Binary Options Experiences: Why it’s mostly a scam and rip-off and what customers can do if they lose through?

This guide is written for 3 groups:

  1. Customers of binary options providers
  2. Investors who have already suffered losses
  3. Interested investors

We recommend that you read this binary options guide to the end, regardless of which group you belong to.

Topics in our legal advice

Important note: There are many positive experiences with binary options trading providers on the internet. There are also reports of high profits in binary options trading in numerous forums. However, these reports are often simply made up.

We explain how you can reclaim deposited funds and which mistakes you should avoid.

Table of contents

  1. Binary Options – Warnings BaFin
  2. Binary Options – Definition
  3. Function of Binary Options
  4. Binary Options: Current
  5. Swiss Method – Binary Options
  6. Binary Options: Testimonials from clients
  7. Just a rip-off?
  8. Binary Options – Taxes
  9. Affiliate Marketing and Binary Options
  10. Fraud – Binary Options
  11. Binary Options: Regulation Financial Regulators
  12. Trading Binary Options: Recommendations
  13. Losses due to options trading
  14. Binary Options Fraud Victims: What to do?
  15. Binary Options News

Binary options – BaFin warns against unlicensed companies

The Federal Financial Supervisory Authority warns against entering into transactions on internet trading platforms operated by unlicensed providers. This concerns the following transactions in particular:

  • financial contracts for difference / CFD Trading / CFDs
  • binary options
  • Forex Trading

“A German internet presence of the trading platform and a customer service in German language with German telephone numbers do not mean that these companies maintain a registered office in Germany.

The operators of the internet trading platforms – i.e. the contractual partners of the customer – are often only mentioned in a very hidden place on the internet pages of the trading platforms, for example in the general terms and conditions. In many cases, well-known offshore letterbox addresses are given as the registered office. Both the operating companies and their alleged registered offices change frequently. As a rule, the operating companies do not have a licence to do business on the German market.”

Binary Options – Definition

Binary options trading involves betting on rising or falling prices. Investors do not acquire the actual asset value of the traded products (such as gold, shares, oil, currencies), but merely place a bet on their price development.

If you place your bet correctly, you usually get back between 60 and 90 percent of your stake in binary options trading. Otherwise, the entire stake is lost.

The term “binary” describes the principle of binary trading very well. An option can only assume 2 states, corresponding to the digital states “1” and “0”.

In principle, no previous knowledge is required for binary options trading. Binary trading is supposedly simple and can also be done with user-friendly apps. Binary options are therefore particularly popular with newcomers to trading.

The “all-or-nothing” principle means that you win or lose the amount you have bet. This is also a decisive difference to share trading. There, total loss only occurs in exceptional cases.

Binary Options Functions

Most binary options brokers offer different account types with different functions. The duration of the individual trades can range from a few seconds to several months.

Often, a variety of assets can be traded, such as currencies, commodities, shares and indices.

Via the trading software, the respective binary options brokers offer the following options, among others:

  • Set on courses and products
  • classic order options
  • options where prices must reach a certain value within the specified time period
  • one-touch binary options
  • High-yield options
  • short-term bets (under 60 seconds)
  • Easy Closure to limit losses

Until recently, binary options trading was reserved for financial institutions and professional traders. Moreover, it was exclusively operated on the OTC market. What is tempting for private investors is that they can enter with relatively small amounts.

Binary options app permissions

Many binary options trading platforms also offer easy trading via smartphone app.

However, before you download a binary options app, you should take a critical look at the permissions you need and question them. Evaluation free some examples of the permissions of the binary options app of the provider Secured Options – which are required according to the Google Play store:

  • Retrieve active binary options apps
  • Identity – Find accounts on the device
  • Contacts – find accounts on the device
  • Location – get approximate location (network based)
  • Phone status and identity
  • Photos/Media/Files – read, change or delete USB memory contents
  • Memory – read, change or delete USB memory contents
  • Retrieve phone status and identity
  • binary options retrieve data from the Internet
  • Retrieve network connections
  • Access all networks
  • Use accounts on the device
  • Disable hibernation

Some binary options apps have already been removed by Google and Apple is even removing all but a few binary trading apps.

