CYSEC, or the Cyprus Securities and Exchange Commission is responsible for regulating many of the largest Forex brokerage companies in the European Union.
In 2016, CYSEC issued several guidelines to the brokers regarding aggressive marketing practices. It has subsequently issued a clarification to these rules in March of this year. CYSEC has been giving warnings to brokers in violation so far, and as of May 31, 2017 will begin issuing harsh penalties.
Specifically, the marketing of bonuses as real cash has been addressed in a circular by the Cysec:
“A bonus or trading benefit being offered and presented to the client in such a way as to give the impression that the trading benefit is real money, free trades or risk-free trades, when in reality that trading benefit equates to additional leverage on the client’s account (and therefore additional risk);”
This is a long overdue change in regulation as the retail Forex industry has had a reputation in fast decline. These changes should cause many regulated brokers to eliminate bonus incentives and focus on improving other aspects of their services to attract new customers and stay ahead of the competition. Longer term, it should allow the legitimate brokers to prosper, and in turn, put some consumer trust and faith back in the Forex industry.
There are several resources available on the web to help lead consumers to the brokers that have outstanding reputations. Informational sites, such as ConnectFX, that offer fair and objective Forex broker reviews and other educational Forex trading materials, are proving to be an invaluable asset to help new traders get started. Also, the CYSEC, FCA, and CFTC all have resourceful sites that offer information, and accept consumer complaints.
Being a consumer has become quite a difficult thing. There are so many scams and people waiting to exploit the unaware consumer. The FTC has released tips to help consumers avoid getting caught up in fraudulent scams. These tips are based on getting yourself educated and informed and being alert when buying anything or receiving claims of winnings.
The consumer tips to avoid fraud include:
Pay attention to the sender. Many scammers pretend to be a trustworthy authority like a bank, government official, or a charity. Learn to spot these imposters. If you look closely at communications from these scammers, you will see that letters or numbers look funny or are different than it would be if it came from the legitimate source. Do not respond to or send money in response to an email, SMS, or call that seem to be suspicious.
The Internet is your friend when it comes to information. Do online research about the company that contacted you or the product that is being sold. Add words like ‘fraud’ or ‘scam’ to your search parameters and see what comes up. You can search the whole message, a phone number, or any other information from the message to find out if it is a scam.
Don’t pay money for promises or to receive money. Any message that requires you to pay money or taxes in order to receive debt relief, a loan, or win a prize, is most likely a scam. You will never see your money or the promised product again. No bank or legitimate credit provider will ask you to share your personal information or make random payments. These scams are everywhere and all consumers need to tread carefully and read carefully.
Use a friend or family member as a soundboard. Scams often play on our emotions and require an immediate response or it will no longer be valid. Before you get swept up in this offer, take a step back and talk to someone you trust. Tell them what you received and ask them what they think you should do. These scammers want you to make an impulsive decision, but it will cost you money.
Always be skeptical and don’t send money to anyone who you don’t know. Any product or prize that requires you to pay money before you can receive it, screams scam and should be avoided. Report the company, delete the email, and don’t give it a second thought.
The consumer rights do not only apply to the consumers, but also to the sellers and businesses. If you own a business or do advertising, it is important to make sure that your advertising claims are fair, correct, and the truth. You can get into serious trouble with the FTC and other organizations if you are caught providing false or misleading information. Follow the tips below to avoid stepping on a landmine with your advertising campaigns.
Ensure that you have enough stock of advertised items
If you are advertising a specific product, it is good practice to have enough of these products on hand. If you fail to deliver or try to up-sell a customer due to a shortage of products, you may be found guilty of false advertising.
Don’t use bait-and-switch advertising
Another potential false advertising situation involves advertising without the intent to sell. This means that you advertise a product that costs less than other products. When clients come in to buy this product, you or your sales people up-sell the customer to buy a more expensive product. If you are advertising something without the intention of selling it, that constitutes false advertising.
Don’t claim that you are going out of business if you’re not
False liquidation advertisements can get you into hot water. You may be required to pay penalties if you advertise ‘Closing Down’ sales when you will still be around when the sale is over. There are specific regulations regarding advertising going out of business sales. If you really are relocating or closing down, find out what these regulations are.
Use terms related to environmentally friendly goods or services carefully
You can be found guilty of false advertising if you claim to be eco-friendly or green without anything to back up the claim. There are policies in place that guide how you can use these and related terms and avoid getting penalties.
Beware of using any of the practices that may be classified as false or misleading advertising or claims. The FTC and other organizations have taken up arms to weed out any sellers that scam consumers or operate outside of the Consumer Bill.