Forex market, as one of the largest markets in the world, is very lucrative and tempting opportunity for anyone and therefore, most scam artists will use it to lure people into their schemes and steal money from them.
Internet is, unfortunately, very convenient for scam artists and it is relatively easy to cheat people. Today anyone can purchase a domain name and set up a website for less than a $10. It is also possible to hire an expert to design a website for relatively small amount of money.
Also, most people are not familiar much about forex market which makes them easy targets as it is very easy to promise dreams and manipulate numbers and information presented.
Scam artists can very easily hide from public, and once scammed, getting money back is very difficult and often impossible.
The most common forex scams are various investment programs, also known as HYIPs, or High Yield Investment Programs. Scam artists usually present themselves as financial experts that can bring unrealistic profit through investing in forex market, stock market, oil, online shares, various off-line businesses, etc. and offer potential victims a chance to profit on their "expertise".
Scam is usually seen as great investment opportunity, sometimes with unrealistic returns (200% - 300% within days), and many people decide to invest money in it. The catch is that every investor must wait a certain amount of time before money can be withdrawn. For example, if a program offers 300% within 10 days, it means that if you invest $100, after 10 days this "expert" will "earn" you $300. During this time investment is locked which means that you can't withdraw a single cent before 10 days expire. Of course this time is necessary for program owners to "trade with invested money" and "generate profit" for investors.
What is really happening during that time nobody knows for sure, but here is the most likely scenario:
You invest certain amount of money and have to wait 10 days before you can withdraw any money. During that time scam artist promotes his program over Internet to find more potential investors. Scam artist also offers investors a commission for every new investor they bring which makes promotion of his website (scam) easy.
Each and every one of the new investors invest various sums of money and each and every one of them has to wait 10 days before withdrawing any money. After first 10 days scam artist usually collects enough money to pay his initial investors their profit. They are happy because they earned a lot of money and decide to tell everyone they know about this program.
The number of investors starts to grow exponentially as well as the money scam artist is collecting. At one point of time he has enough money to live happily ever after and cannot afford anymore to pay profits to investors. It is then when he decides to stop issuing payments and HYIP collapses. In this scenario only first few investors made money, while many others that joined later lost their investments.
Other scenarios are also possible where no one gets paid and scam artist just collects money, makes empty promises, and suddenly disappears with his program. Also, many scam artists return later with a new looking program under different name and website and scam people again.
Some of them even offer realistic investment returns and use that to attract more investors, but one thing you never know about these kind of programs is WHEN they will stop making payments or WHEN they are going to disappear.
High Yield Investing Programs are just one type of forex scams. There are many more investment programs that offer unrealistic income through some kind of get rich quick scheme involving forex trading. There are also a lot of shady forex brokers that offer foreign currency futures and option contracts and they should be avoided at all costs. Some of these programs may seem legitimate and may be very hard to recognize but always keep in mind their only goal - to take your money.
The best recipe to avoid getting scammed is to use your due diligence. If something looks too good to be true, it probably is. Also pay close attention to every detail when you come across some websites that offer "great opportunity" and ALWAYS do a thorough research. It is difficult to say if there may be genuine investing programs that really trade with invested money and generate profit to investors. There are, but probably less than 1% of all investing programs and these programs are private, offer low returns and rarely accept new members.
Never let some tempting offer cloud your judgment. Be suspicious of every offer where you have to decide and act quickly because scam artists usually use this technique to prevent you from thinking a lot about it. Always do a research and you will never be wrong. If the offer is genuine it won't disappear overnight and will be available tomorrow.
If you are interested in investing in forex, arm yourself with knowledge - learn as much as you can about forex trading and thread carefully in forex market. Also find a lot of forums and online discussions about forex trading on the Internet and join them. They are excellent source of free information and even give you a chance to interact with other forex traders. You can see opinions and experiences of different people about various matters; forex trading strategies, forex scams, HYIPs and other investment programs and even ask questions about anything in particular.