Beware! Scarletiron is an offshore broker! Your investment may be at risk.
RECOMMENDED FOREX BROKERS
Don’t put all your eggs in one basket. Open trading accounts with at least two brokers.
If the Scarletiron website is to be believed, this is a broker that offers “innovative and unique solutions” for forex trading and which has earned a leading position in the market thanks to “superb technical support and service quality “.
But Scarletiron gives us no good reason to believe these claims. Actually, fact checking reveals that this is yet another unauthorized website trying to scam inexperienced people out of their money. Let’s take a look at how you can spot this and similar scams.
SCARLETIRON REGULATION AND SAFETY OF FUNDS
From the domain of the Scarletiron it can be assumed that the company behind this website is called Scarletiron Ltd. But this cannot be confirmed – the website does not mention a legal entity name. Nor doesScarletiron provide Terms and Conditions or any other legal documentation. This in itself is a clear clue that we are not dealing with a genuine forex broker.
Despite this anonymity, Scarletiron claims to be “a leading online financial trader in the UK” – one of the leading global fintech hubs with strict regulations for financial services providers.
But for this to be true, Scarletiron must be licensed by the Financial Conduct Authority (FCA). However, we do not find an authorised company with a name like this on the regulator’s register.
Scarletiron also claims to hold a license from the National Futures Association (NFA, which suggests that it is authorized in the United States. The NFA does not issue licenses, but brokers operating in the United States must be members of the institution. The fact that the ID number listed is “123456” is a clear clue that no such license exists. The verification confirms that the Scarletiron does not figure among the authorised forex and CFD brokers in the US.
Scarletiron laso claims to have a “US Financial Enforcement Bureau certification”. This again is not true, besides such certification has nothing to do with the right to offer brokerage services.
When registering an account, we receive a confirmation email from another brand – Unocal. The trading software used by Scarletiron is registered in the name of Unocal Group Limited. This company is also said to be based in the UK. However, a check of the FCA’s records shows that it is also not an authorised financial services provider, if it exists at all. By all appearances, the two websites are the work of the same scammers.
If you intend to invest in financial instruments, first make sure that the intermediary you choose is indeed licensed and supervised by an institution such as the FCA. These brokers have to meet stringent requirements for financial stability and transparency of operations. They must provide clients with negative balance protection and to participate in a guarantee fund that covers up to GBP 85,000 of a client’s investment should the broker go into insolvency. These brokers are also required to keep their clients’ money segregated from their own operating funds in separate bank accounts.
SCARLETIRON TRADING SOFTWARE
As indicated, the trading software used by Scarletiron is registered in the name of another brand. It is the MetaTrader 5 (MT5) platform – the most widely used solution among traders and brokers around the world. Here’s what the platform looks like with a Demo account:
But the availability of a trading platform does not guarantee that the trading is not a sham. Fake brokers use real software to lend themselves credibility and fool their victims that their money is really being invested. While Scarletiron claims to offer forex and other cal assets, only a limited number of cryptocurrencies are included in the platform.
You could always use the services of a regulated broker, the vast majority of which offer clients MT5 or the still very popular MT4. This will enable you to use the advanced features of these platforms without fear of being scammed. These platforms are preferred by the majority of brokers around the world because of their powerful automated trading capabilities, including Expert Advisor bots and customized scripts for backtesting trading strategies.
SCARLETIRON TRADING CONDITIONS
When you visit the website of a legitimate broker you will find proposals for different types of trading accounts suitable for investors with different preferences, as well as detailed descriptions of trading parameters. Scarletiron, however, does not provide such information.
The website specifies only one parameter – leverage up to 1:500.
This alone could serve as evidence that Scarletiron could not be a licensed broker in the UK or the US. Regulated brokers do not offer such levels to retail traders as trading with high leverage carries risks of sudden and excessive losses. A maximum leverage of 1:30 is allowed in the European Union and the United Kingdom and 1:50 in the United States.
SCARLETIRON DEPOSIT/WITHDRAW METHODS AND FEES
The deposit menu has two options – unspecified “digital currencies” and wire transfer. Scammers prefer cryptocurrencies because these transactions are not subject to refunds. Legitimate brokers typically offer clients a wide choice of transparent payment methods, including bank transfer, credit/debit cards and established e-wallets such as PayPal, Skrill or Neteller.
Since Scarletiron does not provide proper legal documentation, it is unclear what traps the fraudsters may have set. Typically, fake brokers make withdrawing money impossible through huge fees and impossible-to-fulfill traded volume conditions.
HOW DOES THE SCAM WORK
There are many scammers lurking on the internet, luring people with promises of easy riches. These scammers arouse the curiosity of their potential victims through online ads, videos, comments and other content on social networks. Often the initial hook is get-rich-quick tips that link to websites and mobile apps of fake brokers or fake investment firms. After clicking on the ad or downloading the mobile app and having given their contact details, the victims are usually swiftly called by fraudsters presenting a concrete “investment proposal”.
These scammers are very aggressive and often even try to persuade the victims to allow them to take control of their computer remotely in order to make certain money transfers. The fraudsters also try to convince the victims to invest increasingly higher amounts of money. They also make promises of repayment in exchange for one last money transfer. This is a technique to collect even more money from their victims. When you try to withdraw your money, your request is blocked by hidden conditions and huge fees. Fraudsters can also simply disappear because they hide behind fake names and offshore companies.
WHAT TO DO WHEN SCAMMED
First of all, it is important that you do not try to recover your money by trusting people who claim to offer such a service for an upfront fee. These are also 100% scammers. If you used a credit or debit card for the transactions to the scammers, you could ask for a chargeback. But such a claim could be disputed if you provided the scammers with a copy of an ID or proof of address. Scammers usually get their victims to use cryptocurrencies that don’t allow refunds. In any case, it is advisable to inform the relevant financial authorities in your country and spread the word online to warn others not to fall into the same trap.