders prediction of the difference in value of an asset between the time the trade contract is initiated and the time it is due. It is therefore not trading an actual asset but is a trade based on differences in the value of an asset.
This means that CFDs are less expensive than trading the actual asset. CFDS also involve more volatility because they are based on differences in value rather than the actual value of a real asset. CFDs are different than options because options involve the actual asset and as the name implies, represents an option to buy the asset at some point. CFDs are levered only to the value of the asset at different time periods.
Are CFDs a Scam?
It should be noted from the outset that CFDs are risky trading products. They are ideal for day traders who are familiar with trading them and can take precautions to avoid severe losses such as stop loss features.
Since the money is held by a contract, they are also less liquid than many other types of investments, which also increases the risk, since the trader can’t get out of it until the contract time is reached.
Because of the lack of regulation required by CFDs, risks and other factors, the SEC in the United States restricts CFD trading. This means that regulated brokers can’t sign up US traders and clients in the United States are not protected against issues that may arise with CFD trading.
Despite the risks, illiquidity, and the lack of regulations, CFDs can’t be said to be inherently fraudulent. It is possible to trade CFDs legitimately and even to make some money. However, too often, scam brokers may take advantage of the fact that these trading products are high risk and convince clients they have lost money when they have not.
Why Are There So Many CFD Scams?
Scam artists tend to be attracted to anything popular and that involves a lot of money. When there is a new trend, there are plenty of fake versions trying to divert customers away from the legitimate product into their schemes.
The same is true in the case of crypto scams, forex trading scams, and CFD scams. What CFDs have in common with crypto and forex trading is that they are all high risk. Scam artists are attracted to high-risk situations because of the psychology behind scams.
If a trading product is known to be risky, the traders won’t be surprised if they lose money. This means that, in many cases, they are less likely to complain and be on the trail of a broker if they have lost money. Also, crypto, forex, and CFDs are all financial products that seem easy to understand at first glance, but in reality, are much more complicated.
Even experienced traders understand that it takes a lot of practice and losses trading these items before they finally succeed. The fact that novice traders can soon admit they are over their head with these products can distract them from the fact that they are being cheated. They are likely to blame themselves and see the losses as inevitable even when they are presented with clear signs that the broker is a fraud.
Signs of a CFD Scam
CFD scams, like forex trading scams and crypto scams, have certain signs that give them away. The following is a list of common signs of a CFD Scam:
- Unregulated broker
- Aggressive manner and cold calling
- Sparse or incorrect contact information
- Little information about how the trading works or accounts
- Asks for a fee upfront
- Hyped up language and extravagant promises of high returns
- Prevents clients from withdrawing money
- Refused to communicate or disappears
The first thing to keep in mind is to trade only with a regulated broker. Most fraudulent brokers and CFD scams are created by those who have no licenses or low-tier licenses from regulators that do not provide oversight. Also, if there is a regulator in the picture, you can file a complaint and the regulator may take care of the issue promptly.
Brokers do advertise, but beware of aggressive tactics like cold calling and spamming. Look out for extravagant promises such as offers to double returns in a short amount of time. Do some research and find out what kind of returns people can expect from legitimate brokers. If the promises seem miraculous, they are probably fake.
Avoid taking advantage of deals advertised on social media, especially by those who pretend to be celebrities. Ensure there is sufficient information on the website including terms and conditions and account information. Check that the contact information is real. Beware of brokers who ask for a fee upfront.
If the broker will not allow you to withdraw your money or suddenly stops communicating, it is important to do something immediately. CryptoComplaint professionals will assist you with an initial consultation and will advise you through the fund recovery process.
Have You Been Affected by a CFD Scam? Talk to CryptoComplaint Experts
Consult with CryptoComplaint experts immediately if you have lost money to a CFD scam, a forex trading scam, a crypto scam or another type of fraud. Our team can provide solutions and advice on how to seek restitution and recover from fraud.
