Online trading – how dangerous is trading? Trading financial instruments on a computer or smartphone is becoming increasingly popular.

However, traders often have negative experiences. This is because numerous providers lure traders with unrealistically high profits and use various online trading scams.
Anyone who fears that their online trading experience has not been above board should contact a lawyer and have the case examined.

Our lawyers at the Herfurtner law firm are available nationwide and throughout German-speaking countries for an initial free consultation. Please feel free to contact us.

We answer the following questions in this text.

  • How does online trading work?
  • How safe is online trading?
  • Which trading platforms are reputable?
  • What applies to trading for beginners?
  • Are all online brokers reputable?
  • Online trading lawyer: How can a lawyer help with online trading fraud?

Online trading lawyer – seek help in case of fraud

Online trading scam – lawyers advise on fraud. As a law firm, we specialise in online trading and the associated challenges for investors.

Because wherever money is involved, there are also providers with dishonest intentions who are not interested in the well-being of their customers, but in their own wallets.

In the course of this article, we will show you what types of fraud there are and how you can protect yourself from fraudulent providers. Nevertheless, fraudsters are also working on further developing and refining their measures. Therefore, even with thorough precautions, it is possible to fall victim to fraud.

In such a case, it is important not to be intimidated or to blame yourself for any losses.

By talking to a lawyer, you can clarify whether you have been the victim of fraud and whether and what options there are to recover your capital with legal support.

Online trading lawyer: Our law firm regularly publishes warnings for investors. In our blog you will also find a large number of texts on various online trading providers about which we provide information.

What is online trading?

Online trading is the extension of traditional trading in financial instruments onto the internet. Here, as there, investors act with the intention of buying and selling assets and making profits in the process. It is no longer just about traditional assets such as shares.

Rather, traders also have access to assets such as:

  1. Derivatives,
  2. commodities,
  3. funds,
  4. foreign exchange or bonds

are available. CFD trading also provides an opportunity to trade without actually owning the underlying asset. This is because you speculate on the price development of the underlying asset.

Online trading is handled via intermediaries such as brokers or banks that provide their customers with special trading software. Investors use such platforms to keep an eye on their account and can trigger orders to buy or sell assets at the click of a mouse.

Online trading is becoming increasingly popular, particularly due to technological developments. However, customers who wish to trade online should be aware of the risks of fraud in advance. Not every online broker is as reputable as they present themselves.

Accordingly, it can be assumed that there will be more and more private traders who trade online in the future. All you need is an internet connection and a computer or smartphone. Nevertheless, the question arises as to the security of online trading.

A general answer cannot be given, as this depends on the strategy of the individual trader and which financial instruments they use.

Instead of the expected returns, only losses: scams involving investments in chat communities

Low investments with high returns: Invest just 250 euros and reap considerable profits. Such promises can be found mainly on the World Wide Web. So-called brokers advise you to invest small amounts of money and apparently make considerable profits.

However, these promises usually turn out to be empty words and the supposed contact person can suddenly no longer be found, especially if you try to reclaim part of your investment. In particular, you should exercise caution with investment tips in social media groups.

At the moment, complaints to the NRW consumer advice centre are increasing in this context, including from citizens in the Rheinisch-Bergisch district. “The fraudsters have usually made off with the money and can no longer be found,” warns Sven Friese, advisor at the advice centre of the NRW consumer advice centre in Bergisch Gladbach. “Those affected are left with losses of several thousand euros in some cases.” He explains how these dodgy offers work.

Trading and emotions

Fraudsters and dubious brokers often exploit the emotions of traders in order to lure them into traps. This happens in various ways:

  1. Exploiting optimism and fears: fraudsters take advantage of a lack of trading experience by making unsuspecting investors supposedly attractive offers that sound too good to be true. They often lure investors with promises of unusually high profits with little or no risk, which can be particularly tempting for beginners.
  2. Use of fake testimonials and false information: There are cases where fake messages from celebrities are used to attract investors to invest in cryptocurrencies on rogue trading platforms. Such platforms promise high profits without the money actually being invested.
  3. Trading in risky products: Some dubious platforms lure investors into trading high-risk products such as binary options or CFDs (contracts for difference), which can lead to rapid total loss. These financial products should only be used by experienced traders.
  4. Use of trading robots and signal sellers: Fraudulent brokers sometimes use trading robots or offer signal services that lure traders with exaggerated promises of profits. It is important to be sceptical and question the credibility of such offers.

How to identify dubious providers

Whether via WhatsApp or at the front door: anyone who receives investment tips without asking should distance themselves from them. This is because the promises made by so-called trading groups or alleged brokers are generally not trustworthy. As a rule, a large profit is promised for a very small investment.

Contacts are often established via Facebook, Instagram, WhatsApp or YouTube. In this way, fraudsters can quickly establish uninvited personal contact and, especially if they are based abroad, cannot be traced later. Anyone who is proactively approached about financial investments should always be sceptical about supposed dream returns and never transfer money.

A frequently used trick is to initially lure customers with small amounts, such as 250 euros. Initial profits are often only feigned, but nothing is actually paid out as a rule. Instead, the investors concerned are asked to transfer further sums as an advance payment if they want some of their money back.

Exotic addresses abroad and a missing legal notice are also warning signs. A look at the company database of the German financial supervisory authority BaFin can provide information as to whether the provider even has a licence for the German market.

Dream returns remain just dreams

In addition to the risk of transferring your money directly to criminals, the risks of the supposed financial investment must also be taken into account: There are no guarantees of profits when speculating on the financial market. It is not uncommon for the money invested to be completely lost.

