Forex trading scams in Zimbabwe: Know the risks, protections.

Namatirai Ruzvidzo

Memory, a bright and ambitious young woman, worked as a clerk in a law firm, diligently saving her monthly salary to pursue her true passion: opening her own boutique.

She spent hours poring over social media pages of several ‘runners’ making price and style comparisons.

Her dream was within reach and she was determined to make it a reality. One day, while browsing online, Memory stumbled upon an advertisement for a Forex trading platform that promised unusually high returns.

The platform’s website was sleek and professional, and the testimonials from satisfied investors seemed genuine. Memory, enticed by the high and quick, decided to invest all of her savings.

This would ensure that she travels to China to order her stock herself thereby cutting out the middlemen.At first, the platform’s dashboard showed promising gains and Memory felt a sense of excitement and anticipation.

She envisioned her boutique flourishing; thanks to the profits she would make from trading. As months went by her account had multiplied at least ten times. It was time to quit her job, withdraw all her savings and start her boutique.

When she tried to withdraw her funds however, she encountered a series of obstacles. The platform’s customer support team was unresponsive and her account was frozen.Within the next few days she was told by the customer support team that her account had been hacked and all her money had been wiped away by hackers. As the reality of her situation set in, Memory felt a wave of devastation wash over her.

She had lost her entire investment, the money she had been saving for her boutique.

The weight of her loss was crushing, and she could not shake the feeling that she had been blind to the warning signs. Memory’s world crumbled around her.

She stopped going out with friends, unable to bear the thought of sharing her pain with others. Her job at the law firm became a chore and she struggled to find the motivation to perform her duties. The boutique, once a source of excitement and inspiration, now seemed like an unattainable dream. Despite her best efforts, Memory never fully recovered from the loss.

She continued to work at the law firm, but her passion for her dream boutique had been extinguished. The experience had left her scarred and she struggled to trust others or take risks.

The memory of her lost savings and shattered dreams haunted her, a constant reminder of the devastating consequences of forex trading scams.

WHAT IS A FOREX SCAM?

As Zimbabwe’s digital economy continues to grow, so does the threat of cybercrime, particularly in the realm of Forex trading.

Recently, it was reported that a fake trading platform masquerading as an investment scheme for one of the largest money transfer companies in Zimbabwe has been luring residents into depositing funds via Ecocash, promising unusually high returns on Bitcoin trading.

This scam highlights the need for awareness and caution when dealing with online investment opportunities. A forex scam is any fraudulent activity designed to deceive traders into believing that they are engaging in legitimate Forex trading when, in reality, they are being swindled out of their money.

These scams can take many forms, from fake brokers and signal-sellers to Ponzi schemes and pyramid schemes, all aimed at separating one from their hard-earned money. Forex scams often prey on the greed, fear and lack of experience of novice traders. Scammers often make grand promises of guaranteed profits, minimal risk and easy money. They lure the unsuspecting public with flashy websites, fake testimonials and sophisticated marketing tactics.

Once they have earned trust, they strike, leaving one with nothing but empty promises and a drained bank account.

DANGERS OF FOREX TRADING SCAMS

Forex trading scams often involve promises of guaranteed high returns with minimal risk. Scammers may use fake websites, social media profiles, or WhatsApp numbers to appear legitimate. In the scam involving one of the largest money transfer companies in Zimbabwe, victims were asked to register on the Amexcyp Market platform and deposit funds, which were allegedly used for Bitcoin trading. However, money transfer company has since distanced itself from the scam, warning users to verify authenticity through official channels.

TYPES OF FOREX TRADING SCAMS

One of the most prevalent types of Forex scams involves fake brokers. These scammers set up a seemingly legitimate brokerage firm, complete with a polished website, customer service and trading platform. They encourage one to open an account, deposit money and start trading.

However, the trades are often fake and when one tries to withdraw their funds, the broker becomes unresponsive or disappears entirely. Fake brokers often operate under the guise of being regulated by a legitimate financial authority. They may even go as far as to forge documents and licenses.

