Investment fraud (impersonating well-known brands) has become rampant on social media. As one industry insider put it: "Clones are like mushrooms. You take one and ten new ones take its place."
Cloned entities on social media offer financial services
Most imposters ostensibly offer Forex signals and other asset classes for free but hide the true costs. They mainly offer two types of paid services: one is "premium" signals, and the other is a managed trading service using bots with amazing returns.
Services that offer "premium" signals charge at least $100 for a week to a month and promise to share 8 to 10 "golden signals" per day. They even guarantee 99% profitability with “Premium Signals”.
But what is the scam here? Reputable signal providers are selling subscriptions to advanced trading signals. For example, FXStreet’s monthly subscriptions range from $9.99 to $19.99. These legal platforms cannot guarantee success rates, nor can they be boastful.
Other products these scammers are offering on social media are even more dangerous. They promise an investment opportunity with crazy returns: Invest just $1,000 and get $15,000 in returns in just five days. Can Warren Buffett or Charlie Munger top it?
These scammers are so convincing that they even display fake customer testimonials on their Telegram channels. Finance Magnates investigated a Telegram channel using the name FXStreet, which had approximately 66,000 followers, most of which were expected to be fake. However, large followings and aggressive sales tactics like this often leave many victims in trouble.
Watch out for these red flags
The obvious red flag is ridiculously high returns. If it sounds too good to be true, it is. Therefore, investors should not fall into such scams out of sheer greed. Annualized returns on most stock market indexes tend to be in the single digits, and if someone offers an investment opportunity that guarantees double or triple digit returns within a few days, there is no doubt that they are a scammer!
Another red flag is imitations of well-known brands. Social media scammers often use the names of well-known brokers or reputable signal providers to create an aura of legitimacy. Investors must check the credibility of any social media channel when interacting with it regarding investment opportunities
In fact, investors should not approach someone if they ask to be paid for services solely in cryptocurrency. Crypto payments are often untraceable, and the use of privacy coins and mixers makes them a prime candidate for scams.
All of the fraudsters Finance Magnates contacted on Telegram were only seeking cryptocurrency payments. They even provide step-by-step instructions on how to make crypto payments (from downloading a wallet to sending a payment). They switched when representatives from Finance Magnates showed interest in their services and products but insisted on making a bank transfer.
Elaborating on the scam trends, Monguió said: “There are three of them. One is cryptocurrencies. What’s more, the more common cryptocurrencies are, the easier it is to request payment in cryptocurrencies. So, the harder it is to get that money back; The second trend is the so-called "dark social", that is, more and more social interactions are not on the open network, but in closed channels, DM messages, etc. Therefore, Telegram, Discord and WhatsApp are very suitable for this Situation; the third is artificial intelligence. These scams we're seeing require interaction with someone, and artificial intelligence will allow them to scale that in incredible ways."
How to deal with scammers?
The threat of social media scams is well known. Brokers are aware that their brand name is being misused and acknowledge that this impersonation harms brokers and their clients. Interestingly, while the real Plus500 account on Telegram only has 2,910 subscribers, one of its clones has over 40,600 subscribers.
Brokers, including Plus500, monitor and report the activity of these accounts. These actions can be reported to social media or by sending messages directly to these pages. It is understood that most reports have received positive responses, but reports are treated differently depending on the independent social platform.
"Most of the time, Telegram is very helpful in shutting down these fraudulent channels. Of course, typically, for every channel we shut down, there might be ten more," said Marios Chailis, Chief Marketing Officer of the Libertex Group.
“As of September 2021, Telegram’s policy regarding managed clones is that they generally do not allow unauthorized cloning of their platform,” said Bizreport Certified Financial Planner Raymond Quisumbing. “To my knowledge, Telegram has not implemented any bans or