Alarm bells should ring if a maximum return without risk is promised for a small financial investment. This is because it often involves speculative forms of investment such as cryptocurrencies or CFDs. The abbreviation stands for “Contract for Difference”. These “contracts for difference” are used to speculate on price changes.

Important: The higher the promised return, the higher the risk.

Example: If 250 euros are supposed to turn into several thousand euros within a week or 30 per cent profit is possible within a year, the promises are too good to be true.

Do not allow yourself to be pressurised

Anything can be posted in private groups without the possibility of (advertising) legal review. In addition, pressure is often built up in the groups by posting pictures of others to prove the success of the method. You should also be sceptical about telephone or door-to-door sales and end conversations immediately.

Under no circumstances should you allow yourself to be pressurised into signing a contract as quickly as possible. When asked questions, fraudsters will often respond evasively or with counter-questions (“Do I look like I’m lying?”).

Victims have these rights

You should always refuse to be contacted without prior consent, as this is not permitted by law. In the event of attempted fraud, you should inform the police immediately. If account details have already been passed on, you should inform your bank immediately. However, it may be almost impossible to get the money back from the fraudsters. This is precisely why particular caution is required in such cases. Anyone who still sees opportunities in a specific case can seek legal advice.

Excursus: Trading and investing – what are the differences?

Anyone who delves into the world of trading will be confronted with a whole range of special terms. For example, “investing” is a frequently used synonym for trading. However, on closer inspection, there is a subtle difference that primarily relates to the investor’s strategy.

While investments are generally considered over the long term, trading is more about moving quickly. This is because the focus here is on achieving goals in the short or medium term. For example, the acquisition of shares in successful companies is more of a long-term investment.

In addition to a positive share price performance, investors focus on the regular distribution of dividends.

The situation is different with trading. Here, investors want to profit from price fluctuations in order to realise a profit in the shortest possible time. Although this is associated with an increased risk, suitable instruments can also be found for “impatient investors”.

How dangerous is trading? The disadvantages of online trading

Where there is light, there are also shadows, and this also applies to online trading. Accordingly, in addition to the advantages, there are also a number of recognisable disadvantages that interested investors should take into consideration:

  1. The emergence of fraudulent trading platforms has led to major risks of loss. An online trading lawyer can advise on this.
  2. Investors should already be experienced in trading and pursue robust strategies.
  3. Compared to trading in person, online trading is rather hectic.
  4. Accordingly, you should keep a constant eye on price movements.
  5. Wrong decisions can result in high losses.

Speculative day trading in particular is not suitable for investors who are new to trading. This is because the risk of misjudging a price trend is immense, and the time pressure also makes corrections more difficult.

Accordingly, this form of trading is more suitable for particularly experienced or very risk-averse investors.

Broker fraud blacklist

A blacklist for broker fraud refers to a collection of companies or individuals in the financial sector that are categorised as fraudulent or unreliable. These lists of warnings are often compiled and published by financial regulators, consumer protection organisations or industry associations to protect investors from potential fraud.

Brokers on such lists could, for example, engage in unauthorised trading practices, provide misleading information or be involved in fraudulent activities. It is advisable to consult such lists before investing or opening a trading account in order to minimise the risk of financial loss.

Online trading – the various instruments

Not only is the number of online brokers large, but the available financial instruments and markets are also diverse. If you compare the portfolios of the various providers, you will come across the same products again and again:

  • Forex trading – trading in currency pairs
  • Crypto trading – trading with cryptocurrencies
  • Contracts for difference – CFD trading on
    • shares
    • indices
    • commodities
    • Cryptocurrencies
    • bonds
    • ETFs

For each of the products offered, investors have the choice between numerous instruments that they can analyse and trade.

In forex trading, for example, a distinction is made between forex majors (such as EUR/USD, USD/JPY or GBP/USD) and forex minors (such as GBP/AUD, EUR/JPY or GBP/JPY) and “exotic currency pairs” such as NZD/SGD, USD/HUF or EUR/NOK.

CFDs on stocks such as crude oil, gold, S&P 500 or shares such as Netflix, Amazon or Bayer are also popular with investors.

When trading cryptocurrencies, the focus is naturally on Bitcoin, which accounts for a third of the entire market with its market capitalisation.

Many investors are therefore asking themselves:

  • How can I buy bitcoin?
  • And, above all: Where can I buy bitcoins reliably?

The topic of cryptocurrencies in particular is becoming more and more of a focus for online trading lawyers when it comes to problem cases. This is because trading in cryptocurrencies takes place without the involvement of a central authority that would control or manage the credit balance.

Only in certain cases, for example as soon as a platform operator trades in virtual currencies commercially by buying and selling them on behalf of third parties, does this constitute an activity requiring a licence according to BaFin.

Important questions for preparation – online trading lawyer informs

Apart from the questions that you should answer for strategy and implementation, there are other aspects that are worth checking. First of all, you should honestly answer whether you are the right type for online trading.

Answering the following questions can help you to assess whether trading is the right method for achieving your goals:

  • What specific goals am I pursuing with online trading?
  • Am I prepared to undertake further training in order to develop strategically?
  • What effort can or do I want to put in to achieve my goals?
  • Can I live with losses?
  • Am I able to react promptly to changing prices?
  • Do I even want to embark on the “adventure” of trading?
  • Do I see trading as a worthwhile pastime or do I want to get more involved and be able to make a living from it at some point?