However, upon closer inspection, the status quo is that these brokers are not regulated at all or they are regulated by obscure, non-reputable agencies.

SIGNAL-SELLING SCAMS

Another common Forex scam involves signal sellers who promise to provide you with winning trading signals. These scammers claim to have insider knowledge or sophisticated algorithms that can predict market movements with high accuracy.

They offer their services for a fee, promising that consistent profits by following their signals. In reality, these signals are often random or based on outdated information. Some signal sellers may provide signals that result in losses, while others might disappear after collecting your subscription fee. Legitimate signal providers do exist, but it is crucial to vet them thoroughly before signing up.

PONZI AND PYRAMID SCHEMES

Ponzi and pyramid schemes are age-old scams that have made their way into the Forex market. In a Ponzi scheme, the scammer promises high returns on one’s investment with little to no risk. Instead of generating profits through legitimate trading, the scammer uses funds from new investors to pay returns to earlier investors, creating the illusion of a profitable investment. Pyramid schemes operate similarly, but they require participants to recruit new members to earn returns. As more people join, the scheme becomes unsustainable and eventually will collapse, leaving the majority of participants with significant losses.

HIGH-PRESSURE SALES TACTICS

Scammers often use high-pressure sales tactics to lure one into their schemes. They may call or email you repeatedly, urging you to take advantage of a “limited-time offer” or to “act now before it’s too late.” These tactics are designed to create a sense of urgency and to prevent you from thinking critically about the investment.

If you encounter someone using these tactics, it is a clear sign that one is dealing with a scam.How to Identify Forex Trading ScamsSpotting a Forex scam can be challenging, especially for new traders who are eager to get started in the market.

However, by being aware of the warning signs, one can protect themself from falling victim to these fraudulent schemes.

Here are some key indicators that one might be dealing with a Forex scam:T

OO-GOOD-TO-BE-TRUE OFFERS

If something sounds too good to be true, it probably is. Scammers often lure victims with promises of guaranteed profits, minimal risk and high returns with little effort. They may claim that their system is fool proof or that they have insider knowledge that will make one rich. However, no legitimate investment can guarantee profits, especially in the highly volatile Forex market. Readers are urged to be sceptical of anyone who promises consistent returns or who claim that one can “get rich quick” through Forex trading. Legitimate brokers will always emphasize the risks involved and will never guarantee profits.

RELEVANT LAWS AND PROTECTIONS

Zimbabweans can protect themselves against Forex trading scams by being aware of the relevant laws and protections in place.

The Securities and Exchange Commission of Zimbabwe (SECZ) is the apex regulator responsible for overseeing the capital market, including forex trading.

The Securities Act (Chapter 24:25) provides the framework for regulating the securities industry in Zimbabwe. The Zimbabwean Cyber Security and Data Protection Act (Chapter 12:07) aims to combat cybercrime, including online scams and financial fraud.

TIPS FOR AVOIDING FOREX TRADING SCAMS

To protect oneself from Forex trading scams, readers should confirm the legitimacy of investment platforms through official channels. Further, one should be wary of investment opportunities advertised on social media. It is also encouraged to conduct thorough research on investment opportunities and brokers. Lastly, members of the public are urged to inform authorities about potential scams.

WHAT TO DO IF SCAMMED

If one has fallen victim to scams, they are urged to report the incident to the Zimbabwe Republic Police or the Reserve Bank of Zimbabwe.

CONCLUSION

Forex trading scams pose a significant threat to Zimbabweans, exploiting the growing digital economy and preying on unsuspecting investors.

The recent scam in which one of the largest money transfer company as highlighted earlier herein, points out to the need for awareness and caution when dealing with online investment opportunities.

By understanding the dangers of forex trading scams, knowing the types of scams to watch out for and staying informed about relevant laws and protections, Zimbabweans can protect themselves from financial loss.