Easy test to reveal scammers

[Andrew Jones]

I have a degree in law LLB, and I see that some people who have been scammed need some basic legal education. Here it is.
1) The first thing about Forex is that you must have a contract with a broker. 2). You must know where that broker physically is and 3) you must know how you will use the law i.e. the police, the courts or a controlling authority e.g. CFTC etc., to enforce your contract if someone tries to steal your money, by not sending it back to you immediately as per the terms of the contract.

SIMPLE TEST
look at the front page of their website. Does it tell you who the broker is? If you have a contract with a broker the broker must be a legal person. I.e. it must be John Jones or John Jones Co. Ltd. Suspicions immediately arise against UFX Bank or Prime4x because they are not companies. It doesn't say Co. Ltd., Inc. Corp. etc. it just says the name but that's not a legal person. You can't have a contract with a bird, a bicycle or a sandwich for example because it's not a legal person. You can't have a contract with the website either. It's not a legal person. So those two webpages do not tell you on the front page who they are. If you look at an honorable company such as GFT or FXCM they tell you immediately on the front page exactly who they are and who is regulating them, so you know how you can get them if they don't honor their contract. The front page of FXCM down the bottom says "regulated by..." And gives you their exact address. Their exact company name and their address. This is the person you are entering into the contract with.

If they don't tell you on the front page or just one click from it you should immediately dump them. Suspicious. In the case of UFX bank, looking at the webpage I do not even know if they are a legal person I can enforce a contract against. All I know is there is a webpage called UFX Bank, some phone numbers around the world and an address in Cyprus and one in London. You cannot take legal action against a phone number and you cannot take legal action against an address. So this is no good. And their address is in Cyprus so who exactly will be regulating a website that gives you a Cyprus address? Can you get a lawyer to take them to court in Cyprus? From the front page of their website, you don't even know who they really are.

The 4 rules below are exactly what you need in every single case. If you don't see these 4 rules fulfilled you should be very suspicious, and you'll need to do some research. If you are not experienced and understand basic legal concepts do not deal with anyone who is not within these basic rules. It is possible to deal with institutions in offshore jurisdictions but you really must know what you are doing.

On the very first page of their website or at least 1 click from that very first page under "about us" or "disclaimer" or something similar you must find the following information clearly stated:

1. The name of the company i.e. at the end it has Co. Ltd. or Inc. etc.
2. The physical address where that company resides must be clearly stated.
3. That physical address must be in a country with a stable, usable legal system. In Asia, where I live, I would only trust Hong Kong, Singapore, Japan, Australia, New Zealand. Even in a country like the Philippines or Thailand for example it can take too long to enforce a contract. Even if you are right and you have all your documents the legal system is so slow it can take years and years. In other words, it doesn't really work. So a stable country with a usable legal system is a must.
4. When you fill in your account opening forms make sure that you are dealing with the same company on the webpage and that the company is putting your money in a bank account in that same country.

If you follow the above four steps you shouldn't have any problems because you have a contract with the broker and the terms of the contract will say that the broker will send you back your money at your request. If the broker does not follow the contract you can get the contract enforced in the US by the CFTC in Japan by the FSA for example. It will just be the regulating authority and the courts in that particular stable legal system country.

I tried contacting UFX Bank to get information about opening an account with them and because I was immediately suspicious the first question I asked in their online chat was "who exactly is regulating you, which jurisdiction are you in?" The reply I got from the other end was "well we have offices in London, Cyprus, Bahrain" and I said, "no I don't want your phone number I want to know exactly where your company is located and who is regulating them". The person on the other end just immediately hung up.

If you do not follow those four rules you better look very carefully at your account opening contract. Who exactly did you enter into the contract with? Where exactly are they physically located? Because that is the party that you have to get your money back from and that is the country whose legal system you'll have to use. WHICH COUNTRY IS THAT COMPANY INCORPORATED in?

For these people that are complaining about being scammed by different so-called brokers who don't even tell you that they are company on their front page, you may not have much chance of enforcing your contract. You might have to try and go criminal law and get the police to arrest them for fraud. Anyway you look at it you have made a mistake if you have broken my four rules above and I hope you have learnt your lesson. But it is not going to be easy for you guys I'm sorry. Learn to smell a scam from the front page of the website.

 

[Pharaoh]

Run a google search on that physical address. Many brokers will have a virtual office in the US, UK, or other reasonably safe sounding country. If the address search turns up dozens, hundreds, or even thousands of companies at the same address, it's very likely a virtual office.

