Employees approach consumers

Employees of fraudulent platforms often make contact with investors. They pretend that the platform is owned by a company that is entered in the commercial register or supervised by BaFin, and misuse the identity of reputable, uninvolved companies. They pose as professional financial brokers with years of trading experience so that they can gain the trust of consumers. Their aim is to create an appearance of respectability. In fact, though, they are committing fraud.

Beware of data theft

The fraudsters use various tricks to obtain consumers’ contact details. For example, in-app adverts display photos of celebrities without their consent that use sensational headlines to induce users to click on the apparent news report. Logos and layouts of popular news providers or TV stations are also frequently used without permission. For example, the headline draws attention to a claim that a television programme is being blocked to prevent an invention from becoming known that could make everyone rich. If users click on the post, they can allegedly secure access to this invention by entering their contact details.

Fraudsters also try to get their hands on the contact details of potential victims using spam emails or social media, for example.

Bogus investments

The “advisers” often tempt investors to invest in what appear to be financial contracts for difference (CFDs) on commodities, shares, indices, currencies or crypto assets.

To process payments, investors are often persuaded to set up an account (also called a “wallet”) with an online trading centre for crypto assets. This wallet is used to convert the deposited trading capital into bitcoin, for example, which ends up in the fraudsters’ wallet rather than in the investor’s own trading account. In other cases – often by email or phone – the account of a private individual is given as the payment account. The account holders receive the funds and forward them as instructed by the platform operators.

Investors are offered support for processing trades by letting platform employees connect to their laptop, tablet or smartphone via remote maintenance software. In some cases, they also gain access to the investor’s online banking software. This access also allows fraudsters to open accounts or e-wallets for crypto assets in the name of their victims and use them for their own purposes.

Fictitious profits tempt you to make further payments

One particularly misleading element of this fraud allows investors to view the supposed balance on their investment account online. In reality, however, account movements and high profits are only faked with the help of fraudulent software after customers have already invested. The claim that the investment immediately generates impressive profits is designed to convince customers to invest even more money. However, the funds paid in are never actually invested. The entire trading platform, including the supposed customer account, doesn’t exist.

As a result, contact with the trading platform often disappears as soon as a credit balance is supposed to be paid out, and investors can no longer reach the so-called “adviser” or are fobbed off with excuses. In many cases, the payout is made dependent on further payments that are claimed to be absolutely essential. Reasons given for this include claimed tax obligations, a required evidence of liquidity or fees that have to be paid. Another common requirement is for the investor to first conduct what is known as a “mirror” transaction. The fraudsters tell the investors that an amount that is usually equal to the requested payout amount must be paid in advance in order to “link” the trading account to the investor’s current account. The payout will then be made and the “mirror” transfer will also be returned. In reality, this justification only serves to persuade the investor to transfer further funds.

Risk that the entire capital will be lost

Victims’ chances of recovering their money are very remote. They risk losing all the capital they have invested.

But even after a total loss, investors are not safe from further attempts at fraud. In some cases, they are contacted several years later with the claim that their lost money has been found or recovered. However, they first have to make a payment for taxes, fees or similar before they can receive their money.

How you can protect yourself

• Be sceptical about unsolicited calls offering investment opportunities. Don’t agree to consultations with strangers that you haven’t requested (illegal cold calling).
• Be suspicious of offers that promise a secure investment, a guaranteed return, high profits or only a very low risk. Don’t trust promises of bonuses and supposed successes on dummy accounts.
• Get comprehensive information from independent bodies before you invest, for example from the consumer advice centres.
• Check whether the providers are licensed in Germany or in another country of the European Economic Area. You can find this out using the BaFin database of companies or the corresponding websites of foreign supervisory authorities. You should also pay attention to the warnings on the BaFin website and foreign authorities. Please note, however, that these warnings can never be exhaustive because of the large number of fraudulent offers and constantly changing practices.
• Pay attention to the legal notice (“Impressum”) for online investment offers. If there is no legal notice or if it is incorrect or incomplete, you should not invest. For German companies, you can check the company data by searching the common register portal of the federal states.
• The identity of existing companies is often fraudulently used in the legal notice. It may also happen that the company name is only subtly modified. Pay close attention to the spelling – including email addresses. If you have any doubts about the authenticity of an offer, you should research the contact details of the “genuine” company and ask them if they have actually made this offer.
• Many fraudulent providers claim they have been active on the market for many years. You can quickly check this information using a “Whois” domain query. This is something you can do yourself. In many cases, the websites were only registered a few weeks or months before, and the information about the owner is anonymised.
• Never grant strangers access to your computer, laptop or smartphone using remote maintenance software. This is how fraudsters can cause considerable damage as well as steal your personal data.
• Be extremely careful when you share sensitive personal data. For example, many fraudsters ask for a copy of your photo ID. They then use your data for criminal activities.
• If a provider tries to pressure you and make you take a decision quickly, this is often a scam. Never let yourself be rushed into doing anything.
• Be suspicious if you are asked to make payments into accounts that have no obvious connection to the operator of the trading platform. Reputable companies generally have a company account and also state this on their website.
• Don’t trust positive testimonials blindly, especially if they are from prominent investors. They may be fake.
• Beware of unsolicited offers of help. Fraudsters often pretend to want to help you get back the money you lost. They often claim to be working on behalf of or even employed by BaFin or other trustworthy organisations.
• Contact law enforcement if you suspect fraud.