You should always be aware that although online trading can lead to high profits, there is also a risk of very high losses. You should therefore carefully weigh up the amount of capital invested and be prepared for disappointment.

If, at the end of the self-analysis, you come to the conclusion that active trading may not be the right path after all, there are alternatives with less risk, such as fixed-term and call money accounts or ETFs.

The returns will be lower, but at the same time the higher level of security is easier on the nerves.

What costs should I expect when trading?

Success in online trading depends not only on the choice of a suitable strategy. The costs incurred also play a significant role.

It is therefore essential to find out about the conditions that the respective online broker offers its customers. After all, the providers are all acting with the intention of making money when they provide the infrastructure for their customers.

Fortunately, it is rarely the case these days that online brokers charge fees for maintaining a securities account. However, there are trading fees for trading, which can vary greatly from provider to provider.

In addition, not all services offered are free of charge.

You should be aware of these costs:


A commission is a fee that the online broker charges you for trading. This fee is charged for every trade you make. If you decide to trade foreign exchange, so-called online forex trading, there are different types of fees.

On the one hand, the provider may charge a fixed fee, regardless of the volume of the respective trades. On the other hand, there may be variable fees based on the respective trading volume. In this case, the amount of the fee increases in proportion to the volume.


When trading a financial instrument, or a currency pair in forex trading, the difference between the buy and sell price is known as the spread. The online broker charges this amount for its services, which is why spreads are one of the usual fees for online trading.

From the trader’s point of view, it is therefore important to ensure that the price is high enough to still achieve a sufficient return after deducting the spread.

Other fees

In addition to these trading fees, there are sometimes other types of fees that are not always communicated transparently. These include, for example, minimum monthly or quarterly fees, fees for an inactive trading account or margin costs.

Information on this can often be found in the “small print” or in the depths of a website.

Further fees may be incurred if you seek advice over the phone, if you keep your positions open overnight or if you use a leverage product. In addition, some brokers are also remunerated for providing information on data streams or news providers.

Trading is not entirely cost-free, as the usual trading fees such as commissions and spreads must always be factored in. However, it is worth comparing providers for the other types of fees. You also save money if you don’t use all the services on offer.

Online trading fraud: unauthorised demands for money

Apart from the costs mentioned above, it often happens that the online trading platform demands further payments. These are usually made-up commissions, advance payments for identification or alleged taxes.

Consumers should always be wary if tax payments are supposed to go directly to the broker instead of the relevant tax office. In this case, it is a dubious and unauthorised claim.

What is swing trading?

A wide variety of strategies can be used to achieve success in online trading, about which you can find a great deal of information in the relevant specialist literature, for example.

One of the best-known strategies is swing trading, which we will look at in more detail in this section. What is particularly interesting here is what characterises this strategy and how it differs from day trading, for example.

Swing trading takes the approach of identifying tiny price movements in detail. The aim of this strategy is to accumulate many small profits in a very short period of time in order to be able to book a large profit at the end.

Swing trading is based on the idea that market prices are generally very volatile. As a swing trader, you capitalise on precisely these fluctuations and look at short-term sections of longer trends.

In principle, swing trading offers a choice between two alternatives:

  1. Swing lows: clear price lows
  2. Swing highs: clear price highs

The aim of swing trading is to speculate in which direction prices will move in order to make a profit. The challenge here lies in the permanent change in movements, which is why forecasts are rarely 100% correct. Accordingly, you should be prepared to accept a certain level of risk and be able to live with losses.

In contrast to day trading, swing trading is more flexible in terms of time frames. This is because trading can take minutes or hours.

Due to the risks involved, swing trading is only suitable for experienced traders or for those who are particularly risk-averse. Even if the profit prospects are tempting, there is always the risk of losing the entire investment. You should therefore only invest money that you can do without if necessary.

What is margin trading and how does it work?

If you are just starting out in online trading, you will come across the term margin trading. Before you decide to do so, let us first explain what margin trading is all about and how it works.

In simple terms, margin trading involves trading with leveraged products.

This involves using not only your own capital but also borrowed capital in order to achieve a higher profit. As a result, the risk of increasing losses increases.

The borrowed capital used for trading is provided by the online broker. It is secured by the investor depositing a security deposit, known as margin. Because the margin is multiplied, the term “leverage” is also used in this context.

An example of margin trading

The best way to demonstrate how margin trading works is with a concrete example. Let’s assume you have a balance of 50,000 euros in your trading account and want to buy 2,000 shares at a price of 50 euros.

In this case, you would have to invest a total of 100,000 euros. If your online broker now offers you a leveraged product and the leverage is 1:5, you only need to deposit a margin of 20,000 euros.

If the share price rises to 60 euros and you sell the share at this price, you have realised a profit of 20,000 euros, which corresponds to a doubling of your investment.

However, this attractive return is also offset by the possibility that the share price has fallen at the time of sale, resulting in a huge loss on your investment.

Many investors ask themselves: What are the most popular leverage products? The most popular leverage products, which are primarily found in over-the-counter trading, include

  1. CFDs (contracts for difference),
  2. Currency pairs (forex trading),
  3. forward contracts (“futures”).

Have you suffered losses when trading via an online broker? Then you can contact an online trading lawyer who will review your case. Losses are not always automatically a sign of fraud – but it is important to rule out this possibility or to defend yourself.

Online trading test: Who is the best online broker?

Once you have made a fundamental decision in favour of online trading, the question of the right provider and suitable online trading platforms arises.

