According to our most recent data, Facebook and Instagram were the sources of more than half of all forex scams in South Africa. Even after government complaints, both companies have a terrible track record of apprehending criminals. We also discovered that many victims paid the scammers in bitcoin or other cryptocurrencies and that over half of the complaints were made against individual scammers rather than the broker.
Social media and cryptocurrency are excellent tools for criminals to conceal their identities. People may use any name they want on social media, and cryptocurrency is nearly anonymous. It’s impossible to get someone’s money back once they pay a scammer they met on social media with bitcoin.
Promises of guaranteed returns and complicated terminology are also red flags of a forex scam. Forex trading is speculative at best, and even skilled traders cannot guarantee returns. While there is forex language, trading can be explained in simpler words.
Anyone in forex trading brokers in South Africa who promises to perform a financial service without an FSP license breaks the law. So before handing over money, always request an FSP license number and confirm it with the FSCA.
Bad brokers
When compared to bad brokers, avoiding individual scammers is rather simple. Even JP markets were FSCA-regulated before it was closed, only after years of complaints. So, what can South African traders do to avoid untrustworthy brokers? There are some clear signals that a broker is not being fair to its clients:
Unpublished spreads: A spread is a fee charged by a broker for connecting traders to the forex market. If a broker refuses to disclose the amount of this fee, it is most likely charging too much.
High deposit and withdrawal fees: Deposits should always be free, and withdrawals should be as inexpensive as possible. Be aware of exorbitant fees or charges that are not explained.
Delayed withdrawals: Withdrawals should be completed within a few days at most. If a broker ignores or delays withdrawal requests for more than a week, it scams its customers.
Missing deposits: Some bad brokers would claim that they did not receive a deposit after it was made. When making a deposit, always ask for evidence of payment.
Unresponsive customer service: In many circumstances, the customer service person of terrible brokers will disregard complaints or requests for assistance, especially if they are dealing with any of the issues outlined above.
Paywalled/limited demo account: the best instructional tool for beginning forex traders is a demo account. Brokers that require prospective traders to register a live account before opening a demo account or terminate demo accounts after a short amount of time are attempting to compel newcomers to begin trading before they are ready.
Conclusion
Facebook and Instagram were the sources of more than half of all forex scams in South Africa. Many victims paid the scammers in bitcoin or other cryptocurrencies. Be aware of exorbitant fees or charges that are not explained. If a broker ignores or delays withdrawal requests for more than a week, it scams its customers.