Beware of Online FOREX Trading Scams

While hanging out on some random money making forum I ran across one user who suggested we all try out a certain FOREX website and bragged about how he had made one-hundred dollars in a month. While I knew trading against the FOREX, or Foreign Exchange Market, was hot at the moment I had never actually ventured to any of the many websites. Always the cynic, I thought I would check this particular website out.

This particular FOREX site seemed like many other dodgy money making websites with generic stock photos, limited time reduced sign-up fees and promises to pay. Without knowing anything about the ins and outs of FOREX sites, it sounded like a good deal but since I had seen so many poorly-written FOREX ads around the Internet I decided to dive in a little further.

I went to a link on the homepage which said, "Withdraw" and I was prompted to open a MS Word document. Right then red lights started going off in my head. In order to collect your money you had to list your personal information, all of your bank account information and then fax it off to a number in the British Virgin Islands. Anyone who is Internet savvy would know not to send this information over an unsecured website, let alone to some random fax number.

This finding led me to do a little more research on this online FOREX phenomenon and the results were less than promising. Most FOREX trading websites I ran across seemed on the up and up on first look but many of them required personal bank account information to be mailed or faxed to a nondescript address or phone number.

I quickly noticed that most of these websites did not originate in the United States and all of the FOREX ads I've seen lurk around websites commonly visited by foreigners, especially Indians for some reason. These scam artists seem to be targeting those from other countries who try to use the Internet to make a quick buck. Online money making forums are stacked with foreigners who sincerely think they just struck gold in FOREX and try to get others to join in without doing the basic research to see if the operation is legit or not.

The best way to play the FOREX market is to avoid online trading websites. If you are serious about investing in the FOREX, hiring a broker is your safest bet, although stay away from any broker who claims FOREX is a safe way to invest because it is in fact very risky. Also stay away from those who say you can make $1000 every week.

Regulation of legitimate FOREX trading falls under the Commodity Futures Trading Commission (CTFC) and are protected by familiar organizations such as the FDIC (Federal Deposit Insurance Corporation) and even the Federal Reserve just to name a few. The CTFC first became aware of FOREX scams back in 2000. They promptly published a Foreign Currency Trading Fraud Advisory, which teaches the public what key words (mainly hyped-up phrases to lure people in) to look out for and where they can go to check out or report a fraudulent website. This advisory can be found online at: http://www.cftc.gov/opa/enf98/opaforexa15.htm .

FOREX scams seem to target foreigners more than Americans as scammers will place FOREX ads in foreign newspapers and they are heard on radio ads in poor areas, but with the popularity of pay-to-click and pay-to-read (PTC and PTR, respectively) websites, the scam is starting to spread to innocent Americans looking to make a quick buck online. The best rule of thumb remains, "If it sounds too good to be true, it probably is."