Forex trading scams in Australia. How to spot and avoid them.

• Forex trading is a fully legitimate endeavor
• An alarming number of Australians fall victim to forex scams
• There are typical red flags that indicate you may be dealing with a scammer
• Forex scams come in various shapes and sizes (forex robot and trading signal scams, guaranteed returns, fake bonuses, etc.)
• Follow the steps listed below to avoid a scam
• Once scammed, your money is usually lost

Forex trading involves a lot of professional entities (governments, banks, asset managers, etc.) and retail investors also have access to the forex market if they open an account at an online broker. 

Most retail investors trade forex in the form of CFDs (contract for difference), which is a leveraged financial product where the investor doesn’t own the underlying asset, in this case the foreign currency in question. If you use leverage, you trade with money borrowed from your broker not only with your own funds.

Given that forex is a highly liquid market and leverage can act as a magic wand in multiplying gains, there is a good chance for making handsome profits when trading forex. At the same time, forex trading involves a high degree of risk and data shows that retail trading accounts can lose money rapidly when buying and selling currencies.

Trading forex is not a guaranteed way of making money, anyone who says otherwise is not telling the truth. 

Australians lost more than AUD 158 million in investment scams between 1 January and 1 May 2022, according to data collated by Scamwatch, a government initiative designed to root out illegal activities. That was a yearly jump of 314% in investment-related fraud.

Forex trading requires a great deal of knowledge, skill and experience. Scammers almost always tell the opposite and attract unsuspecting customers with promises of guaranteed handsome returns. They portray forex trading and the ability to profit as something quick and easy. If you are approached with promises of massive gains in a short period of time, hang up the phone and shut the door. Forex trading simply doesn’t work that way. 

There are three main ways in which an illegal entity scams investors: 

1. The investment offer is a complete scam.
2. The investment is legit, but the money you give the scammer doesn't go towards that investment.
3. The scammer says they represent a well-known company – this is not true.

Scams are often very hard to spot and can feel legitimate at the moment. Scammers can use professional-looking websites and apps, and impersonate legitimate companies. This is true for Australia as much as any other country in the world.

Australian financial markets are overseen by the Australian Securities and Investments Commission (ASIC). The authority has a list of companies you should not deal with. The ASIC website will also tell you whether the business is a registered financial advisor. Any business or person that offers or advises you about financial products must be an Australian Financial Services license holder.

However, due to the ‘fly by night’ nature of many scammers, it is extremely difficult for Australian authorities to track them down and take action against them. This is further complicated by the fact that most scammers are based overseas.

Never work with brokers that do not have a rock solid background and top-notch regulation. By top notch, we mean service providers regulated by the ASIC, the FCA in the UK, the SEC or equivalent in the US or BaFin in Germany. Many scam brokers boast about being regulated but these are typically tax-haven regulators like the Bahamas where oversight is minimal.

Forex scams come in various shapes and sizes, we will list a few of the most common ones: 

• Expert Advisor/Trading Robots scams 
• Trading signals forex scams 
• Guaranteed returns scam
• Unsegregated client bank accounts
• Fake bonuses and promotion campaigns
• Unusually high leverage 

Beyond doing research and checking the entity you are dealing with for license number and regulatory background, there are a few additional things you can do to avoid falling prey to scammers. 

Here’s what you should do to avoid forex scams: 

• Never trust any broker or person offering guaranteed profit. Forex trading is high-risk speculation and profits are never guaranteed.
• Never give money to someone to trade on your behalf. It is illegal in Australia for anyone to invest on your behalf without an ASIC license.
• Never send money to people you meet on social media.
• Always check whether a broker is regulated. Regulated brokers are required to publish their license numbers on their websites. Check that the published license number is valid on the regulator’s website. 

The first thing to check about a broker is their regulatory background. Regulation means oversight by a government-mandated authority and almost all countries in the world have a financial regulator. If a broker is not regulated, do not work with them, it may be a forex trading scam. Reputable brokers publish all regulatory information on their website, including the name of the regulator and their license number. 

Always go with top tier regulators whose excellence lies in the standards they require, such as segregated client accounts, the range of protection tools, and the investor protection amount itself.

BrokerChooser’s team of experts compiles a list of the best forex brokers every year after checking more than 500 criteria for each broker. We have more than 100 brokers reviewed on our site and our analysts examine over 40,000 data points.

The best forex brokers for Australia in 2022 are:

1.  Saxo Bank
2.  Fusion Markets
3.  CMC Markets
4.  Interactive Brokers
5.  Capital.com

We also compiled a list of the highest rated forex brokers in Australia that we keep up to date. One thing worth bearing in mind: all the brokers you find on BrokerChooser are regulated by at least one top-tier authority. These include the UK’s FCA, the SEC/FINRA in the US, the ASIC in Australia, and Germany’s BaFin.

If you would like a tailor made recommendation of the best brokers available in your country of residence, check out our unique broker finder tool.

Not sure if a broker is legit or scam? Write to us at [email protected] and our broker experts will answer your questions. BrokerChooser is here to help people invest. 

If you've lost money to a scam or given out your personal details to a scammer, you're unlikely to get your money back. However there are steps you can take straight away to limit the damage and protect yourself from further loss.

Check out the steps you can take to recover your money. You should also report the scam to the Australian Competition and Consumer Commission (ACCC) on this link or get in touch with them by calling 1300 302 502. 

Some scams may also be criminal offenses. Fraud is regulated under various acts, including state and territory criminal legislation and under Australia’s common law. Where an actual crime has been committed, you may wish to contact your local police, or report it to ReportCyber if the crime has taken place online. ReportCyber helps law enforcement to better combat the growing threat of cybercrime in Australia. Common types of cybercrime include hacking, scams, fraud, identity theft, attacks on computer systems and illegal or prohibited content.

If you've sent money or shared your banking details with a scammer, contact your financial institution immediately. They may be able to stop a transaction, or close your account if the scammer has your account details. Your credit card provider may be able to perform a 'charge back' (reverse the transaction) if your credit card was billed fraudulently.

If you're not sure if you're being scammed, stop sending money. Scammers will keep asking for more money until you stop.

Can you get scammed in forex?

Although trading forex is a legitimate investment, the number of forex scams continues to rise at an alarming rate worldwide. There are various types of scams involving trading robots and trading signals, offers of guaranteed returns and scam forex brokers. Never believe promises of guaranteed or exorbitant profit, forex trading is complex and risky. Only work with regulated forex brokers that are overseen by top-tier regulators. 

How do I report a forex scam in Australia?

If you think you've been scammed or know someone who has, you can report it to the Australian Competition and Consumer Commission (ACCC)  using their report a scam page or get in touch with them by calling 1300 302 502. Get in touch with local police because some scams qualify as a criminal offense. Talk to your bank as they may be able to stop a transaction or recover some of your lost money. 

Can a forex broker steal your money? 

In theory, a forex broker can steal your money, but this will never happen if you choose a well-regulated, reputable forex broker. Legally, there is no way for your broker to steal your money, only scam forex brokers can and will do that. If you choose a forex broker or trading platform that is regulated by a top-tier authority, your money will be in safe hands. 

Feeling confused? Check out our educational material on forex trading. 

You can also dive into our broader glossary explaining all the exotic terms of the financial world. 

If you're looking for a forex broker, check out the best forex brokers or read all forex broker reviews. Alternatively, visit our unique broker finder tool for a personalized broker recommendation.