Foreign Currency Investment Scams - FOREX / Foreign Exchange Currency Frauds

A typical Scam Pitch: "'Given the things happening in Iraq, you can easily profit from the exchange between the U.S. dollar and the dinar.'"

The advertisements to invest in foreign currencies (called Forex contracts) seem too good to pass up. They claim high returns coupled with low risks from investments in foreign currency contracts, like the Iraqi dinar. They offer purchase of the Iraqi Dinar, Vietnamese Dong, the Egyptian Pound and others. The scammers claim that when those governments revalue their currencies, increasing their worth against the dollar, you just sell your Dinar, Dongs or Pounds and cash in.  Even at its best, this market is volatile and high risk. Forex trading can be legitimate for governments and large institutional investors concerned about fluctuations in international exchange rates, and it can even be appropriate for some individual investors. But the average investor should be extremely wary when it comes to forex offers.

How do foreign currency exchange contracts (Forex) scams work

Forex contracts provide the right to buy or sell a certain amount of a foreign currency at a fixed price in U.S. dollars. Profits or losses accrue as the exchange rate of that currency fluctuates on the open market. It is extremely rare that individual traders actually see the foreign currency. Instead, they typically close out their buy or sell commitments and calculate net gains or losses based on price changes in that currency relative to the dollar over time.

Forex markets are among the most active markets in the world in terms of dollar volume. The participants usually include large banks, multinational corporations, governments, and speculators. Individual traders comprise a very small part of this market. Because of the volatility in the price of foreign currency, losses can accrue very rapidly, wiping out an investor's down payment in short order.

The scammers make it sound like a great investment, but it's a scam. The scammer sells you essentially worthless currency for which you pay real dollars. The hoax is so appealing because, unlike previous forex (foreign currency exchange) scams where victims were given a bogus "receipt" for their money, you can actually purchase these currencies. The problem is that they will be very difficult to sell, and it's extremely unlikely they will ever significantly increase in value. Many experts have explained why the investment promises are false.

Often, the victim investor's money is never actually placed in the market through a legitimate dealer, but simply diverted'stolen, for the personal benefit of the con artists.

The Iraqi Dinar is the most popular currency used for the this scam. But given recent political upheaval in Egypt and the growth of the Vietnamese economy, these currencies are also gaining traction.

How to recognize a foreign currency scam

Watch out for these red flags when considering a forex market investment:

How to avoid foreign currency scams

What to do if you have been scammed

If you believe you are a victim of foreign exchange fraud, please

 

If you have questions, are aware of suspicious activities, or believe you

And please let us know about any suspicious calls or emails you receive.  We look for patterns so that we can alert the authorities and victims to new scams, before it is too late!Do  not open the attachment. Delete the email.


References:

Examples of Forex scam prosecutions


Resources and Related Scams