Forex Mystery Shopping: Traders cannot withdraw funds, but can trade without ID


France’s financial regulator AMF has just revealed the results of a mystery shopping campaign that targeted Internet sites, offering Forex and binary options trading. The check showed that the mystery shoppers rarely had problems opening a live account and trading without an identification document, whereas withdrawal of funds was as confusing and hard as it can be.

LeapRate’s loyal readers must have noticed that France’s Autorité des marchés financiers (AMF) is quite vigilant when it comes to issuing warnings about unregulated online trading companies. Last year, the watchdog undertook a broader campaign to warn about the risks related to Forex and binary options trading. In relation to that, the regulator conducted a mystery shopping campaign in December 2014.

The campaign targeted 29 websites, offering Forex and binary options trading to French clients. The 29 websites were selected amid the most visited online trading sites by French investors.

The mystery shoppers had to open a live account, whereas they were forbidden to give their credit card details, start a trading activity and try to withdraw funds.

And here come the findings:

  • The refusal to provide credit card data did not prevent 9 of the 29 websites in question to allow opening of a live trading account. Of these 9 websites, 8 belonged to firms regulated by CySEC, the Cypriot watchdog, and 1 belonged to a company without any regulation.
  • In 5 cases out of 9, the companies did not bother to demand any form of an ID from the trader. And three companies even allowed clients to trade for 10 days without any verification of the clients’ identity.
  • The mystery shoppers were rarely asked any questions about their experience in online trading. And that flew in the face of the fact that the mystery shoppers were instructed to present themselves as newbies.
  • Online trading was usually presented as an easy and profitable endeavor. The claims of the brokers’ sales team were in the form: “There is no 100% guarantee to profit but you can profit in 3 cases out of 5”.
  • Finally, the obstacles to recover client funds were numerous, including staff trying to dissuade the traders from withdrawing their funds.
  • Several weeks after the mystery shopping experiment, the shoppers have managed to get their funds back only from 2 out of the 9 companies in question.

After the gloomy findings, the AMF said it was ready to take the next steps and to turn to court to ask for a ban of certain websites. Moreover, the watchdog is proposing a legislative provision that will empower it to prohibit advertising of high-risk financial products and services.

To view the full findings of the Forex Mystery Shopping experiment, click here.

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Forex Mystery Shopping: Traders cannot withdraw funds, but can trade without ID

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