In recent years, there has been a sharp increase in the popularity of online trading. Over time, the number of users of trading platforms – such as eToro, Robinhood, Trading 212, etc. – continues to grow. Against this backdrop, as is the case with many other areas of the Internet industry, fraud is increasing due to which people lose their money. Here you can find examples of various criminal schemes and recommendations on how to avoid online fraud.
How do you tell a trusted service from a scam? First of all, we recommend paying attention to the following aspects.
1. Regulation by supervisory authorities.
There are regulators in various countries that monitor the legality of companies operating in the field of
online trading and ensure that they properly inform their clients. For example, eToro is monitored by the Cyprus
Securities and Exchange Commission (CySEC) and the UK Financial Conduct Authority (FCA).
2. Security.
Always pay attention to the address bar in your browser window and the security of the data feed. In addition,
you should carefully read the information provided on the website of the trading platform to find out what
security measures it uses.
3. Verification.
In accordance with regulators' requirements, new users registering on the website of the trading platform must
go through a mandatory identity verification procedure.
4. Duration of work in the field of online trading.
Many scammers stop their activities after hitting a big jackpot. Therefore, before registering on a particular
site, it is worth finding out how many years the company has been in this industry.
Sometimes scammers use email and legitimate trading platforms for illegal purposes. Some fraudulent attempts are easy to spot, but there are also scammers whose true motives are difficult to identify immediately. Here are some ways you can avoid potential pitfalls.
1. Loyalty to the trading broker.
If you are approached by a user of the trading platform urging you to start working on another site or contact
him in any other way that is not related to the platform you are using, you should suspect something was
wrong.
URL validation.
Sometimes scammers send links leading to a page that looks exactly like your trading broker's website. It uses a
different URL (web address). It is done to steal your data, including your login and other personal information.
Always check the authenticity of the URL and the security of the connection.
3. Never share your personal information with others.
As a rule, trading brokers ask for the personal information of users only during registration. Repeated requests
are quite rare. If you are asked to provide information about yourself on behalf of the trading platform, this
with a high degree of probability may indicate the feigned actions of the person who addressed you.
Unfortunately, it is impossible to reduce all fraudulent schemes to just a few types. However, we can point out the most common ones to help you recognize them in time and avoid pitfalls.
1. First-class bank.
In the traditional sense, the term "first-class bank" refers to a reputable financial institution, and many
fraudsters use it to legitimize their businesses. Therefore, you should be wary of this term appears in the text
of the proposal you receive. Finding out whether a large bank is involved in a given venture is actually very
simple.
2. The strategy of "hacking" the Pump Dump market.
A classic fraudulent strategy that has become widespread in the cryptocurrency market in recent years. A small
group of scammers is spreading rumors that a certain asset may rise significantly in price shortly. As a result,
there is an increase in the level of demand for this asset, which predictably leads to an increase in its value.
After that, the scammers dump their assets, earning large capital on this, and unsuspecting buyers record
losses. To avoid falling into this trap, you should skip the advice of those you don't know and always do your
own market analysis before making an investment decision.
3. Forex scammers.
This market has also seen an increase in deception in recent years. The foreign exchange market is the largest
market in the world. Both reputable financial organizations and swindlers work on it. In this case, we also
recommend clarifying whether the trading platform is a regulated organization controlled by an official
supervisory authority, whether it implements security measures, whether it requires users to undergo mandatory
verification and whether it can be tracked online.
Trading platforms offering online trading services are a convenient tool for effective investment in financial markets. However, along with the risks directly related to trading and requiring an independent analysis to make informed investment decisions, there is a risk of falling into the bait of one of the many fraudulent online traders. We urge you to exercise the utmost care when trading online and strongly recommend that you follow the tips above to help you keep your transactions safe.
If you regularly use wi-fi networks while trading, especially public ones, using a VPN is a must. Even if you access your trading account from your home network or another one you consider a secure one, it is better to connect to VPN before logging in to secure your passwords and other sensitive data from being hacked or stolen. VPN client will provide access to the trading system through a secure channel, eliminating the threat of data security breach.
A way to combat these scourges has long been invented. It is called VPN. The principles of VPN operation are as
follows:
• A virtual network is created that connects strictly two points - the user's device, where the VPN client part (PC or smartphone) is located, and the VPN server, which provides access to the organization's network.
• Before transmission, the client or server encrypts the data so that even if intercepted, they will not bring any benefit to the attacker.
• Also, before sending, the data is certified using an electronic signature to track their possible change during the transfer.
Thus, when using a VPN, the data cannot be intercepted or changed. However, there remains the last vulnerability associated with the ability to spy on or steal a password. It is where two-factor authentication (2FA) comes to our rescue.
The essence of 2FA is that each user needs two factors to successfully authenticate (and gain access to the VPN client, and therefore to the organization's network). The first factor is called "I have" and is that the user has a particular cryptographic key carrier (token) or smart card. The token's uniqueness is given by electronic keys that are created inside it and cannot be extracted and copied. These keys are used to establish a communication session between the client and the VPN server and protect the transmitted data. Access to the memory, where the keys are stored, is protected by a PIN-code, the knowledge of which is the second factor of authentication ("I know").