Binary Options – News

Binary Robots

Binary robots are a new addition to binary options trading platforms. These are computer-based, automated trading systems. These “robots” are supposed to relieve the client of many aspects of trading binary options.

It cannot be ruled out that there are not also fraudsters among the supported binary options providers.

The robots can supposedly interpret signals independently and decide independently when to enter the market. Moreover, they are supposed to decide independently how much they want to invest in which option. The robot providers promise high profit margins, as the robots are supposed to make the right decisions with the help of complicated algorithms.

The programming and thus also the strategy are different for the various automatic trading systems for binary options. The two most common are:

  • Trend analysis-based robots
    These use a method – simplified – in which you observe the market movement and statistically “predict” a movement. However, this method is not exactly infallible in the unsteady and highly complex market.
  • Mathematically-based robots
    Here, a strategy known mainly from gambling is used: If a loss occurs, an attempt is made to compensate for it by increasing (usually doubling/tripling) the stake. This often leads to a rapid consumption of the entire stake.

In addition, the prices are also different. There are binary options providers who offer free programmes, there is full-price software and there are robots that can only be obtained via (sometimes hidden) subscription.

Robots can be used either as downloadable software, browser plugins or simply web-based.

The most popular robots for binary options at the moment include:

  1. BinärRoboter365
  2. OptionRobot
  3. Fintech
  4. QBits Mega Profit System
  5. Binäre Optionen Roboter
  6. Roboter.iqoption
  7. Automatisiertes Binäres
  8. BinaryOptionAutoTrading
  9. Mikes Autohandel
  10. Deutscher Binär-Roboter
  11. Quantum Code

The Swiss method – what is it?

A new scam for acquiring binary options clients is becoming increasingly popular. Online brokers and agents from Switzerland contact potential clients and ask for their name, email and telephone number. Thereupon, the “Swiss method” for binary options is presented to the interested parties.

Here, trading on platforms of different binary options providers is to be optimised. More should be made of the 50/50 chance offered by the binary options platforms. With a specially generated software, the profit should be even higher than advertised by the platforms. Among the platforms offered are Toroption and CFD Stocks.

Binary options – testimonials from customers

When planning an investment, one should first inform oneself sufficiently about the binary options provider and possible associated risks. Finding trustworthy or even objective information about binary options is not that easy on the internet.

There is a very simple reason for this. Binary options brokers spend a lot of money on online marketing. Thus, most articles in the media are paid advertising. The same applies to forum postings that effusively describe positive experiences – this is also often just advertising.

In reality, many users often have difficulties with refunds from their accounts. For one thing, withdrawals are often subject to charges. On the other hand, withdrawals in binary options trading are linked to special conditions in the terms and conditions, which were overlooked when the transaction was concluded or are difficult to fulfil.

Binary options experiences show that payouts are often simply refused without justification.

Many binary options providers also advertise that the traders employed by them can achieve above-average profits thanks to special knowledge. However, the “support by experienced traders” often only causes the client’s money to evaporate even faster.

The lawyers of the Herfurtner law firm know many cases in which investors have trusted in promises made by binary options traders and have suffered considerable losses as a result.

In general, clients regularly suffer high losses through binary trading. The following testimonials and descriptions of clients are only a small part of the actual extent of fraud and manipulation:

“I invested $29900 with binary options provider …. and lost it. Add to that the $2600 damage due to multiple miscalculated trades by the system until the end of September 2017.”

“I was on … Victim of a scam by a binary options broker … It was agreed with the investment advisor that he would invest a five-figure dollar amount in risk-free gold deals for me. Without my knowledge, he bet $115,000 and lost it all.”