Essentially, an investor should have simple and direct access to the financial markets in order to be able to trade easily. There are differences between the individual providers that can be decisive in a comparison.

You should ask yourself these questions, depending on your personal preferences:

  1. Is it easy and convenient to set up the trading environment?
  2. Do I want to access leveraged products and are these available?
  3. Does the provider provide up-to-date news?
  4. Is the provider suitable for my trading style?
  5. Can indicators be used for trading?
  6. Are all my favourite trading venues accessible?
  7. Can I quickly switch between different accounts?
  8. Is the service aimed at experienced traders or newcomers?
  9. Can analysis instruments be added or changed?
  10. Can I avoid or consciously take risks?
  11. Is it possible to use automated trading (Expert Advisors)?
  12. Do the service and usability meet my expectations?
  13. Is it easy to track open and closed trades?
  14. Is it possible to carry out various chart analyses?
  15. Can different profiles be created for diversified analyses?

The choice of a suitable broker does not depend solely on the trading options. Rather, you should also look at the “trappings” and assess whether the overall package meets your expectations and is suitable for supporting your strategy in the long term.

How safe is online trading?

In any case, you should invest sufficient time in choosing a suitable provider before making a decision. After all, the more care you devote to this topic, the better the prospects of long-term satisfaction.

Particularly important in this context is the fact that every online trading lawyer knows a number of dubious providers that are best avoided.

Accordingly, seriousness is of great importance, which can be determined, for example, by whether a provider makes exaggeratedly high profit promises.

Furthermore, it can be an advantage to turn to a provider whose registered office is in Europe or, even better, in Germany. This makes it easier for an online trading lawyer to resolve any difficulties between the provider and investor should problems arise.

Online trading for beginners: which broker is the best?

Many people want to learn how to trade online and ask themselves what they need to consider when trading online for beginners. Many newcomers to trading are also concerned with the question of which broker is the best.

However, it is difficult to make a general recommendation for a suitable broker for beginners, as providers tend to differ more in terms of their offering than in their focus on specific levels of experience.

Nevertheless, you will occasionally find indications that an offer is more suitable for beginners or advanced traders. The extent to which this applies to your own situation must be left to personal analysis.

However, it is generally helpful if you can find your way around the provider’s website and, above all, understand what they are talking about.

If you have any questions, you should contact the provider’s customer service team, preferably by telephone. This also allows you to test the quality of the service by presenting your concerns and later assessing how they were dealt with.

Tip: When choosing the right broker, it can also be helpful to exclude certain providers. Many law firms, but also corresponding forums on the Internet, keep lists of providers that have attracted attention due to a lack of licensing, for example. Speak to an online trading lawyer and get advice.

Online trading lawyer: Glossary

In the world of online trading, you often come across terms that many beginners are not familiar with. We explain what they mean:


The term asset is another word for financial instrument. There are many different assets that can be traded. For the sake of clarity, they are divided into so-called asset classes.

These include, for example, commodities, shares or foreign exchange. This diversification gives investors the opportunity to choose the right instrument depending on their own risk profile and profit intentions.

Forex trading

The term forex trading refers to trading in foreign exchange, which is generally considered to be highly speculative. The intention is to make profits by predicting the price development of one currency in relation to another currency.

Currency pairs are therefore always considered, for example the US dollar and the euro or the British pound and the Japanese yen. There are a number of online brokers who specialise in this business and offer online forex trading.

What is a CFD?

CFD trading is the trading of contracts for difference. Investors do not become part owners of a company, as is the case with shares, but speculate on the direction in which the price of an underlying asset will move. It is possible to bet on both rising and falling prices.

Due to the enormous risk of loss, especially in connection with margin trading, CFD trading is more suitable for those traders who have sufficient experience.


A future is another name for a forward contract. The tradition of futures trading goes back to the commodities market, where sellers and buyers agreed to trade a certain quantity of a commodity in the future, with the price being fixed in advance.

Depending on how the price developed, the buyer could either make a good deal or pay too high a price. Today, futures are no longer limited to commodities.

Day trading

Day trading involves opening and closing positions on the same day. The advantage of this is that you do not have to pay overnight fees, which reduces the risk of losses due to gaps.

Ideally, you will achieve a very good return within a few hours with relatively little starting capital. However, you should follow price developments for as long as possible. In addition, due to the short time period, it is crucial that your strategy works out completely.

Day trading is therefore a discipline that is more suitable for experienced traders.

Fibonacci trading

Those who trade professionally follow clear strategies. These include, for example, the so-called Fibonacci strategy, which is often used when trading currency pairs in particular.

Basically, this involves recognising developments and trends in good time so that you know at what point you should either open or close positions.

It is based on the Fibonacci numbers, which have been known since the Middle Ages and are used for calculations to help assess price movements on the foreign exchange market.


Gaps are significant price changes that occur unpredictably and cause problems for investors at the beginning of a trading day. Gaps are often triggered by negative news circulating in the media while the stock markets are closed.

Because it is difficult to protect against gaps, they are one of the scenarios that traders fear the most.


The leverage effect is mainly found in margin trading. Here, you only use a fraction of your own capital and borrow the difference from the online broker.

Many providers offer immense leverage of up to 1:400, which greatly multiplies the capital investment. On the one hand, trading with leverage significantly increases the chances of making a profit. On the other hand, this also applies to the risk of loss.

Online trading lawyer

There is no such thing as an online trading lawyer, but there are lawyers who are familiar with the subject of online trading. A consultation with an online trading lawyer is always advisable if you suspect that you have fallen victim to an online scam.

