Introduction to CFD Scams
Contracts for difference (CFDs) are a type of financial derivative that allows investors to speculate on the price movements of various assets, such as stocks, commodities, currencies, and indices. CFDs are popular because they offer high leverage, low entry costs, and flexibility in trading strategies. However, CFDs are also very risky and complex, and not suitable for inexperienced or unsophisticated investors.
Unfortunately, there are many scammers who prey on people who are interested in CFD trading, offering them fake or fraudulent investment opportunities. These scammers use various tactics to lure victims into their schemes, such as:
- Promising guaranteed or unrealistic high returns with low or no risk
- Using professional-looking websites and apps that mimic legitimate trading platforms
- Impersonating well-known companies or regulators and using fake endorsements or approvals
- Contacting potential investors through phone, email, social media or dating apps
- Creating fake news articles or investment comparison websites that promote their scams
- Asking for personal or financial information, such as bank account details or passwords
- Demanding upfront fees, taxes, or commissions before releasing any funds
- Refusing to allow withdrawals or blocking any contact with the investors
CFD Scams Example
According to Cybertrace, a cyber security company that helps victims of online fraud, there are three main types of CFD scams in Australia:
Fake trading platforms
These are websites or apps that claim to offer CFD trading services, but are actually designed to steal money from investors. They may show fake trading accounts, wins, losses or balances, and use fake brokers or agents to communicate with the investors. They may also ask for additional payments or fees before allowing any withdrawals, or simply disappear with the money.
Fake green bonds
These are scams that claim to offer investment opportunities in green bonds, which are bonds that finance projects that have environmental benefits. However, these bonds are not available to the general public or retail investors, and the only way to invest in them is through a managed investment scheme. The scammers use social media or websites to advertise their fake green bonds and use fake ASIC endorsements or logos to appear legitimate.
Fake investment advice
These are scams that offer investment advice or tips on CFD trading, but are actually trying to manipulate the market or sell worthless products. They may use paid advertising, fake news articles or fake comparison websites to promote their scams. They may also use high-pressure tactics, such as limited-time offers or scarcity claims, to persuade investors to act quickly.
Types of CFD Scams in Australia
If you encounter any of these red flags, you should be very cautious and do your own research before investing any money. You should also check the investor alert list from the Australian Securities and Investments Commission (ASIC) to see if the entity you are dealing with is unlicensed or unregulated. You can also report any suspicious activity to ASIC or other authorities.
One example of a CFD scam is CFD Advanced, about which Cybertrace has issued an urgent alert. CFD Advanced uses multiple domains, such as www.cfdadv.com and www.cfdadvanced.london, to offer CFD trading services. However, these services are fake and fraudulent, and the scammers behind them target Australian victims, especially retirees with significant super balances.
The scammers use a slickly designed website, technical jargon and lofty promises to convince the victims that they are dealing with a reputable company. They also use Australian bank accounts to make the transactions seem more trustworthy. They induce the victims to open a trading account and deposit money into it. They then show them that they have made a high initial win and even transfer some of it back into their account. This makes the victims feel confident and trusting, and they transfer more money to the scammers.
However, when the victims try to withdraw their money, they face problems. The scammers demand payment of significant withholding tax or income tax before releasing any funds. Then they delay and eventually cease contact altogether. The victims realised too late that there were never any real trading accounts, wins, brokers, or online platforms, and that all the taxes were fake too.
How to Avoid CFD Scams
To avoid falling victim to CFD scams, you should follow these tips:
- Do your own research before investing in any CFD product or service. Check the credentials and reputation of the entity you are dealing with. Verify their licence and regulation status with ASIC or other regulators. Read reviews and feedback from other customers.
- Be wary of any unsolicited contact from strangers who offer you investment opportunities. Do not give out your personal or financial information to anyone you do not know or trust. Do not click on any links or attachments in emails or messages from unknown sources.
- Be realistic about the potential returns and risks of CFD trading. Do not fall for exaggerated claims or guarantees of high profits with low or no risk. Remember that if something sounds too good to be true, it probably is.
- Be careful of any fees, taxes, or commissions that are requested before you can access your funds. These are usually signs of a scam. Do not pay any money to anyone who claims to be able to release your funds or recover your losses.
- Seek independent advice from a licensed financial adviser or planner before making any investment decisions. Do not rely on advice or tips from strangers or unqualified sources. Do not let anyone pressure you into investing quickly or urgently.
- Report any suspected CFD scams to ASIC or other authorities. You can also contact Cybertrace or other cyber security companies that can help you recover your money or protect your identity.
Conclusion
CFD trading is a complex and risky form of investment that is not suitable for everyone. There are many scammers who exploit the popularity and demand for CFD products and services and offer fake or fraudulent investment opportunities. These scammers use various tactics to lure victims into their schemes, such as promising high returns, using professional-looking websites and apps, impersonating well-known companies or regulators, and demanding fees or taxes before releasing funds.
To avoid falling victim to CFD scams, you should do your own research, be realistic, be wary, seek independent advice and report any suspicious activity. You should also check the investor alert list from ASIC to see if the entity you are dealing with is unlicensed or unregulated. If you have already been scammed, you should contact Cybertrace or other cyber security companies that can help you recover your money or protect your identity.
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