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Forex Trading Fraud and Scams

May 21, 2008  |  Difficulty: Easy

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Most Forex fraud and commodity fraud is committed in the US by firms located in South Florida (Boca Raton was voted by CNBC as the telemarketing fraud capital of the world in 2000), or Southern California. Russia is currently a major source of investment fraud. Never make a check or bank wire payable to anyone other than a FCM registered with the NFA. In the majority of cases, Forex fraud is perpetrated by firms located in the United States with principals and brokers who had formerly been registered with the National Futures Association, but had their licenses revoked.

There are many cases of fraud with unscrupulous groups telling clients to make the check payable to an offshore FCM or in many cases a Bahamas FCM. With the exception of major World Banks, there are no Bahamian FCMs. The Bahamas are the country of choice for fraud due to the fact that they are a short flight from Florida. If you have been victimized in this manner of fraud or contacted to invest in Forex in the Bahamas we suggest you immediately contact the FBI.

Other Forex trading fraud and scams include brokers who use pitches claiming that customers can make a lot of money with little risk. Sales solicitations appearing in newspapers, telemarketing, television promotions, or attractive Internet websites, that tout high-return, low-risk investment opportunities in foreign currency trading are most likely fraudulent. The old adage appears to be true yet again, if it sounds too good to be true, it probably is.

A year long law enforcement effort recently targeted the top ten Internet scams. Five U.S. agencies and consumer protection organizations from nine countries and twenty-three states participated.

What they developed was 251 law enforcement actions against online scammers in "Operation Top Ten Dot Cons." These scams were taken from Consumer Sentinel, a database of more than 285,000 consumer complaints established and maintained by the Federal Trade Commission and accessible to more than 240 consumer protection agencies in the U.S. as well as Canadian and Australian law enforcers. The FTC enacted an information sharing and coordination agreement to combat cross-border fraud. The top ten targeted scams are as follows:

  • Internet Auction Fraud
  • Internet Service Provider Scams
  • Internet Web Site Design/Promotions - Web Cramming
  • Internet Information and Adult Services - Credit Card Cramming
  • Multi-level Marketing/Pyramid Scams
  • Business Opportunities and Work-At-Home Scams
  • Investment Schemes and Get-Rich-Quick Scams
  • Travel/Vacation Fraud
  • Telephone/Pay-Per-Call Solicitation Frauds (including modem dialers and videotext)
  • Health Care Frauds

The Internet has revolutionized the way information is gathered, the way we shop and do business. The huge collaboration with law enforcement agencies, industry and consumers was done to create a climate where e-commerce can be conducted with confidence. There is an established consumer protection coalition that spans the globe with the goal of making the Internet safe for consumers.

Announcement of the international law enforcement effort was made in conjunction with a meeting of the International Marketing Supervision Network (IMSN), a group consisting of consumer protection enforcement authorities from 29 countries. The IMSN facilitates practical actions to prevent and redress deceptive marketing practices with an international component.

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