But it is also worth talking to a lawyer in advance of a planned investment in order to protect yourself from suspicious providers.

Online trading app – choosing the right trading app

Many online brokers offer their customers the use of a special online trading app. These apps can be obtained from the official Google or Apple stores and can be used on standard smartphones and tablets.

This is convenient, as it allows you to view share prices, trigger orders or check your own portfolio while on the move or on the sofa. There is a wide range of trading apps available, which raises the question of which trading app to choose.

How a trading app works

If you are already familiar with trading on a computer, you should have no problems using a trading app. However, newcomers in particular are advised to familiarise themselves with the basics of trading first.

If you are familiar with online trading and your smartphone, a trading app is generally easy to use. The biggest advantage of a trading app is that it makes its user independent of location. After all, if you want to trade immediately while studying the stock market news, this is no problem with an app.

On the other hand, the ease of use can lead to a lack of concentration and wrong decisions being made.

In addition, the size of the mobile screen often restricts access to important information, which is why it is a good idea to keep up to date away from your mobile device. If you are aware of the potential risks, the advantages of using a trading app outweigh the disadvantages.

Which trading app is the best?

It is difficult to judge which trading app is the best, because as a user you are dependent on which app the respective provider makes available. These can be self-developed apps, but also programmes from third-party providers.

In this respect, it is more important to judge the quality of the broker than to get lost in the details of the app on offer.

Anyone who has become accustomed to using a trading app is often tempted to trade more often than usual. This can quickly add up if a provider charges a fee for every trade.

You should therefore take a close look at the costs, which can basically be divided into three categories:

  • Custody fees: Some online brokers and banks charge a fee for managing a securities account. Investors need one to keep their securities safe. A comparison is worthwhile, as this fee is now waived in many places.
  • Order fees: This fee is charged pro rata of the order amount when an order is executed. Many providers have limits in the form of minimum or maximum prices per trade.
  • Third-party fees: This type of fee is not incurred directly by the online broker, but is due, for example, when you buy shares on a stock exchange.

There is also a high risk from dubious online trading apps. A large number of fraudulent apps, so-called trading bots or crypto robots, are offered in the cryptocurrency and Bitcoin sector in particular.

In conjunction with exclusively positive advertising and celebrities who are used as unsolicited testimonials, users are promised an unrealistically high profit. The trading bots of these scam providers are supposed to make smart investments completely independently on behalf of the customer.

Beware of rip-offs: online trading calls

It is not always thanks to your own initiative that you decide to take up online trading. Often there is an external impulse, for example through news or adverts from providers.

Time and again, however, clients tell us about methods that are primarily used to initiate fraudulent measures.

The telephone is the favoured medium of dubious providers who want to lure consumers to their platforms with the prospect of high profits.

The calls are made out of the blue, often from abroad, with the callers presenting themselves as charming and cunning dialogue partners.

Dubious providers lure consumers to dubious online trading platforms with the prospect of high profits. Accordingly, the Federal Criminal Police Office, Bafin, consumer protection organisations and online trading lawyers are warning of a new type of financial fraud.

Online trading scam – also known as cyber trading

Many online brokers advertise how easy it is to trade successfully and make handsome profits. This is supported by correspondingly positive and relaxed imagery on the providers’ websites.

However, you should be aware that you can also end up with a dubious provider with fraudulent intentions.

Our law firm is aware of many cases in which investors have opened an account with an online broker in good faith, paid in their capital and theoretically carried out various trades.

In reality, however, they were the victims of a systematic Internet scam, because despite visibly high account balances and alleged profits, these clients never received a payout – and in all likelihood never made the reported trades.

This type of fraud involving supposed investments is also known as cybertrading. Unfortunately, the issue is more widespread than you might think. More and more frequently, interested investors are coming across fake and completely dubious websites on the internet where they are promised quick money and particularly high-yield investment products.

In addition, such providers invest a lot of time and money in professional appearances that give the impression of seriousness. This is what makes it so difficult for many investors to recognise in time that it is not an honest offer, but a scam.

Cybertrading: Successful investigations against fraudsters

Several arrests and the first indictment as part of the “Cheetah” investigation dealt a serious blow to Cypriot cybertrading in November 2022.

A group of suspected investment fraudsters were dealt a serious blow thanks to intensive investigations by the Fürstenfeldbruck criminal investigation department, the criminal investigation department with central duties in Upper Bavaria North and the Bavarian Cybercrime Centre.

The perpetrators used the alias “Cheetah” and operated a call centre in the northern half of the island, which is not under the actual control of the government of the Republic of Cyprus – the so-called “Turkish Republic of Northern Cyprus”.

The Bavarian State Office for Crime Prevention arrested three suspected members of the offender group and brought the first charges in November. German law provides for prison sentences of between one and ten years for commercial and gang fraud.

A further success by investigating authorities was achieved through coordinated efforts in five countries. Together, they dismantled a criminal cybertrading network with tens of thousands of victims of fraud and billions in losses worldwide.

On 8 November 2022, with the support of investigative authorities from numerous other countries, including Georgia, North Macedonia and Ukraine, 25 business premises and private homes as well as six call centres were searched simultaneously in five countries.

In this context, arrests were also made and assets seized. The operation centred on Tbilisi, the capital of Georgia.
More than 60 German police officers, five public prosecutors and IT forensic experts were involved in the international search operations.

