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Avoid Fraud

  • Avoid Fraud

    The commodity futures and options markets are high-risk investments and you can lose your entire investment rapidly.  The CFTC Office of Consumer Outreach provides free educational resources to raise awareness amongst potential investors before they become involved in the markets.

    When researching market investment opportunities, be sure to check against the CFTC’s signs of fraud for warning signs of fraudulent claims.

    If you think you’ve been approached by or involved in a scam or other fraudulent activity, contact the CFTC.

    • Report Suspicious Activity

    This content is also available in Spanish: Aviso al Consumidor En Espanol

    Before You Trade

    Understand the Basics

    Before you trade in commodities or futures, educate yourself on the basics of trading.

    Check Out Your Financial Provider

    Verify your financial provider's registration status and disciplinary history before you invest. Revalidate their credentials at least annually.

    • Use CFTC SmartCheck to verify that your financial professionals are properly registered and in good standing.
    • Check the CFTC RED List (Registration Deficient). You should avoid the entities on this list. They have been identified as acting in a capacity that appears to require registration, but they are not appropriately registered.
    • Check registration status and disciplinary history at National Futures Association or call NFA at 800-676-4632
    • Check online for disciplinary history with the CFTC or call us at 866-366-2382
    • Contact your state’s securities commissioner
    • Contact your state Attorney General’s Office and state banking, insurance, and securities regulators (which often have their own websites)
    • Contact the Better Business Bureau
    • Contact the National Fraud Information Center
    • Find out if your firm and any parties involved with the trade are registered or regulated institutions or entities that are outside the CFTC's jurisdiction. Check the following websites (note that some institutions outside the CFTC's jurisdiction do not appear on any of these lists or in any other readily-available places):

    Ask Questions

    Before you invest, ask your financial provider the following questions. Legitimate firms will not have any trouble providing you this information.

    • How are you qualified to provide me this service?
    • How does this product meet my financial needs?
    • How are you paid for your service?
    • What fees and commissions do you charge?
    • What state and federal agencies are you regulated by and are you registered? Be sure to verify their response.

    Signs of Fraud

    The best way to protect yourself against fraud is to stay informed. Be aware of the tactics scammers use to lure you into making questionable investing decisions. Watch for the following in the sales pitches:

    • High rate of return or guarantee - verify the firm or individual's track record, don't invest unless you can get solid information about the investment and the company.
    • Limited time offers or high-pressure sales tactics – don't be pushed into a quick decision. Be suspicious if they demand an immediate commitment or if they ask you to expedite payment, regardless of the method (cash, money transfer, credit card, etc.).
    • Little or no risk – except for obligations of the U.S. government, all investments have a degree of risk. Futures contracts are leveraged or margined; you may be liable for losses in excess of your initial deposit. Ask for a written risk disclosure statement.
    • Exploiting friendship or trust – check it out with someone whose financial advice you can trust; don't fall for claims that others you know have already invested.
    • Exclusive offers, limited supply, special discounts or favors – avoid any offers available just for certain people or claims of urgency due to limited availability.
    • Claims of "Interbank Market" trading – avoid companies that offer to trade foreign currency for you in the interbank market, a network of large companies and banks.
    • Aggressive sales approach – not taking "no" for an answer, repeated phone calls, threats, urging you to take advantage of a particular trend or event in the market.
    • Special credentials, claims of credibility – beware of individuals claiming they have special experience or claiming credibility based on where they work. For example, "Believe me, as a senior vice president of EZY Money Inc., I would never sell an investment that doesn't produce."

    Avoid becoming a victim: 

    • Ask for written materials – legitimate firms will not have a problem providing written information.
    • Beware of get-rich-quick schemes – if it sounds too good to be true, it probably is. Be particularly vigilant if you recently retired or came into money and are looking for a safe investment.
    • Avoid unsolicited telephone calls about investing – be skeptical if someone you don't know calls you about investment opportunities. Even if they may claim that they obtained your name from a list.
    • Check out the company or organization – ask what state or federal agencies the firm is regulated by and with whom it is registered. Verify using CFTC SmartCheck.
    • Ask what recourse you have if you're not satisfied – get any warranty or refund provision in writing.
    • Beware of testimonials you can't verify – check the legitimacy of an enterprise and all references.
    • Beware of fake websites – do your research and verify with the agency or organization that has regulatory authority over the type of investment you are considering.
    • Check CFTC SmartCheck – learn about the latest fraud schemes.

    Types of Fraud

    Our Fraud Advisories provide information about specific types of fraud:

    Report Suspicious Activity

    To report possible violations of commodity trading laws:

    • Call the CFTC’s Division of Enforcement at 866-FON-CFTC (866-366-2382)
    • Submit our online form
    • Submit a Form TCR under our whistleblower program
    • Send us a letter addressed to:
      CFTC
      Office of Cooperative Enforcement
      1155 21st Street, NW
      Washington, DC 20581