UPDATE ON FOREX TRADING SCAMS IN SOUTHA FRICA

There has been a significant rise in online trading scams in SA, with forex trading “investment schemes” topping the list of illegitimate online trading deals, as a result of the economic uncertainty brought about by the COVID-19 pandemic.

The COVID-19 crisis has resulted in South African consumers increasingly looking for new investment opportunities and financial products due to the economic challenges and uncertainty.

Many are being swindled out of their hard-earned cash by unregulated and illegal online trading brokers, who promise them a good return on their investments.

While there are various variations of online trading scams, including those trading in stocks, crypto-currency, precious metals, commodities and binary options, forex trading scams have emerged as the most lucrative for criminals in recent months, according to security experts.

Forex trading is a fast-growing legal career for professionals with a financial background; however, since the onset of the lockdown period in SA, criminals are increasingly taking advantage of this trading method, by using online brokerage platforms built on fake software not plugged into real forex exchanges.

WikiFx is an Online Broker inquiry platform, there is a in “significant rise” in enquiries from South African consumers who have been swindled out of their hard-earned cash by illegal online trading companies.

“Since the COVID-19 pandemic began, the number of enquiries received by WikiFx from investment scam victims in SA has risen by 20% to 25% on a monthly basis. It now averages 1 000 per month. We believe that this increase is due to the fact that the pandemic has forced large numbers of people to remain at home, reduced or eliminated their incomes and, thus, encouraged them to seek what seemed like simple and quick ways to make money,” explains Cohen.

Approximately 35% of these victims reported that they lost more than R15 000 per person. While research on the latest local stats on online trading scams has not been conducted, trends show they are on the rise and the schemes have become more sophisticated.

Unlicensed, unregulated online trading scams are nothing more than video games intended to convince the consumer that it is real, manipulated by a charlatan hiding behind a computer screen. “It‘s nothing more than smoke and mirrors – though the look and feel of these ’brokers convinces the investors that the enterprise is legitimate, the trading platforms they feature do not follow obligatory rules and procedures. The gains you supposedly make are all imaginary and the losses are very real,”.

The granddaddy of online trading scams was binary options, which reached its height in the middle of the past decade. By then, countries began to prohibit binary options trading by retail investors, forcing the scammers who ran binary options sites to quickly find some other way to make their living, and many if not most settled on forex scams, he adds.

The SA Shares trading Web site has posted a notice to alert potential investors of the top 27 worst forex broker firms in SA: “Scam Alert – these are unreliable forex brokers in the market which traders need to be aware of and avoid by all means,” states the notice.

There is a global increase in scammers targeting consumers searching for investments online at the moment. Scammers target victims via direct messages on social media and they also use search engine poisoning, which means their scam sites will pop up when people search for investments online. Most often it will be about crypto trading or trading forex.

In most instances, online traders use fake names and identities or impersonate existing legal companies to entice victims to invest their money, and eventually, victims can't get any of their invested money back.

“The forex market is more susceptible to scams because there is no regulated centralised exchange and scammers take advantage of the inexperienced, beginner traders desire to enter the market. In addition, the volatility and fluctuation of the South African rand makes it an attractive currency to trade in and it's used in many currency pairs such as USD/ZAR.”

At WikiFx we have received several similar cases. However, each case has its own twist in the way things play out. WikiFx will be following up on cases in order to help victims recover funds.

Please stay tuned at WikiFX for more updates regarding other scammed cases.

Declaration: The evidence in WikiFX exposure articles are verified via the following processes:

1: Evidence Collection: chatting records, trading records, banking transaction documents

2: This evidence will be evaluated and verified by experts who have been working in the forex industry for many years.

3: The editor will review it again before the article is published.