How to tell a scam broker from a real one

Most losses to bad brokers are not caused by trading. They happen before the first trade: a deposit goes in and either the money cannot come out, or the platform was never a real market at all. The good news is that the warning signs are consistent, and a short checklist catches most of them.

The warning signs

• Unsolicited contact. A message, call or social media approach offering a trading opportunity is the most common way people are recruited. Legitimate brokers do not cold-call retail clients with guaranteed returns.
• Promised or guaranteed returns. No one can guarantee profit in trading. Any figure quoted as a certain monthly or weekly return is a red flag on its own.
• Pressure to deposit quickly. Countdown offers, bonuses that expire today and a personal account manager pushing you to add more money are sales tactics, not services.
• No licence number, or one you cannot verify. A genuine regulated firm publishes its authorisation details and they match the regulator's register.
• A bonus that locks your withdrawals. Some offers make you trade a huge volume before you can withdraw anything.
• Withdrawal friction. New fees, extra identity checks that never end, or sudden account restrictions when you ask for your money back.
• Payment to a third party. If you are asked to send money to a personal account, an unrelated company or a crypto wallet, stop.

A ten-minute check

1. Get the exact legal name of the company that will hold your account, and the licence or reference number, from the terms and conditions.
2. Look that number up on the regulator's own register, not through a link the broker supplied. For UK firms that is the FCA Register.
3. Compare the registered address, website and phone number on the register with the ones you were given. A mismatch is the signature of a clone firm.
4. Search the regulator's warning list for the brand name and the website address. Many regulators, including the FCA, publish these.
5. Check the permissions. A firm can be authorised for some activities and not for the one you are using it for.
6. Read the terms for withdrawals, bonuses and inactivity fees before you deposit anything.

Clone firms and why they work

A clone firm copies the name and sometimes the firm reference number of a real authorised firm, then builds a convincing website with different contact details. If you only check that the number exists on the register, a clone passes. That is why the contact details on the register are the ones to trust, and why you should always compare them with what you were given.

Regulated does not mean risk-free

Even a genuinely regulated broker can be a poor fit. Regulators differ in how strictly they supervise, and one broker group can run several entities under different regulators. The entity that holds your account decides which rules and which compensation schemes apply, so confirm you are being onboarded to the entity you checked. For UK retail clients, FCA rules on leverage limits and negative balance protection apply to UK-authorised entities and may not apply to an offshore entity of the same brand.

If you have already sent money

• Stop sending more. Recovery scams often follow, promising to get your money back for a fee.
• Keep records: messages, account statements, transaction references and website addresses.
• Contact your bank or card provider quickly. Depending on how you paid, there may be a route to dispute the payment.
• Report it to the relevant regulator and to the police or fraud reporting service in your country. In the UK that means Action Fraud and the FCA.

How the typical scam unfolds

Most of these schemes follow a pattern. First contact comes through social media, a messaging app or a call from someone offering to help you trade. A small first deposit appears to grow quickly on a platform that looks professional, and the platform may show profits that are numbers on a screen rather than a market. You are encouraged to deposit more, and often to take a bonus. When you try to withdraw, new conditions appear: taxes, fees, verification steps or minimum trading volumes. Eventually contact stops or you are asked for more money to release what is already yours.

Questions worth asking any broker

• What is the exact legal name of the company that will hold my account, and where is it registered?
• Which regulator authorises it, and what is the licence number?
• Where is client money held, and is it kept separate from company funds?
• Which compensation scheme, if any, covers my account?
• What are the fees for deposits, withdrawals, inactivity and currency conversion?
• How long do withdrawals take, and what checks apply?

A genuine broker answers these without hesitation and in writing. Vague answers, pressure, or a refusal to give a licence number are all reasons to walk away.

Demo accounts are not proof

A demo account or a platform screenshot showing profits proves nothing about whether you can withdraw real money. The test is what happens with a small real deposit and a small real withdrawal, and even that is not conclusive on its own, because some schemes allow small withdrawals to build trust before a large deposit.

Get help early

The sooner you act, the better the chance of a route to recover money. If you are unsure about a broker, ask the regulator directly through its own website, and talk to your bank if you have already sent funds. Be wary of anyone who contacts you offering to recover lost money for an upfront fee: that is a common follow-up scam.

Checking is quick, so do it every time

A check that takes ten minutes costs almost nothing compared with a deposit you cannot withdraw. verify.trading shows the regulator details and the source behind each verdict, so you can open the register and confirm it yourself.

Key takeaways

• Unsolicited contact, guaranteed returns and deposit pressure are warning signs on their own.
• Verify the legal entity and licence on the regulator's own register and compare contact details.
• A demo account or on-screen profit proves nothing about withdrawals.
• Stop sending money and act quickly if you suspect a scam.
• Be wary of anyone offering to recover lost money for a fee.