“I unfortunately suffered a huge loss through binary options. The company … broke off contact after 3 conversations.”

“I have paid in a total of 17,ooo euros with the company … a total of 17,ooo euros and followed their trading tips. As a result, my deposit has now shrunk to 8,500 euros. And even this amount I don’t get, because my requested payout is refused with the reason that I received bonuses and therefore a certain trading volume for binary options has to be kept.”

“It looks like I have also been taken in by a scam broker. The homepage has been down for 3 weeks.”

“After I tested all the webinars offered via the DEMO account, I found that all the accounts managed by the provider sooner or later led to a final crash. In my opinion, this is systematic fraud.”

“I filed a criminal complaint against these machinations. The public prosecutor’s office dropped the case because the fraudsters are presumably operating from abroad.”

“After I did not want to deposit any more , contact with me was cut off and no further withdrawals were authorised. Email contact and telephone contact were no longer possible.”

“I have an account with … an account with approx. 2500.- dollars and can no longer withdraw this amount. Support is not responding to mails.”

“After through the help of the account manager … € loss was incurred, I stopped trading, applied for an account closure and requested the transfer of my remaining money back. Money unfortunately never arrived.”

“Although I managed to trade a certain volume, the binary options broker refuses to pay out.”

“After an almost complete loss of the total stake, I pulled the emergency brake. Now there is only about 17,000 EURO left on my customer account. I would now like to have this remaining amount paid out in full. Unfortunately, because of the bonus conditions, … refuses to pay out the amount. I have sent several e-mails with deadlines for payment, but there has been no reaction.

Is it all just a rip-off?

Binary options trading cannot be called a scam per se. However, many binary options providers have fraudulent intentions. Even the FBI warns against fraud in binary options trading.

It is not easy to find out the seriousness of brokers immediately. Binary options are for the most part convoluted and therefore not easy for private investors to understand. Often the general terms and conditions of the providers are not clearly designed and contain little information about the high risks of loss.

Binary options are advertised with exaggerated profit opportunities. But the reality is different. According to the experience of clients of the law firm Herfurtner Rechtsanwälte, most trades end with a complete loss.

Binary options are speculative bets that almost inevitably lead to losses in long-term trading. The profits then end up with the providers. Sometimes, however, private individuals are simply defrauded. In some cases, clients were even persuaded to disclose the access data of their online banking software. As a result, private accounts were simply cleared out.

“A closer examination of the offers and business practices of binary options providers usually reveals irregularities and, in quite a few cases, fraudulent intentions.”
Lawyer Wolfgang Herfurtner

Some users complain that their money was suddenly gone after they had temporarily not traded actively. Sometimes profits made were not refunded despite multiple requests. Some clients report bad experiences that contradict the original presentation of the providers.

But how can one tell whether the chosen binary options provider is reputable or whether it is an investment scam? Where can one find up-to-date and truthful information? Unfortunately, these questions cannot be answered in a general way. As a rule, the following should be taken into account:

Often, high profits within a short period of time are reported in web forums. However, these reports of good experiences do not make a serious impression. Not infrequently, these reports are shared by alleged binary options users who use so-called stock photos for their profile pictures, among other things.

These are pre-produced photos, which are usually purchased through picture agencies and thus certainly do not represent the forum user behind the profile.

Binary Options Taxes

Our law firm advises clients who have questions about tax payments on losses from binary options trading. In particular, the question also arises as to how “virtual profits” are to be taxed.

There is also a certain trend that web searches on the topic of “options” lead to untrustworthy search results. This trend has the following background:

Many dubious traders actively publish descriptions about binary options that recommend their own platforms as particularly trustworthy and profitable. You can often find allegedly neutral statements on rating portals or in forums.

Likewise, many videos are supposed to convey information about binary options and the associated chances of winning. However, this information should be treated with caution. Especially the exuberantly positive reports are often posted online by the providers themselves or so-called affilate partners.

