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Home » Binary Option Scams: And how to Avoid them

Binary Option Scams: And how to Avoid them

When it comes to Binary Options, there have been quite a few examples of people who have been taken for a ride by a Broker and have lost a large amount of money. Binary Option Scams are quite common and come down to a number of factors including improper due diligence and manipulation by the broker.

This is an unfortunate situation as it has tainted the image of Binary Options in it’s entirety. Despite the many bad actors on the market, there are good opportunities to connect with honest brokers who treat their clients with the respect that they deserve.

However, finding these particular brokers can be challenging. It is for this reason that we have developed a short guide to spotting the scammers, identifying their schemes and finding the ideal broker to trade with on an ongoing basis.

Binary Option Brokers

Typical Binary Option Scams

When it comes to scams in the Binary Options industry, the saying “if it’s too good to be true” rings true. If you come across a broker or signal provider or any binary options agent online that is promising outlandish returns with very little risk, then your alarm bells should be ringing. Although trading Binary Options can yield a trader success in the long term, it requires analysis and dedication.

This is where new traders often tend to trip up. Without knowing any of the binary options basics they think that trading trading them is a panacea that will solve all of their problems. This is why most people who fall for these typical scams are left with a horrible experience of the industry.

The Software Scam

We have come across the software scam quite a few times and it tends to be one the most noticeable scams in the binary options industry. What this usually involves is some “revolutionary” software that has been secretly developed. Usually, you are presented with a video where a presenter will take you through a story of how effective the software is. Apart from some of the wild claims that are made in video, to the untrained eye it may appear as a semi legitimate offer.

However, using some mere common sense would avoid the trader any pain. Firstly, if the software was indeed revolutionary and only made profits, why is it not the exclusive property of a wall street hedge fund? Why would they offer it for free to the general public to use? Moreover, why would a legitimate broker continually allow a trader to use money making software on their platform? Surely this would hurt their bottom line? The Reality is indeed far from this.

These software proposals are merely scams that are an effective marketing tool for the broker. Once you have entered your details, a broker will call you up and try to get you to deposit the minimum with said broker and you then very quickly and effectively lose your money. This is a win for the broker and the affiliate marketer who provided you with the software.

These are usually easy to spot. They use terms like “guaranteed profit”, “totally risk free” with a whole host of other wild claims. They also try to make it look as if there is some urgency to the deposit. You can an example below.

Scam Site

Another typical sign that is usually presented with Scam software are the fake testimonials. We have seen them all. Essentially it is a group of some really well taken and good looking people who give their glowing opinion of the software. We are also often surprised at the extent of bad spelling in these testimonials. Moreover, the traders in the testimonials all have outlandish returns and are from all walks of life. Some of them even claim that they will be quitting their jobs in order to trade binary options with the software! Below are some samples from another offering.

Fake Testimonials

As mentioned, returns that seem to always be positive with no risk of any losses should be viewed with suspicion. Binary Options trading involves some degree of risk and you should have appropriate money management strategies in place when trading them. The mere idea that you can switch on this profitable trading software and only achieve winning trades seems quite sketchy to us. Moreover, who is collecting all the information on these winning trades? Is the broker willingly sharing data and information with the software provider. These are all red flags and you should tread cautiously with information like this below.

Questionable Returns

The Broker Managed Account

This is another type of scam that we have come across quite frequently. Essentially, a broker will offer a client the opportunity to use one of their “trading professionals” at the company. These are supposed to be ex wall street veterans who can generate you returns that most hedge funds would dream of. These professional traders require you to make incredibly large deposits with the broker to make use of their services. This is generally suspicious to us as they are being referred by the broker. Why would the broker offer you a trader to make money at their expense?

Another type of scam that we have witnessed are signal providers who offer you free signals from their professional traders for a limited time period. Similar to the software scam, they usually only work with a friendly broker who is in on the scam and they present a number of fake testimonials along with supposed trading records. Once you have been on the signals for a certain time period, they offer to manage the account full time for you, subject to very strict withdrawal and lockup periods. This is indeed a red flag as the trader should theoretically always have access to their funds.

