Biggest Fraud Scam in the UK !

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Biggest Fraud Scam in the UK !

Post by Spiral on Fri Oct 14, 2016 8:11 pm

Thousands of British people have lost millions of pounds to an international scheme that is sold as an investment opportunity but in reality is a gamble or straight-up scam. While other countries have banned this business, a regulatory loophole has left UK victims completely unprotected – despite police saying it is now the biggest fraud in Britain.

The sale of what are known as binary options involves betting on whether financial assets, such as shares, currencies or commodities, will rise or fall over a specific time period. Even when the bets are legitimately placed, it’s a hugely risky enterprise – but our investigation indicates that for many companies binary options act primarily as a vehicle for scamming people out of money.

Victims are targeted by salespeople in call centres abroad – typically located in Israel and Romania – who use high-pressure tactics to convince them to invest. They are then led to believe that their investment is growing as bets are placed – but when they try to cash in their purported returns they are unable to.

The Bureau spoke to dozens of people across the UK who had been targeted by a range of different companies. Many people have had money taken off their credit cards without consent – in some cases thousands of pounds.

Hundreds of binary options companies exist around the world, making billions of pounds a year. A whistleblower working in Israel told the Bureau everyone in his call centre was aware that they were operating a fraud, and that salesmen were urged by bosses to “rape the clients” financially.

Software is used which allows clients to check their purported account activity online, showing their funds rising and falling as the bets are supposedly made.
How the con artists escape the law

The fraudulent sale of binary options is now the biggest scam in the UK, according to the National Fraud Intelligence Bureau’s deputy director and financial crime specialist, DCI Andy Fyfe. An average of two reports are made to police each day and the average investor loses £20,000.

This was likely just the “the tip of the iceberg”, said Fyfe, as most people would not bother reporting in the knowledge there was little police could do. There have been no successful prosecutions because the fraudsters are usually located abroad.

The business is not overseen by the Financial Conduct Authority (FCA) because it is classed as gambling. But the Gambling Commission only regulates operators that have equipment based in Great Britain.

Many binary options firms operating globally are completely unregulated. Others register themselves in Cyprus, where the central bank allows financial companies from other countries to apply for operating licences, and where the trading is classed as investment rather than gambling.

The firms can then operate anywhere in the European Union (EU), except where individual countries have introduced restrictions.

The Bureau has seen internal documents from some of the companies listing the names of hundreds of UK victims and how much they have lost. One British investor put in £200,000 and many others had lost tens of thousands. Typically people invest small sums to start with and are then drawn in with a series of false promises.
I nearly cried. My wife was going to leave me – “Richard”, a victim of a fraudulent binary options firm

“George” originally put £250 into an account run by a binary options company called Inside Option. He was persuaded that if he put another £500 in, he would be insured against any losses. The only condition was he would have to wait eight months before taking out the money.

Inside Option sent him a letter guaranteeing that this would be the case on headed notepaper with a London address. All the payments were made on a credit card and George thought that meant he would be protected if it turned out to be a fraud.

He watched the trades taking place on his Inside Option electronic account and it appeared that the more money he put in the better he did. It was doing so well he persuaded his girlfriend and his mother to invest their savings too, influenced by salespeople who “incessantly pestered” him with offers of better and better terms.

Eventually after eight months they had invested £80,000 in binary options. According to the account their balance was now £500,000, but when George started trying to withdraw the money last year he ran into problems.

He was told the trader who had set up the account had left to look after his sick mother. Then Inside Option said it would have to bring in its legal department to check the validity of the deal, and after that he struggled to get hold of them. “The trail went cold,” George said.

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