Whether you are looking to get involved in the commodity market or you are already invested in it, there are a few things you need to know about commodity broker scams. These scams are designed to take advantage of people who are unfamiliar with the industry, and they can ruin your money. Thankfully, there are a few ways to recognize a scam before you are ripped off.
Signs of a fraudulent online brokerage firm
Having a broker account is an important financial decision, but you should be cautious about choosing a firm that will not do your best interests for you. Many brokers will make false promises about their services or try to squeeze you for more money than you have. In order to avoid being taken for a ride, check out the following signs of a fraudulent online commodity brokerage firm.
The most obvious sign of a fraudulent firm is their insistence on transferring funds outside of your official brokerage account. In some cases, the company will charge a hefty withdrawal fee, and may require you to provide excessive identification before they release your funds. Also, watch out for brokers who impose absurd hold times on your money, requiring you to wait for a certain amount of time before they will release your funds.
Excessive withdrawal fees
Whether you’re a new trader or an experienced investor, you need to recognize commodity broker scams that charge excessive withdrawal fees. Traders are able to protect themselves from this type of scam by researching the firm’s website to discover whether they are reputable. By reading complaints from previous customers, you can identify patterns and decide whether or not the company is worth your time.
You should also look for specific information that is segmented by product type. For example, if you’re interested in trading futures, you may want to search for complaints about excessive withdrawal fees on the exchange, and then look for patterns. You’ll also want to find out what the most common complaints are, as well as why they were filed. You should also look for specific information about the company, such as whether it is registered with the Commodity Futures Trading Commission.
High yield investment programs
Investing in securities and commodities has become an increasing trend over the last few decades. This has led to a huge spike in fraud in the financial industry. The total amount of losses associated with securities fraud is estimated to be more than $40 billion per year.
High yield investment programs are a type of investment that promise high returns over a short period of time. These programs are typically operated by unlicensed individuals. They work as a Ponzi scheme, which means that the money used to pay off older investors is paid by the money earned from new investors. This is similar to the multi-level marketing business model.
The hallmark of a HYIP scam is the promise of incredible returns. However, the payouts are usually too small to provide any real value to the investors. In fact, many HYIPs only pay investors after they have already invested a substantial amount of money. This gives the impression that the investment is legitimate, but in reality it is not.