Just before you are able to realise your profits at the end of the lock up period, the trader loses all of your money and disappears. On some occasions, the provider themselves present fraudulent documents that they get the client to sign. These are not worth the paper they are written on.

Beware the Bonus

Another dangerous binary option scam that is offered by the broker is a signing bonus. These bonuses often appear to be a generous but come with numerous caveats, which are often impossible to overcome. These include trading the entire bonus amount over a particular limit. We have heard stories from some of our members where they would have to trade up to 13 times their bonus amount in order to withdraw this funds. By this time, the client has either lost all hope or lost all their money.

Although these bonuses are opt-in we have also heard stories from members who were given the bonus despite opting-out. This moves from being a mere contractual snag to a straightforward Binary Options Scam.

Binary Option Scams

Withdrawal and Platform Issues

The most unfortunate situations we here of are brokers who refuse to pay out a client’s winnings. These happen far too often for us to recall. After the client has made considerable returns on their trades, the broker changes tunes. Either the broker demands arduous requirements such as numerous forms of ID, or he merely just cannot be reached. We have heard stories from some of our members of brokers who have merely gone AWOL and refuse to talk with their clients.

We have also heard some stories from our members of brokers who have rigged platforms. These platforms appear to just send the clients trade out of the money the moment before expiry. These members took a look at the mispricing and mis-quoting of the currency pairs from the live market quotes. We have also heard of instances where a trader would make a lot of money in the Demo mode of the platform. However, after they invested their funds, the platform spreads would be unrealistically wide. This means that the broker has pulled the wool over the eyes of the unsuspecting trader by jigging the platform.

How to Spot Binary Option Scams

There are a number of tell tale scam signs that one can look for when with both a broker and a Managed Account provider. First among these is a lack of important company information on their homepage. Brokers who operate in the shadows and merely want to grab your money will try to provide as little concrete company level information. It is important to look for key information such as regulatory oversight and legal terms and conditions.

When it comes to client testimonials, none are as impartial as those you can find on other sites. If a broker or managed account provider has a number of glowing testimonials on their own website, this may defeat the purpose. Although I know that there are honest brokers who provide their client’s feedback on their site, these will hold way less weight than if they were on a third party site or forum. If a broker or managed account service is truly as impressive as it claims to be, you are certain to find the same reviews by dedicated clients in other places.

Binary Option Scams

No Service Speaks Volumes

Brokers who are also unresponsive to initial questions and inquiries should be greeted with a degree of scepticism. If a broker is unresponsive to your questions before the initial investment, you can be guaranteed that they will be less responsive the moment that they have your money.

Broker track record is usually also very important. A number of brokers that have had negative reviews in the past and have built up a bad reputation try to re-brand themselves and attempt the same tactics with a bunch of new clients. That is why taking a look at the history of the broker and the website itself is important. A handy tool to do that is something called the Wayback Machine. What this allows you to do is to take a look at a snapshot of the website a number of years back and verify how long the broker has been in the game and whether they have done any re-branding.

Finding the Right Service

Despite some of the bad actors who embark on Binary Option scams, reputable brokers and effective managed account services are present. It is very important however, to know what to look for and how to find the right service for you. One of the most important methods is to do further online searches for the service you are considering. Other Binary Option traders are a great resource for you to tap as it allows you to hear from individuals who know firsthand about the service you are considering.


The Binary Trading Club is a great resource to start. Given that the club is a member based community, fellow traders can share information about the industry comfortably. This includes information on the most effective managed options trading accounts to the best broker reviews. Membership in the club is spread among a number of traders with all skill levels and experience levels.

