Financial Conduct Authority (FCA) suggests £87k per day is being lost to scams in binary options.
The FCA has issued a warning for consumers and investors to be wary when investing in binary option investments, particularly via advertisements using social media.
It suggests that under 25s are six times more likely to get caught by such as scam rather than the over 55s.
What is a binary option?
Were you are make a bets on the expected value or price of a stock, commodity, currency or index. Ever heard of Contracts for Difference (CFDs), Options or Futures? They may have binary options in them too. Some high profile adverts will entice you to invest with wild investment return claims, glamorous lifestyle photographs and more.
The reality is that it is a bet on a change in the price of shares, currencies and cryptocurrencies. If you bet that a price will fall and you get it right, there are significant gains to be made. That said, there are both legitimate and scam ‘binary options’ platforms.
Legitimate binary options platforms became regulated by the FCA in January this year. So for many places to invest, you have protection, but there are obviously some that are not and then you get tied in to ‘share’ prices that the ‘scammer’ moves to draw you in further to keep you invested or indeed investing more. Indeed, the FCA is already investigating some and looking for back dated consumer redress where malpractice has occurred.
Cryptocurrency is not currently regulated, but if as a part of a ‘binary option’ investment trust, they are included in the investments, you may then have some protection.
If in doubt take professional financial advice. We have a saying that we ask you to heed given that scammers will always continue to take advantage of that fact: “You can only con a greedy person”.