The Bavarian and Saxon investigators have been on the trail of the criminal network for several years on charges of commercial gang fraud, forming a criminal organisation and money laundering.

This criminal network has been reported on internationally in the past, in some cases under the catchphrase “Milton Group”. According to reports, the gang has been active in cyber trading since 2016.

According to current investigations, hundreds of fake trading platforms and dozens of contact centres in numerous countries can be attributed to the perpetrators’ global organisation. The damage is considerable and is said to amount to well over 100 million euros in Germany alone.

The work of the Bavarian and Saxon investigators and their foreign colleagues is currently focussed on evaluating and analysing the extensive electronic evidence in this complicated case.

Dubious trading platforms

CFD trading, foreign exchange trading and binary options trading are highly speculative transactions with a considerable risk of loss. However, due to the low interest rates for traditional investment products such as fixed-term deposits or overnight money, alternative investment opportunities are becoming increasingly popular.

Accordingly, there are various offers for online trading with a wide range of financial instruments on the Internet. As is so often the case, black sheep are up to mischief and lure investors to dubious online trading platforms with promises of high returns and supposedly no risk of loss.

However, after the first supposed successes, investors only experience losses, which often end in the total loss of the investment made.

There are also many known cases in which the – alleged – profits are not paid out for various pretended reasons.

It is not uncommon for providers to demand dubious advance payments, commissions or taxes that are to be paid directly to the online broker, but not to the tax office. Such taxes in particular are fictitious.

Anyone who has been the victim of such a scam naturally wants to get their investment back.

This is where fraudsters, dubious trading platforms and dubious service companies come in and take advantage of the plight of the defrauded investors. This is because alleged authorities, law firms, tax experts or mediators supposedly offer defrauded investors the opportunity to get their lost money back.

The great danger: total loss for the investor

The number of complaints is constantly increasing, which is why consumer protection organisations are now calling for increased caution in online trading.

These online brokers are particularly focussed on CFD trading, i.e. trading in contracts for difference, and forex trading, i.e. trading in currency pairs. Both asset classes are highly speculative forms of investment with correspondingly high risks.

There are many reports on the Internet from investors describing how they lost their capital. What they have in common is that they suffered a total loss of their invested capital on fraudulent websites.

The loss of individual investors is in the six-figure range, and it is assumed that the cumulative loss is in the three-digit million range. The consumer protection organisations have also received numerous complaints against various providers and platforms.

If you look at the reports from aggrieved investors, you realise that almost all platforms follow the same pattern for attracting new customers. Initially, you are supposed to invest a manageable amount of 250 euros or US dollars. The investor is not told exactly what happens to the money.

After just a short time, considerable profits are said to have been made with the invested capital. Accordingly, a personal employee of the broker now solicits further and higher investments in order to further increase profits.

If you agree to this and continue to top up your account with the provider, the difficulties begin.

Problems with the payout

As soon as you request a payout, you are put off with various arguments. In most cases, the initially lively exchange then only goes one way because the personal contact person is suddenly no longer available.

But even if you don’t accept the offer of further investments, you still face a problem. This is because brokers are persistent and harass unwilling customers massively with telephone calls.

Many websites of dubious brokers do not have a legally valid imprint. In addition, when checking the domain, you often realise that the same people are behind different platforms.

Once the broker has received the money, it is transferred abroad as quickly as possible via various channels. In addition, some platforms close their website if they are too much in the spotlight, only to reappear a short time later under a new brand name.

Particularly often, an offshore address is given as the company’s registered office, which is a letterbox company. This is what makes it so challenging for consumers to get their money back in the event of fraud.

Contact an online trading lawyer if you suspect that you have been the victim of online trading fraud. It does not matter in which country the provider is based. In the past, our lawyers have often succeeded in taking successful action against offenders from distant foreign countries.

Resourceful and flexible platform operators

In fact, customers’ deposits are never invested as intended. According to BaFin and the BKA, entire trading platforms, including the alleged customer accounts, are completely fake. To protect themselves from fraud, the authorities advise customers to reject unsolicited calls about investments.

The topic of binary options shows how flexibly the platform providers operate. Their marketing and sale to private customers has been banned by the German BaFin and the European ESMA since 2018.

However, brokers reacted quickly, moving away from binary options and prioritising forex trading and CFD trading. In many cases, providers even continued their business under the same name and simply changed their offering.

BaFin warning list in relation to online trading

BaFin, the German Federal Financial Supervisory Authority, warned investors about “fraudulent international online trading platforms” back in December 2018.

Together with the German Federal Criminal Police Office, the authority points out the dangers of online trading with certain speculative financial instruments in its “Warning against online investment scams”.

In its warning, BaFin explicitly mentions financial contracts for difference (CFD trading) and binary options on cryptocurrencies, currencies, shares, indices and commodities. There is a risk of total loss of the deposit.

Unlicensed providers are the main focus here. They are characterised by telephone support and the accumulation of profits that cannot be paid out.

In addition, money paid in would not flow into the investment offered. Such operating companies are not permitted to conduct business in Germany; they are often letterbox companies based in offshore areas.

Other European financial supervisory authorities, such as the Italian CONSOB, the British FCA and the Belgian FSMA, also regularly issue warnings online about online trading.

Contact financial supervisory authorities in the event of trading fraud

Claiming to be an authority or law firm that can only take legal action against suspicious brokers is not only dishonest, but also untrue. This is because every EU member state has its own independent financial supervisory authority that is able to punish legal offences.

