Spotting 'forex' fraud: foreign investment has its risks.
THE BETTER BUSINESS BUREAU OF ALASKA INC.
With financial markets on the upswing, many consumers are re-evaluating their investment options. Solicitations to trade foreign currency contracts, also known as "forex," are particularly tempting. Ads for high-return, low-risk investment opportunities in foreign currency trading are blanketing local newspapers, radio promotions and attractive Internet sites. Are these offers too good to be true?
Sometimes they are. While much "forex" trading is legitimate, the Commodity Futures Trading Commission (CFTC) reports a sharp rise in foreign currency trading scams. How does one sort through the offers to select a reputable operation? The CFTC and the Better Business Bureau offer the following warning signs of fraud to those who are considering "forex" investment opportunities.
* "Too good to be true" claims. Get-rich-quick schemes are actually lose-everything-quick schemes. Be particularly cautious if you have recently acquired a large sum of cash. Retirees make easy victims.
* Offers that predict or guarantee large profits. Such claims are false. No person or business has a crystal ball that can predict the future.
* Offers that promise little or no risk. If the company claims that written risk disclosure statements are routine formalities imposed by the government, beware. Do not fall for promises that your investment is "secure" or that there is a "maximum" that you can lose per day.
* Pressure to invest funds that you cannot afford to lose. The currency futures and options markets are volatile; they contain substantial risks for unsophisticated customers. Reputable companies will permit you time to evaluate their offer and make an informed decision.
* Unwillingness to provide a...
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