 

[Andrew Jones]

Scammer "company" address

Run a google search on that physical address. Many brokers will have a virtual office in the US, UK, or other reasonably safe sounding country. If the address search turns up dozens, hundreds, or even thousands of companies at the same address, it's very likely a virtual office.

even a good physical address in a stable country is not enough. In fact, that is part of a scam tactic to deceive people. You must have a good physical ADDRESS IN THE COUNTRY IN WHICH THE COMPANY IS INCORPORATED. That is where the regulating authority or court etc. has jurisdiction. If a scammer is incorporated in Cyprus but has a small office in London it won't work. That is not enough to get the authorities to act to bring a victim's money back. You have to be able to enforce your contract against a company, Co. Ltd., Inc., LLC etc. in the country in which that company is formed.

 

[Albert.b]

even a good physical address in a stable country is not enough. In fact, that is part of a scam tactic to deceive people. You must have a good physical ADDRESS IN THE COUNTRY IN WHICH THE COMPANY IS INCORPORATED. That is where the regulating authority or court etc. has jurisdiction. If a scammer is incorporated in Cyprus but has a small office in London it won't work. That is not enough to get the authorities to act to bring a victim's money back. You have to be able to enforce your contract against a company, Co. Ltd., Inc., LLC etc. in the country in which that company is formed.

Have you got it guys?

THE BROKER'S ADDRESS MUST BE IN THE COUNTRY IN WHICH THE COMPANY IS INCORPORATED.

 

[RahmanSL]

Lately, we see some new forex brokers claiming to be from New Zealand, and as explained by some FPA members, these companies are offshore companies registered in New Zealand.

As you have a a degree in law LLB and is well qualified to spot scammers, you would be carrying out a great service to Newbies by listing all brokers whom, in your opinion, is trustworthy.
So far, most everyone (except for broker's rep & IB) is shying away from coming up with such a list as they would feel responsible for reccommanding a particular broker who didn't turn out as reccommanded or worst, a scammer.

 

[Andrew Jones]

Dear RahmanSL,
You raise a good point about doing research to spot scammers and someone from Forex Peace Army should actually investigate the webpages of brokerages and report the ones that smell bad. But actually if you apply these rules you will not be the victim of the super basic scam of just taking a sucker's money and not sending it back. You could still get into an argument with a legitimate broker about execution or spreads etc. but the rules should reveal "brokers" who you should avoid immediately and simply close their webpage as they are not being honest with their information.

ON THE FRONT PAGE
1. Front page only- Company name as in Company Ltd., Inc., Corp. LLC etc.
2. Physical address of that company in the country in which that company is incorporated or regulated.
3. That country is reliable. This includes the court system in that country or the government regulating authority. Trustworthy brokers will usually have their registration number with the controlling authority i.e. "Australian Financial Services License Number 226625" from the GFT page.
4. When they give you the deposit instructions make sure the money is going to the same jurisdiction.

Most of the cases of brokers that I see on this page at Forex Peace Army who have people complaining that they cannot get their money back have suspicious webpages. I don't like the webpages of UFX Bank, Prime 4x, FXopen or FBS for example. They are all lacking information. Some of them are lacking really basic information like their address. Try getting a court to make an order to enforce a contract against a party that lives in cyberspace. A branch office address is no good either. If John is in Saudi Arabia and Forex Bad Guys Inc. is registered in Cyprus but has an office in London or Auckland, John cannot use the legal system in England or New Zealand. He made his contract with the broker in Cyprus. A person in England or New Zealand has a better chance if they dealt with the branch in their own country.

For Newbies and small accounts an easy rule of thumb would be to just avoid any small or young company and Just stick to established companies who tell you exactly who is regulating them. If you have a substantial investment account and for some reason you want to go offshore or to a small, young brokerage, then it is worth doing the research anyway.

The reason I wrote my initial letter was because I was quite distressed that customers seemed to be so naïve and when I looked at the webpage of many of these little and offshore brokerages I realized that there was a chronic lack of basic information identifying the broker so it would not be possible to take legal action against them.

 

[RahmanSL]

That's some pretty good and sound advice you posted which Newbies can greatly benefit.

But like I said, you are quite qualified to spot & to differentiate the scammer brokers from the real ones.
So, where so few dare thread, would you be brave enough to come up with a list of brokers who, in your opinion, is 95% trustworthy?

You mentioned "FxOpen" as among the other brokers whom you "don't like the webpages".
While I agree that FxOpen is not regulated by any meaningful regulators, and yes, they are also being on the "sue list" of the NFA(?) and has their "HQ" in Cyprus, I still do trust them.
Having a well regulated broker is, of course, very much preferred, desired, and secured (to say the least), but the regulatory bodies do have so many Rules & Regulations and Terms & Conditions that doesn't appeal to me at all. In fact, from what I can read & understand, the regulatory bodies wants to exert their power to dictate how and where you should trade.

I think I will stick to none-regulated brokers for now (but minus those obvious scammer brokers, of course) until the day comes when I feel ready to start "investment trading" on any significant size (>usd100k) account.
When that day comes, hmmmm, I have only one particular broker in mind and, in the meanwhile, will update myself on their reliability and reputation...

