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Experts’ Tips to Avoid Broker Scams

Trading can be a risky investment if you are unsure what to do. When you begin trading, there are many things you need to learn. It is something that you can’t put your money into without having any knowledge. However, despite the amount of knowledge you may have about trading, you can still be a victim of broker scams. 

How Much Money Is Lost?

There are many areas that are affected in some way due to the different scams. Phishing is a standard email scam that many people have fallen for in their time. Securities Investor Protection Corporation estimated that investment fraud costs $10 billion to $40 billion annually. 

FINRA (Financial Industry Regulatory Authority) initiated over 800 disciplinary actions against brokers and individuals. This then resulted in $39.5 million in fines. In the UK, around £1 billion was lost due to fraud in 2019. 

As you can see, a lot of money is lost due to fraud. Furthermore, it seems to be more common than ever and is something many people are victims of. Moreover, if you invest your money, you need to ensure it is safe. 

Different Types Of Investment Scams

There are many different investment scams out there that you need to be aware of. Make yourself aware of the various scams so you can spot them if you ever encounter one.

Some of the different scams include; Bad brokers, boiler rooms, unregistered securities, pump & dump, Ponzi schemes, pyramid schemes, precious metal scams, alternative investment scams, and investment seminars. 

Bad Brokers

Bad brokers are something that you need to be aware of. These are the type of people who will take your money off you and never return it. These brokers will take your money in different ways so you need to ensure you are aware of them. 

A bad broker will trade unfairly with customer orders. For example, a broker may wait for the market to change before making an order, so they gain more money. A poor broker may charge you ridiculous fees or commissions as well. In addition, they may charge you other fees such as a service fee. 

There are several things that a bad broker can do. Before you invest your money with a broker, you need to check to see if they are registered with the FCA register website. If you have ever been a victim of a broker scam or fraud, you should ensure that you have yourself covered. If you have doubts about the fees you are paying, you should get advice from a professional. 

Promises That A Bad Broker Makes

The typical promises of a bad broker would be promising easy profits in a short time, guaranteeing profits, and sign-up bonuses that are too good to be true. There are so many things you need to be aware of and a broker lie is one of them. 

Once you have deposited your money with a broker, they may manipulate your money in several ways. One of the more common is what we mentioned earlier, charging extortionate fees and going against a trader’s order. 

Before investing with a broker, you should check to see how long they have been trading. If they are relatively new, you should ensure that they are legitimate. It is easy to avoid a broker scam by taking some time out to research the broker before investing. 

The Three R’s To Ensure A Broker Is Legit 

The homework you should do before you invest with a broker is easy once you know how. If you follow the three r’s, you should be ok.

R1. Checking A Broker Is Regulated 

One of the first things you should do is check to see that a broker is registered. Depending on the country that you live in, there are many regulatory agencies that monitor brokers. 

If you live in the United States the main regulatory agencies include, BVIFSC, CFTC, CIMA, FinCEN, FINRA, IFSC, FSRA, IIROC, NFA, and SEC. If you live in Europe or the United Kingdom, you should look at AMF, BaFIN, CBofl, CySEC, FCA, FINMA, MiFID, FSCS, and UKNF. 

Once you have done that, you need to move on to the second R which is traders’ reviews of the broker. 

R2. Reviews of the Broker

Reading online reviews is the next thing you should check before you invest with a broker. Naturally, a broker will have some bad reviews but if the majority are good and legit, you should be safe. Furthermore, if a broker has a lot of bad reviews saying the same thing such as high spreads and/or commissions, you should probably stay clear of them. 

R3. Is the broker recognized in the industry? 

The final R you need to be checking before you invest with the broker. Checking to see if they are recognized in the industry or received rewards for their success is another way of checking if a broker is legit. 

You must check on industry groups to see if they are legitimate. For example, if a broker has received a reward in the last two or three years, they are doing something right. 

As mentioned previously, even the best brokers and firms would have disappointed a trader. However, you must ensure that a broker doesn’t have too many complaints that say the same thing. 

The three Rs are important and should be something you always check before you invest your money with a broker. This will limit the chances of you being scammed. 

What are investment seminar scams?

Investment seminars are something that is becoming a very common scam. Many investment seminars are legit however, there are also many which are not. A lot of fraudsters will sell pointless educational packages to people who don’t know much about trading. Furthermore, these seminars will cost thousands of pounds which you need to be aware of. 

The question is, how do you spot an investment seminar scam? Firstly, they will likely flex their luxury lifestyle. Furthermore, they will likely force people to sign-up instead of focusing on the skill. These seminars will usually target beginners and will guarantee you results. Additionally, they will offer a discount to sign-up immediately which again, entices people straight away.

How do you find a regulated broker?

Finding a regulated broker is very simple once you know how. Regulated brokers in the UK include Plus500, Etoro, Forex, City Index, and many more. There are many regulated brokers so make sure you research them to see if they are legit. 


Broker scams are hard to spot and are one of those things that you could easily fall for. As long as you check your three R’s, you should be ok. Just ensure that those brokers have reviews and ensure that they are good as well. 

Disclaimer: The information in this article is provided for general education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. It is not intended to be and does not constitute financial, legal, tax or any other advice specific to you the user or anyone else. TurtleVerse does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.



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