Affiliate Marketing and Binary Options

Affiliate marketing comes from the USA and is also called partner programme in Germany. It is a web-based commission system. Companies offering online services pay commissions to website operators who “send” visitors to their shop, who then become customers there.

This is also how many new websites have emerged that are supposed to evaluate whether binary options trading in general or individual platforms are rip-offs. Different points are compared. But basically this is only to prove that they are reliable offers.

The fact that even commercials for binary trading can be seen on TV is also not an indicator of seriousness. TV broadcasters do not check whether advertised offers are fully compliant with legal regulations.

Mostly, users of binary options platforms have the impression that the deals are manipulated. It is not easy to prove this. Providers use highly complex software. Only a deeper examination of the processes can provide reliable results.

However, it is usually a case of manipulation when prices of the traded products are not identical to the official share prices on the stock exchanges. In such cases, binary options brokers can achieve higher profits through these price manipulations.

Binary options providers have numerous tricks up their sleeves to make more money. For example, many providers advertise with loss-leader offers. These are often not compatible with legal regulations. Many CFD trading providers act in a similar way.

Binary Options Fraud

Not all binary options brokers are regulated by authorities. However, many traders are supervised by the relevant regulatory authorities. In Europe, most brokers are based in Cyprus or England. The authorities there ensure that certain guidelines must be adhered to.

Various platforms violate EU rules or regulations of the Federal Financial Supervisory Authority (BaFin). The European Securities and Markets Authorities (ESMA) warns generally and Europe-wide against binary options and similar products. And in Belgium, trading in binary options has even been banned altogether.

The French financial supervisory authority Autorité des Marchés Financiers (AMF) in turn banned a company from offering binary options in France in August 2016. The reason given for the ban was that the company had not fulfilled its duty to act fairly and honestly in the interest of its customers. The ban affects existing customers and new customers.

The online platforms for binary options are usually not based in Germany, Austria or Switzerland, as Wallstreet Online has already reported.

Binary Options – Regulation by Financial Regulators

It would be welcome if binary options were comprehensively supervised by the state. The Markets in Financial Instruments Directive (Directive 2004/39/EC), also called MiFID or Financial Markets Directive, is a directive of the European Union (EU). It is intended to improve the harmonisation of financial markets in Europe.

According to this directive, the laws of the state of the company’s registered office must be taken into account for financial services and not those of the client’s home country. Most platforms offering binary options are based in Cyprus or Malta. Consequently, they have to observe the laws there. The state regulation is therefore based on the local regulations, even if the clients are based in other EU countries.

What does the state regulation for binary options mean for German, Austrian and Swiss clients? Is this a kind of “certificate of no objection” or is a certain amount of caution required despite the state regulations.

The supervisory authority in the USA – The Securities and Exchange Commission – has also warned against binary options transactions and pointed out the high risks. Furthermore, the authority recommends interested investors to inform themselves very carefully about binary options providers before investing money.

Due to dubious business practices of some binary options platforms, authorities and courts became active. In the USA, proceedings against over-the-counter providers of these offers were underway. It was investigated whether banks had violated regulations of the American financial market.

Already in 2016, a court ruling was issued in which banks were ordered to pay damages to binary options investors in the amount of USD 7.1 million and a fine of USD 2 million.

Recommendations binary options trading

  • Ensure that the binary options trading platform has registered your offering with the relevant financial regulatory authorities. These authorities include e.g. Security Exchange Commission (SEC), Cyprus Securities and Exchange Commission (CYSEC).
  • Ensure that the provider has registered itself with the correct financial regulators.
  • For offerings in the US, make sure that the platform is a “designated contract market” which is with the Commodity Futures Trading Commission (CTFC). Also check the registration status and background information on FINRA and .
  • Check if the binary options company is on the CTFC Redlist.
  • Never invest in financial products that you do not understand. If you cannot articulate the financial product in a few words, refrain from doing so and look at other investment options.