...but who knows! : )....by that time, my present favorite broker FxOpen might become a fully regulated broker which will save me from any need for any migration

 

[Albert.b]

That's some pretty good and sound advice you posted which Newbies can greatly benefit.

But like I said, you are quite qualified to spot & to differentiate the scammer brokers from the real ones.
So, where so few dare thread, would you be brave enough to come up with a list of brokers who, in your opinion, is 95% trustworthy?

You mentioned "FxOpen" as among the other brokers whom you "don't like the webpages".
While I agree that FxOpen is not regulated by any meaningful regulators, and yes, they are also being on the "sue list" of the NFA(?) and has their "HQ" in Cyprus, I still do trust them.
Having a well regulated broker is, of course, very much preferred, desired, and secured (to say the least), but the regulatory bodies do have so many Rules & Regulations and Terms & Conditions that doesn't appeal to me at all. In fact, from what I can read & understand, the regulatory bodies wants to exert their power to dictate how and where you should trade.

I think I will stick to none-regulated brokers for now (but minus those obvious scammer brokers, of course) until the day comes when I feel ready to start "investment trading" on any significant size (>usd100k) account.
When that day comes, hmmmm, I have only one particular broker in mind and, in the meanwhile, will update myself on their reliability and reputation...

...but who knows! : )....by that time, my present favorite broker FxOpen might become a fully regulated broker which will save me from any need for any migration

Have you read the FPA case against FxOpen?

Are you as confident now about their dealings with clients who make good profits?

 

[athenafx]

Ufxbank

Hereafter is a copy of a chat with ufxbank.

I did not have time enough to go ahead with their location or how much capital they have, because they failed rapidly.


Please wait for a site operator to respond.
You are now chatting with 'Ethan'
Ethan: Hello and welcome.
Ethan: How may i help you today ?
athenafx: I would like to know in which country your bank is registered
Ethan: We are now going through the regulation process with the NFA in the USA and with the CYSEC in europe.
Ethan:
Ethan: we are currently registered as an IB with the NFA and have our approval for full regulation pending
athenafx: Is your company a bank ?
Ethan: we are a forex brokerage
athenafx: May be i am confused but there is the word bank in your company name. So I thought you had a bank license.
Ethan: no we are not a bank, it is just the name of our company
Ethan: my apologies for the confusion
athenafx: So there is no warranty for the deposits ?
Ethan: we use a bank to store our funds but we ourselves are not a bank
Ethan: all of our clients funds are very safe
athenafx: May be for small deposits but larger ones may need something like segregated funds
Ethan: we provide segregated funds to all our clients
athenafx: Well, which is the bank responsible for the segregated funds ?
Ethan: We use BKB private banking in switzerland
athenafx: Very well, I am in switzerland.How long doest it take for deposits and also for withdrawals ?
Ethan: The deposit time depends on the method of deposit and withdrawals usually take between 2-5 business days
Ethan: Credit and debit cards show immediately in your account
Ethan: as does moenybookers
Ethan: wire transfers can take around 2 business days
Ethan: sometimes less
athenafx: I read in the terms and conditions that trades "out of the market" will be canceled but how could a customer know that a trade is "out of the market" ?
Ethan: where exactly in the terms and conditions are you referring to?
athenafx: This : All off-market deals will be cancelled and will not carry any profit or loss. Off market deal is a deal that was opened or closed in prices that did not exist in the market.
Ethan: Just a moment

 

[RahmanSL]

Have you read the FPA case against FxOpen?

You mean that case dated 11-Feb-2009 (2 years ago) brought by “Tradingsmart”?
If you are referring to that case, yes I did read it.

However on 15-June-2009, the FPA issued a statement:
“We the members of the Scam Investigations Committee of the Forex Peace Army have deliberated on all the evidence available to us and have reached a conclusion. It is our opinion that...
FPA's investigators have dealt with FX Open's representative before. He has always been honest with the FPA, even in cases where this has cost FX Open money….
…..a combination of age of the case and lack of solid evidence to prove or disprove cheating by either side means that this issue can only be resolved by an official legal or regulatory inquiry…..
We regret that we cannot make a final determination.”

Frankly, NO, I do not have less confidence in FxOpen being legitimate & trustworthy after reading that case since the verdict is none conclusive.
Additionally, I have not read any more similar case since then and also all the cases that I have read here at the FPA and from other FxOpen clients in their web site forum have been settled amicably.
Most cases that I have read are impatience Newbies shouting at their top of their voices of late payments which were not banked into their account due to none business days. In almost all of these cases, the Newbies normally posted back apologizing for their impatience and inexperience in such matter.

I think my "defense" of FxOpen sounds like I am an IB or Rep of FxOpen. I am neither of that, but just a regular client.
I am just stating it like it is and how I perceive FxOpen as a forex Broker.

Maybe my opinion of FxOpen might change in the future....but that will only come about after I've experience some "funny business going on" in my trading account with them. But so far, so good!