In Germany, for example, the BaFin (Federal Financial Supervisory Authority) is the authority to be contacted. Other well-known authorities are the FCA (UK), CySec (Cyprus) or the FMA for Austria or FINMA for Switzerland.

Trading providers – which trading platforms are reputable?

Because there are repeated cases of broker fraud in online trading, many interested investors ask themselves some basic questions:

  • How dangerous is trading?
  • How can I recognise the risks?
  • How safe is online trading?
  • Is forex trading reputable? And what about CFDs and cryptocurrencies?

In general, it can be said that online trading is legal. However, this does not necessarily mean that trading is safe. Because where there is a lot of money in circulation, there are also many black sheep who try to get their share of the cake with fraudulent measures.

We will take a closer look at the scams used in the following section.

Facebook, Instagram, Whatsapp & Telegram: Fraudsters lure you onto social media channels

The battle for the top spots on the results pages of search engines such as Google is fierce. It is therefore becoming increasingly difficult for fraudulent providers to make their offers visible to a wide audience. As a result, they are switching to other channels and are particularly focussing on social networks.

This is where the supposed online brokers place adverts that can be targeted very specifically thanks to the targeting options offered by Facebook and Instagram. It is true that social networks have now taken machine and human protective measures to prevent adverts from fraudsters. However, this is not always successful.

If you click on such an advert, you often find yourself on a website where you are confronted with exaggerated promises of profit. The aim of the scammers is to gain the trust of the investor in order to persuade them to pay in their capital.

Apart from adverts, you can also be drawn into a dialogue in which you are tempted to sign up to a Ponzi scheme, i.e. a fraudulent pyramid scheme.

This involves buying a membership and profiting as a percentage from the deposits of subsequent members. There is rarely a genuine product, it is merely a self-feeding system.

Another scam is the use of bots, i.e. automated dialogue partners that disguise themselves behind a profile. Such artificial conversations often result in the recommendation of a particular broker that offers attractive conditions and fabulous profit prospects.

Elon Musk, the Lion’s Den and other celebrities

Online adverts often conceal landing pages that advertise celebrities – without their knowledge or consent – who are said to have made a fortune in crypto trading, for example.

Particularly popular in this country are the investor Frank Thelen, known from “Höhle der Löwen”, Günther Jauch and Thomas Gottschalk, as well as Bill Gates, Markus Lanz, Friedrich Merz and Elon Musk. The stories are often given lurid headlines to suggest that you can become a millionaire in no time at all.

Although numerous celebrities are now defending themselves with the help of their lawyers, such fake messages can be found time and again.

Building trust with logos of strong media brands

Anyone who clicks on an advert and ends up on a landing page aimed at fraud often discovers that the original topic of the advert is not dealt with here at all. Rather, it is now about a particularly lucrative offer for automated trading with cryptocurrencies. The focus here is often on Bitcoin as a particularly popular asset.

In addition, fraudulent websites often try to gain the trust of users by working with the reputation of well-known media. This is done by boldly incorporating familiar logos from Spiegel, FAZ, Süddeutsche Zeitung or BILD.

This approach is familiar from reputable providers in other sectors who want to draw attention to the actual reporting on their products. In this case, however, the media have nothing to do with the alleged brokers.

Popular for fraud: cryptocurrencies, forex trading, CFD trading

In times of tight returns for traditional savings products, more and more customers of online brokers are interested in products where the supposed profit prospects are significantly higher. Trading contracts for difference (CFD trading), crypto trading or trading currency pairs (forex trading) are particularly popular.

The products themselves are unproblematic, at least in terms of their legality. What they have in common, however, is a high level of risk for the investor, but also the prospect of extraordinary profits.

And this is precisely what makes them attractive from the point of view of many investors, because getting rich quickly is still the dream of many investors.

However, this dream also makes them susceptible to the promises of fraudulent providers. Even if you are tempted by fantastic returns, you should not buy into this, but rather bear in mind that there is no realistic possibility of getting rich from zero to one hundred with online trading.

Danger in trading due to manipulated software

The offer of a free demo account using manipulated software is particularly perfidious. Fraudsters take advantage of the fact that such demo accounts are also part of the online trading test with well-known brokers and try to gain the trust of unsuspecting investors.

Fraudulent brokers use fake software with which users can simulate trading. In principle, you always win more than you lose. As a result, after a while the user has the feeling that they have mastered not only the software but also the markets.

They then start to invest real money, which means that the providers have achieved their goal.

Online trading taxes: first deposit, then pay out?

As soon as the trader trades with real money, disaster takes its course with a fraudulent provider. Sooner or later, you will want to access your winnings and request a payout. But instead of the quick payout promised at the beginning, problems arise – the broker does not pay out.

Investors are first asked to make a further deposit before the payout can be made. It is often pretended that the taxes due have to be paid first. It is not possible to deduct the amount from the supposed credit balance. Instead, a separate transfer must be made.

In other cases, the provider makes the excuse that payouts are only possible from an abstrusely high credit balance. This restriction of availability alone shows that you are dealing with a dubious provider.

Other popular explanations for the refusal of payouts are diffuse technical problems that can never be solved.

The basic principle is clear: the fraudulent provider puts forward various reasons and the investor will not get their money back. Rather, at this point there is another attempt to cash in one last time via dubious additional payments.

Why aren’t fraudulent brokers put out of business?

If you search online for Internet fraud, the large number of reports makes you wonder why the “fraudulent brokers”, i.e. the dubious providers, are not taken out of circulation. Especially where complaints from investors are piling up, it seems obvious that online trading is not going according to plan.

