Binary options scams

Find out how binary options work, how to avoid scams and what to do if you are scammed.

UK consumers are being increasingly targeted by binary options investment scams.

Binary options are a form of fixed-odds betting.

Typically a trade involves whether an event will happen or not (for example, will the price of a particular share or asset go up) and the outcome is either yes or no.

If the investor is correct, they ‘win’ and should see a return on their investment; if they’re wrong, they lose their full investment.

How binary options scams work

Binary options traders often advertise on social media – the ads link to websites that are well-designed and professional looking. 

The firms operating the scams tend to be based outside the UK but often claim to have a UK presence, often a prestigious City of London address. 

Scam firms may manipulate software to distort prices and payouts – they then suddenly close consumers’ trading accounts, refusing to pay back their money. 

The Gambling Commission the City of London Police have all issued warnings about binary options trading.

How to protect yourself

From 3 January 2018 we will regulate binary options in the same way as investment products. Until then they remain a gambling product and are regulated by the Gambling Commission.

This means that if you invest in binary options before 3 January 2018, you won’t have access to the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong.

If you want to invest in binary options, we strongly recommend that you only deal with firms that are:

  • based in Great Britain with a current licence from the Gambling Commission to offer bets on binary options
  • an EEA firm based in a Member State outside the UK that is authorised to deal in binary options and supervised by its home Member State’s financial services regulator, and which is passporting its services into the UK
  • a non-EEA firm that is appropriately authorised or licensed and supervised in its home country

Always be wary if you’re contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true.

We strongly advise you to get independent professional advice before making any investment.

If you have been scammed

You can report the firm or scam to us by contacting our Consumer Helpline on 0800 111 6768 or using our reporting form.

Because binary options are not regulated by the FCA, your investment is not protected by the UK’s Financial Services Complaints and Compensation Scheme.

If you have already invested in a scam, fraudsters are likely to target you again or sell your details to other criminals.

The follow-up scam may be completely separate or related to the previous fraud, such as an offer to get your money back or to buy back the investment after you pay a fee. 

If you have any concerns at all about a potential scam, contact us immediately.