Binary Options – Losses due to Options Trading

The lawyers of the Herfurtner law firm are receiving more and more enquiries from victims who have lost a lot of money in the context of binary options trading. Similarly frequent are enquiries where the money won is simply not paid out.

In most cases there are different chances to get back the investment in binary options.

This applies to both sums paid and profits not paid out. In almost all cases known to us, investors have been deceived by binary options providers. These clients are therefore entitled to the return of the payments made.

Profits made can also be claimed in part. Our law firm has extensive experience with numerous binary options providers. In many cases, we have been able to obtain a partial or complete refund of the money paid.

Many clauses in the general terms and conditions of binary options providers are surprising for clients. They are objectively so unusual with regard to the particular circumstances of the case that the contracting party need not expect them.

This applies in particular to clauses on which the providers often rely to refuse to pay out the capital. However, due to the surprise effect, such clauses may be invalid.

In such cases, clients can assert a claim for payout with regard to deposits made.

The terms and conditions of many binary options providers – most of which are also available in German – contain clauses that are not customer-friendly.

The often large scope of the terms and conditions is also problematic. It is not uncommon for terms and conditions with up to 25 pages of small print to be posted online. Some clauses are not clear and understandable.

Many binary options providers have deceived the users of the platform, be it through unfair conditions for customers or manipulation of the price display. This leads to the loss of the business basis. Customers can withdraw from the contract and demand the return of the money they have paid.

We as lawyers are instructed by the investors and initially build up pressure on the binary options providers through out-of-court letters.

Some of the providers have now developed a new “method” to “leverage” the lawyer and continue to cheat the customer or investor out of his money:

After the lawyer has written to the company, the customers are repeatedly contacted by their account manager. The account manager tries to make it clear to them that the lawyer is only costing them money and cannot achieve anything. Instead, it would be much more sensible to trade again and make up for the losses incurred, or even make a profit.

Often, a few successful binary options “test trades” are then also placed in order to convince the client / investor.

Our law firm expressly warns against being contacted again by the binary options providers or even continuing to trade. By doing so, you are contradicting your wish for repayment and this in turn can be used by the providers as an argument against repayment.

Clearly refer the provider to your lawyer. You should also inform your lawyer immediately about the renewed unauthorised contact by the provider in order to take the appropriate steps.

If you come into contact with one of the fraudulent providers, the only way left is to go to your lawyer.

Our lawyers will be happy to discuss the next steps with you. In addition to the direct enforcement of claims, this also includes contacting financial supervisory authorities, regulatory authorities, ombudsmen and criminal prosecution authorities, among others.

Fraud in binary options trading – What can injured parties do?

Traders who suspect they have been the victim of fraud should have their options examined by an experienced lawyer. In many cases, it is possible to recover investments already made.

Herfurtner Attorneys at Law can look back on a long and successful cooperation with authorities and financial institutions.

We offer the following services to affected investors and clients in case of losses due to trading with binary options:

  • Lawyer’s letter of claim to trading platform

    Herfurtner Attorneys assert your claim for damages directly with your trading platform. Many providers are prepared to settle out of court with our clients. In this way, the providers want to prevent the initiation of investigation proceedings by financial supervisory authorities or even public prosecutors. In the past, countless settlements have been reached with various providers in this way.

  • Involvement of police and financial supervisory authorities

    German and foreign authorities have already established a number of so-called focal public prosecutor’s offices. These investigate in collective proceedings against certain providers. Herfurtner Attorneys at Law represent countless injured parties and are in close contact with the competent authorities. Public prosecutors’ offices and financial supervisory authorities at home and abroad can block bank accounts of the fraudsters and seize assets. The international cooperation of the authorities is coordinated by Europol and Interpol.

  • VISA, Master Card, American Express – refund possible

    Credit card companies often offer their customers effective protection against fraudsters. Amounts already paid can be charged back under certain conditions. Herfurtner Attorneys at Law will check for you whether this possibility also exists in your case.

