“Binary options” put buyers in a bind

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Over the years, lots of rip-offs have been built around exotic “investment” strategies that were pitched as simple. Recently, the Securities and Exchange Commission and the Commodity Futures Trading Commission issued warnings about investment scams using “binary options” as a hook.

Not familiar with binary options? Then you’re probably better off keeping your money in your pocket. In fact, you can stop reading now, unless you’re fascinated by financial products with poor performance records and a tendency to attract scammers.

In theory, a binary option is a financial product in which the buyer’s profit or loss is determined by a yes/no proposition. If the proposition occurs, there is a set payoff: usually a pre-determined percentage of the option price. If the proposition doesn’t happen, the buyer usually loses the entire cost of the option. For example, a binary option would pay a percentage if a certain stock is above a predetermined price at a specific time. But if it’s not, the buyer loses the entire purchase price.  Binary options are often sold through trading platforms that operate over the web or through mobile apps.

Here are some other problems with binary options:

  • Binary options sellers have engaged in troubling practices such as advertising bogus profitability claims; taking positions counter to their customers’; and, requiring customers to purchase many options before they can cash out. Remember, if you’re wrong once, the money is gone.
  • Investment professionals have noted that the payout structure usually favors the seller.
  • Securities regulators have gotten complaints about binary options sellers who refused to credit customer accounts or process reimbursements; manipulated software to generate losing trades; or committed identity theft.
  • Many sellers are overseas where it’s difficult for law enforcers to investigate.
  • Many binary options trading platforms may be violating SEC and CFTC rules.

Some people who lost money to binary option scams have been contacted by people who promised to get that money back for them. If they paid for the “recovery service,” they lost that money, too.

Spotted a shady binary option deal? Report it to the FBI’s Internet Crime Complaint Center at www.IC3.gov, or call the CFTC at 1-866-FON-CFTC or the SEC at 1-800-SEC-0330.

Tagged with: invest
Blog Topics: 
Jobs & Making Money

Comments

This is important real blog play about the government

Empire option a frudulent company: Empire option is a fuad!they have terms and conditions sectio on line at   empireoption.  com they saything they donot do. please do something about this people and help collect my money back.how will you know mewhen you do not have my conttact address?

You can tell the FTC about a problem with a company. Go to FTC.gov/complaint and make a report. The information you give will go to law enforcement agencies for large investigations.

You can also report to the Attorney General in your state. This website lists the state Attorney Generals for every state.

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