However, the local authorities often simply lack the means to take action. In many places, the fraud is organised by global networks based in distant foreign countries. Small Caribbean countries are a particular focus here. In addition, fraudulent websites that have fallen into disrepute are simply shut down, only to reappear a short time later under a new name.

Our law firm represents numerous aggrieved investors and is in continuous dialogue with the relevant authorities both nationally and internationally. As a result, our lawyers are repeatedly able to block bank accounts of fraudulent providers, secure assets and recover the money of many clients.

Recognising dubious online brokers – this is how it works

It is not always easy to judge whether you are dealing with a reputable provider. Although there are some providers whose websites at least raise questions, a large number of fraudulent online brokers disguise themselves with very professionally designed websites.

Therefore, when asking the question: Is my online broker reputable? you should pay attention to details and check the following facts:

Is the provider based in the Caribbean?

Providers from the Marshall Islands, the Dominican Republic or St Vincent and the Grenadines are particularly common. Based on our clients’ experience with providers from this region, we advise you to reconsider an investment.

The details of a provider’s registered office can often be found on the company’s website, in the contact section or in the footer.

Does the website have a legally binding legal notice?

In the Federal Republic of Germany, there are general information obligations and mandatory details for the legal notice in accordance with Section 5 of the German Telemedia Act (TMG). This obligation to “provider labelling” applies to all commercially operated websites.

The maintenance of an imprint also applies to foreign providers who conduct their business activities in Germany.

Is the provider registered with a European financial supervisory authority and regulated?

The existence of a valid licence from a European financial supervisory authority can be an important criterion for determining whether a provider is reputable. This is because a provider has to invest a great deal of money to obtain a licence.

These authorities are particularly important for the European Economic Area:

  1. Federal Financial Supervisory Authority (BaFin, Germany)
  2. Financial Conduct Authority (FCA, United Kingdom)
  3. Financial Services and Markets Authority (FSMA, Belgium)
  4. Austrian Financial Market Authority (FMA)
  5. Swiss Financial Market Supervisory Authority (FINMA, Switzerland)
  6. Comisión Nacional de Mercado de Valores (CNMV, Spain)
  7. Cyprus Securities and Exchange Commission (CySec, Cyprus)
  8. Are there a conspicuous number of spelling and grammatical errors on the website?

Fraudulent providers often gather the content for their websites from various sources and use translation programmes to adapt texts. This often leads to errors and a dubious overall impression.

Does the provider promise unusually high profits or guaranteed returns?

Particularly in the field of automated crypto trading, you often come across supposedly sensational offers that entice you with a guaranteed return of 3% per day.

Anyone who is intensively involved in online trading knows that this is merely an unrealistic lure.

Can deposits only be made using unusual methods?

Today, there are a large number of payment service providers whose services are used for online transactions. Some of them are very popular with fraudsters because they offer anonymity.

Accordingly, you should be wary if, for example, a deposit is to be made via Western Union or Paysafecard.

8 tips for affected investors – protection against online trading fraud

  1. Look at the addresses of the alleged helpers in map services such as Google Maps and also look at the photos. If a picture shows a country house, it is quite unlikely that this is the company’s headquarters.
  2. With a simple internet search, you can find other users’ recommendations and warnings about a supplier, product or service.
  3. If you receive a call or email from someone claiming to be able to help you recover stolen funds, simply ignore them and never give them your personal details.
  4. Make sure you are well informed about trading platforms, online brokers and other service providers before making any kind of investment or payment.
  5. Avoid sending money by bank transfer if you are not 100% convinced of the seriousness of the offer. Otherwise, there is a risk that you will not recover the capital invested.
  6. You should not blindly trust people who claim to be representatives of authorities, lawyers or other service providers, but should always insist on legitimisation.
  7. It is not uncommon for fraudsters to claim that their company is based in another country. Caution is advised in this situation. It is advisable to find the address of the company using search engines and online map services. It is a red flag if no company is based at the address given or if there are several other companies there.
  8. Victims of investment fraud should contact the police or the public prosecutor’s office as soon as possible to report their losses and obtain justice. They should also inform BaFin about the fraud.

Online trading and fraud – all information at a glance

If you have been the victim of trading fraud and have lost money, do not be fooled by supposed offers of help. Be particularly wary if you are contacted by alleged law firms, arbitrators or financial supervisory authorities.

Do not trust the providers’ own websites, even if they appear to be reputable. Fraudsters go to great lengths to put on a “clean front” and appear in search engine results pages.

Also be sceptical if someone contacts you by phone and be aware that supposed online brokers and alleged service providers who assist in the recovery of capital often work together.

Also avoid making advance payments to strangers and beware of sharing your personal details.

Online trading lawyer: support in the event of losses and fraud

Not every online trading loss is a sign of fraud or attempted fraud. Nevertheless, for the sake of caution, you should refrain from making further payments and first explain transparently why the loss occurred.

However, if it is no longer possible to contact the provider once you have submitted a withdrawal request, you should be wary.

The same applies to the fact that the online trading provider holds out the prospect of a payout, but the investor must first transfer any “taxes” or fees due.

Anyone who suspects that they have been the victim of online trading fraud can also seek investor protection and contact a lawyer. The lawyer will examine the case and determine whether and to what extent the investor can assert claims against the contractual partner.

Lawyers also support their clients in asserting their claims and reporting the matter to the relevant law enforcement authorities. If you would like to consult with an online trading lawyer, please click here to contact us.