– No! Avoid binary options come-ons like the plague! It is almost
certainly an investment scam. The “binary options” scam is the most recent
widely reported financial fraud making the rounds – with quite some success
at bilking money from the unwary. It is basically a variation of the
eternal “get-rich-quick” scheme, which has been perpetrated on the
unsuspecting since time immemorial. But because it has become so prevalent,
garnering victims through online contact, it can lead not only to
unrecoverable financial loss, but what’s worse, to identity theft.
A “binary option” is a type of options contract where the payoff comes only
if a certain outcome occurs on a specific financial asset. Typically, you
make a bet on whether the price of a stock, commodity, or currency will
rise above or fall below a stated level by a certain time. The term
“option” is a misnomer (all part of the scam, of course), because buyers of
the contract do not actually have the opportunity to buy or sell the
underlying security, as they do with real options. A binary option is
essentially just a betting slip, similar to what you get at the races for a
bet placed on a horse to win.
However, unlike the racetrack, the binary options scam lures you in with a
few small early “wins” (all faked, of course). Once you’ve been hooked, the
binary options trading platforms – typically fake websites located overseas
– will require you to provide copies of credit cards, passport, driver’s
license, utility bills, and other personal data (under the pretext of doing
a “credit check”). Once they have that (it’s what they’re really after),
they’ll have effectively stolen your identity, allowing them to rack up
thousands of dollars on your card, and use your identity for even more
nefarious purposes. And you’ll never again see any money you’ve put up or
any supposed “winnings” from your binary options trades.
The binary options scam has become a real problem, targeting investors who
browse financial websites. In recent cases, TV personality and Conservative
leadership candidate Kevin O’Leary’s identity and image have been
fraudulently used by binary options scammers to lure in victims. In a Jan.
30 release, the Ontario Securities Commission advised that The Millionaire
Blueprint, Play It On Point, Eurostreet Money, and Boss Capital are among
the scammer websites that have illegally used Mr. O’Leary’s name and
likeness. Sadly, a Manitoba business owner and father of four recently fell
victim to a binary options fraud, losing hundreds of thousands of dollars,
leading him to take his own life.
How to avoid becoming a victim
Such tragic losses are entirely preventable. The first thing to remember if
you are solicited to put up money for an investment opportunity online or
by phone is that offering investments for sale in Canada is a regulated
activity. Before even thinking of putting up any money, check with the
Canadian Securities Administrators for registration and enforcement history
of the person or organization offering you the investment. The CSA has an
excellent search engine at http://aretheyregistered.ca,
which will tell you very quickly whether what you’ve been offered is
The OSC currently advises that “no business is currently registered or
authorized to market or sell binary options in Canada.”
The Ontario Securities Commission also offers five excellent best practice
tips for judging the legitimacy of any investment opportunity you may be
1. Always check registration and enforcement history before investing.
2. Be wary of giving out personal information (including credit card
information) by phone or online.
3. Never make a decision on the spot, even if pressured to do so (and the
pressure can be intense). Research the offer and review it with your
financial advisor. A legitimate investment will still be there tomorrow or
next week or next month.
4. Insist that written information (e.g., prospectuses, financial
statements, etc.) be sent to you. Review them with your financial advisor.
5. Understand completely what you’re getting in to, including risks,
transaction details, mechanics of trading, reporting, and so on.
For more information on spotting and preventing fraud, check the
Canadian Anti-Fraud Centre. Finally, remember the old investing adage, “If it sounds too good to be
true, it is.”
Robyn Thompson, CFP, CIM, FCSI, is the founder of
Castlemark Wealth Management, a boutique financial advisory firm specializing in wealth management
for high net worth individuals and families. Contact her directly by
phone at 416-828-7159, or by email at
for a confidential planning consultation.
Notes and Disclaimer
© 2017 by the Fund Library. All rights reserved. Reproduction in whole or
in part by any means without prior written permission is prohibited.
The foregoing is for general information purposes only and is the opinion
of the writer. Securities mentioned are illustrative only and carry risk of
loss. No guarantee of investment performance is made or implied. It is not
intended to provide specific personalized advice including, without
limitation, investment, financial, legal, accounting or tax advice. Please
contact the author to discuss your particular circumstances.