The Belgian watchdog, the Financial Services and Markets Authority (FSMA), recently revealed a disconcerting trend in its latest report – fraudulent trading platforms and cryptocurrency scams continue to dominate the fraud landscape, accounting for roughly half of all reported cases.
In the latter half of 2024, these illicit activities led to reported losses of €15.9 million for Belgian consumers, with a considerable €12.5 million being tied to fraudulent trading platforms. These platforms, primarily linked to cryptocurrency investment schemes, have proven to be a particularly perilous pitfall for consumers. The FSMA also reported losses of €1.6 million due to deceptive portfolio management offers.
The past year saw the FSMA receive 2,621 reports of unauthorized activities, marking a 20% uptick in comparison to the previous year. The number of warnings issued by the FSMA also rose, with 16 warnings concerning 297 fraudulent entities and 396 websites disseminated throughout the course of 2024.
A notable emerging threat is the so-called “recovery room” fraud. This insidious scam involves fraudsters targeting victims of initial investment fraud, offering to recover their lost funds for an upfront fee. The FSMA has strongly advised against paying these fees, sharing personal information, or granting the fraudsters remote access to devices.
Operating under the guise of law firms or financial authorities, these fraudsters often employ fake documents, websites, and email addresses in their duplicitous efforts. The FSMA reported 25 such scams in the last six months, which equates to a 57% increase in recovery room fraud cases from 2023 to 2024. In response to this rising threat, the FSMA has alerted the public and is actively cooperating with judicial authorities and web hosts to tackle these scams.
Simultaneously, the FSMA has highlighted the risks associated with prop trading firms. These firms, which engage in proprietary trading, are often accused of exploiting consumers’ financial naivety. As reported by Finance Magnates, these firms tempt consumers with the opportunity to trade various financial products, such as shares, commodities, and forex, without using their own capital. However, they often require consumers to pay for expensive courses, supposedly designed to weed out less committed participants, while simultaneously generating revenue.
Many consumers end up paying for multiple courses without ever accessing real trading opportunities. Upon completion, consumers are provided with a certificate and the opportunity to engage in simulated trading on demo accounts, offering them no control over actual trades or potential earnings. Consequently, the FSMA urges caution when engaging with these firms.
These alarming trends underline the importance of consumer education and vigilance in the face of an increasingly sophisticated and diverse fraud landscape. As the FSMA continues to monitor and combat these threats, the public should remain wary and informed to protect their financial well-being.
