The Financial Conduct Authority (FCA) in the United Kingdom has brought to light and warned investors of the existence of a potential online trading scam involving a clone firm.
The regulatory body has warned potential online traders and investors about a clone firm which is posing as an international branch of the popular United Kingdom firm FXCM Group, an international multi-asset broker. The clone firm was named ‘FXCM’ Germany and has been trading in the United Kingdom. By posing as a branch of FXCM Group, the clone firm sought to dupe potential investors and online traders into thinking that they are dealing with the FXCM Group, a trusted trading group.
Clone firms are a major challenge in the online trading industry worldwide and regulatory bodies across the world are constantly battling to find and uproot these clone firms. As the industry continues to grow, there is more money flowing through it and fraudsters are finding ways to get their hands on some of the money that is in the industry.
The increase in the number of scams and fraudulent activity being perpetrated in similar ways worldwide is alarming. The duplication of company names and websites has become more prevalent and this is a major cause of concern. Scammers will make use of exact or similar names, logos and websites to lure in unsuspecting people and these people end up losing money to these scammers.
‘FXCM Germany’ a textbook scam
Such methods were employed in the case of the duplicate firm posing as ‘FXCM Germany’. Through using a title similar to a well-known company and acting as a part of the original group, the duplicate firm managed to lure in investors that are based in the United Kingdom. Local traders fell victim to this scam and the FCA’s discovery of this bogus firm will go a long way in saving many online traders and investors from falling victim to this fake firm.
‘FXCM Germany’ was using a German address as its business address. It did not assume the business address of the original FXCM firm which is based in London. It is important that potential traders and investors take note of such details when they are engaging in business with a firm that claims to be a part of a major group. Confirming these details or discovering such irregularities will save traders from falling victim to a scam such as the one that was being run by the bogus firm.
The bogus firm was also operating without a license which is a gross violation of the United Kingdom’s laws governing such trading. Operating without a license means that the firm is not registered and does not adhere to any of the regulatory measures that have been put in place to ensure that traders and investors are protected as they do their business.
Potential traders and investors should exercise due diligence and check the firms they are about to trade with for legitimacy before they proceed to do business. Once the money is lost to scammers and fraudsters, it is next to impossible to recover it.