Sir Richard Branson has warned investors not to take his word about staking their money on binary options because too many fraudsters try to rip them off by hiding behind his name and reputation.
Branson says angry investors who have lost their cash often get in touch, only to find the investment was a fraud and using his name without permission.
“I am determined to prevent anyone being confused into giving money or their personal information away on a false pretence. These scams can be terrifyingly deceptive and I would urge everyone to look out for these stories and report them as soon as you see them,” said Branson.
The Virgin billionaire is backing warnings from UK crimefighters concerned about a rising tide of scams involving binary options.
False celebrity endorsements
The City of London police explained that fraudsters try to make their scams more believable by telling potential investors that Branson or other celebrities are backing their venture.
In the last financial year, investors lost £13 million to binary options scammers, compared with 32 million the year before.
Binary options are banned in many countries.
They work by taking bets on whether the price of an asset, such as a commodity, currency or share, will rise or fall. If the bet is right, the investor wins, if not, they lose their stake.
Scammers offer high returns to attract investors and often tamper with the results to distort odds and payouts.
Binary options warning
In many cases, they refuse to credit winnings to customer accounts or disappear with their money.
Detective Superintendent Glenn Maleary, of City of London Police, said: “We have seen an increase in binary options fraud in the last two of years. Opportunist fraudsters have taken advantage of an unregulated market and done everything can to defraud unsuspecting investors.
“Anyone who invests in binary options should be vigilant about who they are trading with and should follow our protection advice to ensure that they don’t fall victim to what is becoming a commonplace investment scam.”
In Britain, binary options are not protected under the Financial Service Compensation Scheme. Financial regulators have published warnings about binary options last year.