Foreign Currency Scams And How It Pays To Have Your Wits About You Under the Dodd Frank Ruling

Reports from the CFTC (Commodity Futures trading Commission) states that it has seen a rise in the level of foreign trading scams in recent years and accordingly it has warned customers to be wary of potential fraud. Under the Dodd Frank ruling which was brought into law by President Obama in 2010, any individual who is aware that a potential fraud might be taking place, is about to take place, or has taken place, can submit a complaint to the CFTC and may be considered for a whistleblower award.

The CFTC has the power to investigate claims against deregulated firms who are reported to be selling or offering members of the public foreign currency futures and options contracts, and indeed it has the power to close them down. It can also investigate its registered firms and affiliates and prosecute if foreign currency fraud is found to be taking place.

When is foreign currency trading legitimate?

Generally speaking trading in foreign currency options and futures takes place on boards or exchanges approved by the CTFC. Even if the trading isn't taking place on an exchange or board, then it can be carried out legally provided one or both of the parties involved is a financial institution such as a bank, futures commission merchant, registered broker-dealer, or an insurance company or is an entity or individual with a high net worth.

Unscrupulous companies and individuals target retirees especially

So just how do you identify a foreign currency trading scam? In essence opportunities that sound too good to be true generally are. So-called get rich schemes involving foreign currency trading have a tendency to be fraudulent. In this game there is no such thing as a free lunch. If you have been approached with an offer that sounds too good to be true, then you've good reason to be alarmed, especially if a company has asked you to part with your hard earned cash. Under the Dodd Frank ruling you can report the company or individual and if your fears are justified, then you could receive a monetary award.

It's a sad fact of life that unscrupulous companies and individuals are out there to fleece individuals of their hard earned savings. It goes without saying that in hard economic times everyone is looking to make money in one way or another, but do you really want to risk your savings or your pension in a scheme which promises you the earth but delivers nothing but heartache? Unfortunately retired people with access to their retirement funds are sitting targets for such fraudsters and once you have parted with your money it can be difficult or downright impossible to get it back. You also need to be cautious if you have acquired a large cash sum and are looking to invest it.

Warning signs

Be very aware of any of the following potential red flag areas:

• Guarantees of high performance and high profits
• Downplaying the risks - it's a well-known fact that foreign currency markets are extremely volatile and can incur substantial losses. This is not the place to invest money you can ill afford to lose.
• Sending cash via the internet or mail – it's easy to trade online but with many companies operating this outside of America, there's often no address or other information on their website and recovering your funds is impossible
• Inability to get any background information or track record on their performance– it's simple, don't deal with anyone who won't give you any information about themselves or their company

The bottom line is that unless you are convinced that the people you are dealing with are totally above board and legitimate, then don't trade with them.

The Dodd Frank ruling was put into place by President Obama so that members of the public could act as eyes and ear for the government to help crack down on fraudulent acts, such as currency fraud, and depending on certain criteria a whistleblower may qualify for a financial share of any monies recovered. So it makes sense to have your wits about you if you sense dodgy dealings.