cautionRecently I came across a broker called Royal de Bank.  Their website was such a mess, and their terms and conditions were so unreasonable, that I wondered momentarily if they could be another website by that company that runs Cedar Finance.  Royal de Bank is owned by a company called RDB Corp, however, which is based in Anguilla.  I am not here to give you the 411 on Royal de Bank, but to use them as an example in a discussion about why you should be wary about slippery terms and conditions pages.

When you sign up for a new product or service, do you actually read the terms and conditions?  Or do you blithely check the little box that states “I have read and agreed to the terms and conditions,” and then click to the next screen?  Do not feel too bad if you do.  A lot of people lie outright each and every time they check that box.  Unfortunately, scammers in the binary options world are counting on you to lie when you check that box.  We often forget that we are in effect signing a legal document when we check that box.  You are not only stating that you have read the terms and conditions, but that you agree to be bound legally by them.

What a lot of scammy brokers do in order to keep scamming people is boldly and bluntly state their unfair terms right inside that document.  “Let the buyer beware,” as they say.  If you agree to those fishy terms, you have legally given the company permission to abuse you.  This is how a lot of companies get away with their cons.  This is not to say that regulatory agencies will not eventually come down on them, but only in situations where there is regulation, and for most of the binary options world, there is scarcely any at all.

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Read top 10 signs of scams here.

Why You Should Read the Terms and Conditions

Why should you read the terms and conditions page from top to bottom before you check the box and move on?  Here are just a few aspects of your dealings with a binary options broker which are governed by the terms and conditions page:

  • How quickly and through what means you can withdraw your money.
  • How much money you can withdraw and how often.
  • Situations where you can not withdraw your money.
  • Technical issues and whether the broker is responsible for them or not, even if they cost you money.
  • Hidden fees and commissions.
  • Privacy policy.
  • How bonuses work, and how they impact withdrawals.

These are all areas where scammers can catch you off guard and take advantage of you if you do not read thoroughly and understand what you are reading.  It does not help that these documents are typically penned in thick legalese.  Many of them are unintelligible.  The more confusing and insensible a broker’s terms seem to be, the less likely it is you can trust the broker.  We do not live in a world where companies share their practices in plain terms, but brokers which make an effort to communicate simply and clearly are far more trustworthy than those which do not.  This is what we mean when we talk about “transparency” when dealing with a company.

Examples of Dodgy Terms and Conditions

Example #1:

Let’s look at some examples of slippery terms and conditions which could cost you money.  This first one is taken right off of Royal de Bank’s terms and conditions page, and concerns withdrawals and hidden fees:

“Fees of 45 Euros will be charged for any withdrawal of an amount less than or equal to 1000 Euros.  5% fee will be charged for any withdrawal of an amount greater than 1000 Euros.”

Let’s translate this statement into real terms.  If you try to withdraw 1000 Euros or less than 1000 Euros, you will be charged a fee of 45 Euros.  “Great, then I will just make sure I always withdraw more than 1000 Euros,” you might think.  But wait—if you do that, you will be charged a 5% fee.  What is 5% of 1001 Euros?  It is about 50 Euros.  Ouch, that actually is more expensive than the aforementioned fee of 45 Euros!

Imagine if you had not read those terms and conditions before you deposited your money with this broker.  You would have gone to withdraw your money, thinking that nothing could go wrong.  Then you would have found yourself hit with a 45 Euro fee or higher, and you would have no idea why.  You would not even be able to withdraw all your money and close out your account without paying the fees.  And what if you had a very large account?  What if you tried to withdraw 10,000 Euros?  You would be paying a fee of 500 Euros!  That is quite an absurd fee simply to get your money back in your own hands—as much of it as possible, that is.

That is a lot of money to lose because you failed to read the terms and conditions for a broker.

Example #2:

At another broker I recently looked at, I remember seeing a particularly tricky terms page concerning bonuses and withdrawals.  The text in the document went something like this:

“All withdrawals subject to withholding until the bonus turnover requirement of 30x has been met.”

The broker literally had stated they would withhold all withdrawals until the turnover was met, even of money that was originally part of the deposit for trading.  That means the broker was treating the money as a lump sum, and not even separating out the money which had originally belonged solely to the trader.  If you were to deposit into the account and accept a bonus, you would be giving the broker permission to consider your money as their own until you met the turnover requirement.  That is a pretty good way to say goodbye to your funds forever.

Example #3:

It is a good idea to have a look at the limited liability clause for the company you are thinking about trading with.  This is where a lot of companies get themselves off the hook when it comes to technical “errors” on their sites.

One of the most pervasive trading scams in the binary options world works like this:

Imagine you are in a trade, and the clock is set to run out in 60 seconds.  When you hit “0,” you are in the money.  But the clock keeps running for whatever reason, and 20 seconds later, you are out of the money.  The clock then stops, and records the trade as a loss.  The money comes out of your account.  You know clear well that you should have won that trade, so you contact the broker to complain.  The broker then tells you it was a technical error, and that the site is not responsible for losses caused by technical errors.  You are then pointed toward that limited liability clause in the terms and conditions.  There is nothing you can do to get your money back, because you agreed to be bound by that clause.

All of these examples highlight the importance of reading terms and conditions thoroughly before you check the box saying, “I agree.”  You are signing a legal document when you check that box, and shady brokers will use that to their full advantage when they want to scam you and get away with it.  Never give a broker permission to steal your money or make life difficult for you.  Reading terms and conditions can protect you from the con artists out there and help you to understand your relationship with the broker you do decide to trade with.  Good luck finding a great broker—and if you do not know where to start, try checking out our recommended brokers list.