The Covid-19 pandemic has seen a lot of South Africans entering online trading & investing for the first time. Some of these new traders don’t bother to read about the dangers of online trading before venturing into it. This has led to sharp increase in online trading & investing scams targeting South African consumers.
Many of these scammers find their victims on social media, where many scammers are masquerading as Finfluencers.
These fraudsters promise high returns & huge guaranteed profits from forex trading by trading on their behalf, or by asking general public to invest money in their managed forex account for guaranteed returns.
These fraudsters usually go for soft targets like the inexperienced investors who want to invest their money in the markets but don’t know how to.
Here are some points that you should follow to help you not be just another statistic.
Tip One – Check if the Broker is Licensed in South Africa
Any broker and Financial Service Provider (FSP) operating in South Africa must be licensed by The Financial Sector Conduct Authority (FSCA). It doesn’t matter if you’re dealing with a forex broker or a stock broker. They are all brokers.
One major difference between them is their client base.
A stockbroker’s client base mostly consists of Investors & traders who trade in the stock markets while a Forex Brokers’ client base mainly consists of Traders trading CFDs.
If you deposit your hard-earned money with an unlicensed broker, there is a high risk that you would lose it all & will never be able to recover that money. There are so many scams brokers that target South Africans in the name of forex, and the best way to avoid such brokers is verify that they are authorized by FSCA.
According to Safe Forex Brokers South Africa (a broker comparison portal in South Africa), all investors & traders should go to the FSCA’s website and check for a list of licensed brokers from their public search for regulated FSPs and check the products for which the broker is authorized, the broker’s FSP No
Tip Four – Don’t be Fooled by Celebrity Endorsements
A recent tactic used by investment scammers is to recruit a known celebrity or a Social Media Influencer as a Brand Ambassador. This celebrity in most cases is not aware that the Broker is not licensed. They go ahead and help market the scam to their fans on Instagram, Facebook, Twitter etc.
These Star struck fans, don’t bother to carry out due diligence to ascertain if the Broker is even licensed to operate in the location. They rely on the endorsement of the product by their Idol and end up losing their money to the scammers.
Just because you see a financial product by your favorite celebrity, don’t forget to carry out proper due diligence of the risks involved.
Beware of Social Engineering
Social engineers try to extract information from you through building trust and showing empathy. An online scammer will sometimes infiltrate your circle and become a friend. This may happen in religious gatherings or even social clubs
The scammer becomes a member of your circle, builds trust and then begins to advertise his product to you and other members.
This kind of plot also attempts to manipulate your psyche. If other members of your circle buy into the idea and you refuse to participate, you risk being labelled a spoilsport.
Beware of Time Limited offers on Investment
Most online scammers when advertising their products will give the impression that the offer is limited.
For example, they may claim to offer a discount or higher returns to the first fifty customers. They then urge you to take advantage of the offer before it elapses.
These are all techniques to make you buy into the scam without thinking about it properly. It is better to be safe than sorry. If you are not sure about a proposition, let the offer slide.
Source: eNCA
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