Speak to Your Broker

Once you have an idea of the type of service that you want or the broker who you may like to use, it would be a good idea to reach out to the broker and ask him all of the important questions with regards to their service. These include inquiring about segregated accounts, regulatory oversight, trading terms, bonus conditions, payout times and account types among others. Depending on how responsive the broker is to your questions, you can get an idea of the honesty of the broker and the customer service that you can expect. Then, when it comes to investing your money, make certain to read all the terms and condition attached to the Bonus before you accept it. If your conversation with the broker was honest enough, then you will know this from the beginning.

In order to find the right Managed Account service, you need to know exactly what you are looking for. You have to set yourself individual risk limits together with acceptable trading strategies. This means that when you have a discussion with a provider, you are able to ask the right questions and make clear your requirements. This will make certain that and managed account provider does not play hard and fast with your funds and make irresponsible trades. It may also help to ask the provider some technical information with respect to their trading strategy. This allows you to vett whether the provider knows exactly what they are talking about.

Have you Been Scammed?

If you are reading this page and are worried that you indeed may have fallen for a Binary Options scam, there are a number of things that you can do in order to increase your chances of getting your money back. Similarly, by taking steps against a Scam broker, you are helping the rest of the community avoid such a trap.

Below are a list of steps that you can take such that you can drastically increase your chances of securing your funds.

Keep all Communications

Before you can start on your quest towards fund redemption, you have to get your ducks in a row. By this, you have to gather all communication that you had with the broker including Skype, Email and documents such as bank statements. These are your first tool that can be used in any dispute.

If the broker is disputing your claims, then you can use the documents as proof of the dishonesty.

Ask for a withdrawal

If you feel that this was indeed one of the Binary Option scams above, then you should request your funds back. If the broker is an honest operator, then they should send the funds back with relative ease.

It is important to note, however, that certain documents are required for withdrawal. These are standard practice and should be made available. These include proof of residency and identification. Similarly, if you have elected to take a signing bonus, this could limit your withdrawal options.

If, however, you have followed everything to the book and the broker is still making excuses, you clearly have a dishonest broker and you will need to take more drastic steps to get your money back. It is at this stage that you should let the broker know that you are considering reporting him to the community and the authorities.

Let Fellow Traders Know

The Binary Options industry is largely built on trust. Other potential traders value the opinion given by yourself if you have an experience with a broker. Similarly, the broker knows that negative press online can harm him in terms of future business, so he is more likely to discuss if he knows that you are going to sully his brand.

Use community forums and social media to alert people to your experience with the broker. Let forum moderators and influential traders know about the scam.

Use the Banks / Payment Providers

To use an old adage, “follow the money”. If you used a credit card, then you can request that your bank process a charge back. Although this tends to be quite an effective method to cancel the payment, the bank may require additional documents from you to confirm the authenticity of the claim.

Another avenue that you can use is to contact the broker’s payment provider. Many payment providers dislike binary option scams as they could be face with the threat of “facilitating” a fraud, they may threaten the broker with account closure if he does not reimburse you. We have heard of a number of cases in which this helped recoup funds.

Tell The Regulators

If all else has failed and you have exhausted all of these other avenues, then you should consider alerting the regulator about your experience with the broker. Although regulators have recently been asleep at the wheel for Binary Options, they have started to wake up and are actively taking action against deceptive practices. You can read all about Binary Options regulation here.

Tell the regulator that oversees the broker in question. If you are based in Europe, then the broker’s regulator will most likely be CySec. Sometimes it is not always clear where (or if) the broker is regulated. However, you can usually search the CySec database for the name of the parent company. Moreover, if you tell the broker that you are about to contact the regulator, then they may send you the funds. Brokers value their regulation and the threat of them losing it could cause them to relent.

Tell the Club

We really value the importance of an open and trustworthy Binary Options industry. It is therefore very important that we are kept up to date with news of the latest binary option scams to hit the wires. Our members regularly share their experiences as well as tell us about potential scams that they came across online.

Let us know of your experience and we can try to assist you with advice and alert our members of the broker.