  • Transfers can be reversed

    Transfers from your bank account can also be recalled many months after they have been executed. Herfurtner lawyers contact your bank and the recipient bank for this. It does not matter that the accounts of the fraudulent providers are often held at banks abroad.

If you have suffered losses due to binary options trading, our lawyers will be happy to assist you.

Clients about us

Markus W.
“Through the Herfurtner law firm, I have been reimbursed for my entire investment by the provider of binary options. I would not have expected that! The advice given by RA Herfurtner before and also during the mandate was super and flawless!!! Many THANKS!!!”

Thomas H.
“Through the Herfurtner law firm, I got back a good portion of my misused money with a fraud company.”

Alexander R.
“Through the Herfurtner law firm, I got back my entire investment in binary options. I was advised and looked after to my complete satisfaction. I can only recommend the Herfurtner law firm. Therefore five stars.”

News Binary Options

Measures adopted on the provision of binary options

ESMA has formally adopted new measures on the provision of contracts for difference (CFDs) and binary options to retail investors.
The measures were published today in the Official Journal of the European Union (OJ).

EU Ban on Binary Options – Restriction on Contracts for Difference

The European Securities and Markets Authority (ESMA) bans the sale of binary options due to high risk and restricts the sale of contracts for difference (CFDs) in the European Union (EU).

This is to ensure investor protection in the European Union. The new measures on CFDs are intended to ensure that investors’ losses cannot exceed the amount they have invested.

Ban on binary options planned

The European Securities and Markets Authority (ESMA) has announced measures against highly speculative investment products. While trading in CFDs (contracts for difference) is only to be restricted for the time being, binary options trading is even to be banned. Those responsible want to decide on the implementation before the end of January.

Knesset (Israel) bans binary options for good

The Israeli parliament (Knesset) unanimously voted 53-0 to ban binary options trading from Israeli soil altogether.

Israel has been a major hub for this form of trading from brokers, payment service providers and matching technology providers. Those who want to continue offering binary options are relocating their business.

Other hubs such as Cyprus, Ukraine or the Marshall Islands – freely available sources also speak of Romania and Bulgaria – are believed to be doing so. Other providers are taking advantage of the trend and changing their business area from binary options to cryptocurrencies.

Already in March 2016, Israel decided to ban providers from offering binary options to Israeli users. According to some freely accessible sources, the reason for the general ban is that the many fraudsters among the providers damage the country’s image internationally. If providers based in Israel continue to operate, they now even face prison sentences.

Binary Options Banned in Canada

The Canadian Securities Administrators (CSA) prohibits trading in binary options that have a maturity of less than 30 days. Since most binary trades only run for minutes or hours anyway, this ban is very unpleasant for many providers. The CSA justifies the ban with the many cases of fraud that occur in connection with binary trading.

Canadian consumers and customers are to be better protected. The CSA also wants to actively cooperate with credit card providers, technology providers and advertising companies. So-called offshore offers are to be made more difficult. The CSA also describes what many customers have already painfully experienced: Many providers do not offer real trades, but collect the clients’ money without any consideration.

All-or-nothing options, asset-or-nothing options, bet options, cash-or-nothing options, digital options, fixed-return options or one-touch options, which are nothing other than binary options, are also affected by the ban. Many providers of binary options also sell on customer data to other fraudsters. Customers often become victims several times after they have registered online.

Hirose FX removes binary options app from Apple App Store

Binary trading provider Hirose FX has confirmed that customers will no longer be able to download the LION BO mobile app from the Apple All Store. A few months ago, Apple Inc. published new “developer guidelines”. According to them, apps that allow binary options trading are no longer supported.

Japanese forex broker Hirose Tusyo Inc (TYO:7185) – also known as Hirose FX – has now removed its app from the Japanese and American App Store. Apple and Google are planning to ban binary options apps across the board. This follows a notice from the Australian Securities & Investments Commission (ASIC).