ASIC Deputy Chairman Peter Kell said:
The Targeting Scams report published today by the Australian Competition and Consumer Commission (ACCC) shows reports to Scamwatch on investment scams increased in 2016. ASIC is alerting the public to ways to stay informed and protect themselves from scams.
The data published by the ACCC indicates that Australians continue to be vulnerable to scams, including investment scams. It also shows that scammers are increasingly using online methods to reach and take advantage of Australian investors.
More and more, we are seeing social media platforms being used to lure victims into investment scams. According to the most recent Targeting Scams report, online scams have increased by 130% over the previous year, and this reflects an increase in both email and social media-based scams.
The scams reported to ASIC generally involve unsolicited phone calls or emails offering investment opportunities with attractive returns. These investment scams can come across as very professional and are often supported by sophisticated and genuine looking websites and social media advertising. If you receive an unsolicited investment offer, the best way to avoid being a victim of a scam is to hang up the phone and don’t respond to the emails.
We want to encourage people to take basic steps to protect themselves and ASIC’s MoneySmart website has information about safe investing’, Mr Kell added.
ASIC reported $11.6 million of cold calling binary options scams in 2016 (The Targeting Scams report) and reminded that there are a number of ways for consumers to check the legitimacy of a company.
It is important to check the list of companies you should not deal with and the person offering the investment should be able to answer a series of questions, such as:
- What is your name and what company do you represent?
- Who owns your company?
- Does your company or scheme have an Australian financial services licence (AFSL) or an Australian credit licence (ACL) and what is the licence number? Check this number on ASIC’s Professional Registers.
- What is your address?
If they can’t answer these questions, hang up the phone, delete the email or stop dealing with the person. Make sure you block them on social media platforms so they cannot contact you or your social communities and delete or remove ads for financial products from your social feed.
It’s important not to let anyone pressure you into making decisions about your money or investments and to not invest in something you don’t understand. Get a second opinion from licensed financial advisers’ Mr Kell said. ‘And if you think you’ve been scammed, contact your financial institution immediately.
You can report investment scams to ASIC online or by calling 1300 300 630.
Visit ASIC’s MoneySmart website for more tips on avoiding investment scams.
If you have concerns about other types of scams visit the Scamwatch website.
Binary options — the latest investment scam that’s costing victims everything
Family of man found dead after losing life savings urges action, hopes it won’t happen to anyone else
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.
“Binary options fraud is a leading type of investment fraud facing Canadians today,” said Jason Roy, chair of the newly formed task force set up by Canadian Securities Administrators. “We want Canadians to know that there are no registered individuals or firms permitted to trade these products in Canada.”
Traditional stock options allow investors to buy a stock or other investment for a certain price, on or before a certain date. As such, gains and losses are limited to the gap between the option price and the market price.
But binary options are a much more short-term bet on the direction of an asset. Unlike regular options, they are all-in: bet right and you make all the money from the person on the other end of the trade. If you’re wrong, you lose it all.
“It’s a naked bet — with lots of downside,” says Neil Gross, the former chair of investor advocacy group FAIR Canada. “These schemes are pretty much gambling, not investing.”
They’re also growing. Roy says securities regulators across the country received 800 complaints about such scams last year, but the true number of victims is likely far more.
Binary options “traders” advertise on websites geared towards investors, as well as on social media, in order to promote their fake investing mobile apps. Regulators are now cracking down on those ads.
But the regulators don’t have the power to reach into foreign countries where many of the scammers are based, because they’re located in “jurisdictions that in many cases aren’t co-operative,” Roy says.
Once the victim has seen some early “wins” on options trades they’ve supposedly made, the fraudsters will ask for credit card information — and that’s when the losses and withdrawals start.
That’s exactly what happened to Edmonton business owner Fred Turbide, his son Tomas Ferreira told CBC’s On The Money in an interview Thursday.
Turbide thought he was in on a lucrative investment, “but in reality it was just ones and zeros,” his son said. “He was just hustled out of it all.”
Eventually the father of four had put his life savings into one such binary options scam, losing $320,000. He tried to get his money back but was unsuccessful.
The stress of realizing what had happened pushed Turbide over the edge. Last December, he killed himself in the garage of the family home.
“There’s no real words to describe it,” Ferreira said of Turbide’s death just before Christmas. “It literally turned our lives upside down.”
Because the fraudsters were likely overseas, the family doubts they’ll get any of their father’s money back, but their main aim is to honour their dad’s dying wish, left in a note: “He said go after these guys,” Ferreira said. “He gave us his contacts and told us to go after them.”
‘Just trying to steal money’
Tragic though the story is, the Turbide/Ferreira family members are far from the only victims.
Indeed, the scam is becoming so common that even the regulator was personally solicited to participate. Jason Roy received a robo-call at home one evening, asking him if he wanted to make a lot of money.
He was immediately suspicious but played along for more than an hour to get information. He signed up under an alias and fake email address. The phone number he was given looked Canadian, as did the address — but neither was legitimate. The person on the phone became increasingly desperate to get his credit card information.
“It was very slick, very sophisticated,” Roy told CBC News, “That’s why we’re so concerned [as] we are seeing Canadians drawn in on an increasing basis.”
While the phone number appeared Canadian, Roy traced the number from Ontario to Pennsylvania, then Colorado, then Latvia, and eventually to an end user in Israel — a growing hub for such activity according to a recent investigation by newspaper The Times of Israel.
“It’s very high risk,” Roy says, noting that quite often there’s no trading happening at all. “Companies calling Canadians are 100 per cent boiler rooms — just trying to steal money.”
While binary options are legal in some places, there are no firms registered to sell them in Canada. Which is why all Canadian investors should steer well clear, and report any solicitation attempt to the CSA via a new website set up to fight the scam.
Anyone who feels they’ve already fallen victim should immediately cancel their credit card and contact the CSA.
While the Turbide family holds out little hope of seeing justice, they want to spread their patriarch’s message.
“Our main objective is just to stop this from happening to anyone else,” Ferreira said.
Source: CBC Ca
Don’t Gamble On Binary Options
There are lots of ways to lose your money in this world but here’s one I hadn’t encountered before: binary option Web sites. They have become popular over the past few years with new ones appearing all the time: anyoption.com, bulloption.com, spotoption.com, binaryoption.com, etc. etc.
The sites appeal to the same type of people who play poker online. But they somehow have an aura of being more respectable because they represent themselves as offering a form of investing. Don’t kid yourself. These are gambling sites, pure and simple. It’s probably just a matter of time before regulators move in on them.
Until that happens, they seem to be doing great business. A Google GOOG +0.16% search for binary option Web sites produced 870,000 hits with promotions like “earn up to 75 per cent every hour” and “81 per cent profit in one hour or less, trade all major markets”. You can buy these options, which are also known as all-or-nothing options, digital options, or Fixed Return Options (FROs), on stocks, commodities, indexes, foreign exchange, and other derivatives.
In fact, you can place a bet (which is what it really amounts to) on just about anything that is publicly traded, depending on which Web site you use (some offer a wider range of choices than others). Some sites provide free guides to binary option trading to get you started.
“My dad has recently gotten involved with trading binary options online. The basic premise for the site he uses is at a specific time, say 1:25 p.m., you can put down perhaps $100 that XYZ stock will either increase or decrease in price within five minutes—by 1:30 p.m. If you are wrong, you get $15 back. If you are right, you win about $70.
“I’ve proven to him that, mathematically, the site has an edge and you must be right 55% of the time in order for your bet to have a neutral expected value. I am also a professional online poker player by trade so I have an extensive understanding of probability, the online gambling markets, and how these sites work.
“I’m looking for a way to definitively convince him to stop and that his edge isn’t as great as it seems. I tried talking to him multiple times about the subject but I’m not as knowledgeable about the field and ultimately that becomes my shortcoming when trying to convince him why he shouldn’t continue to be involved with this. Any help would certainly be appreciated.”
I found this correspondence especially fascinating because the writer is a professional online poker player—a gambler by trade. Yet here he is trying to convince his dad that online gambling is a bad thing. I agree, it is. But it’s understandable if the father is skeptical about advice from a son who does the same sort of thing, albeit in a different form.
But that’s for them to sort out. What intrigued me was to discover that binary option trading has become a kind of pseudo investing sub-culture. I went to the site our reader says his dad uses and did some research. It describes binary options as “an exciting new type of investment”—note the use of the word “investment”.
“When a binary option is purchased on our platform, a contract is created that gives the buyer (known here as the investor) the right to buy an underlying asset at a fixed price, within a specified time frame with us, the seller,” the Web site explains. The option must be held until maturity (even if that is five minutes away); unlike regular options it cannot be sold before then.
These sites promote themselves as offering controlled risk (you can’t lose more than a specified amount), low cost, big gains if you guess right, and ease of use—you can trade from home whenever markets are open and set up an account with a credit card.
So what arguments would I use to convince dad to quit? For starters, this sort of thing can quickly become addictive, especially to market junkies. Although the amounts bet may be small, the total can quickly add up if many trades are done in a day. It wouldn’t take long for things to get out of hand.
Second, no one, no matter how knowledgeable, can consistently predict what a stock or commodity will do within a short time frame. Will Apple AAPL +1.40% (AAPL) shares go up or down in the next 10 minutes? Unless there has just been some major announcement from the company, there is no way to even guess at that.