According to WikiBit’s 2023 Risk report, 23 percent of the broker reviews its platform came across in a year were marked as “high risk,” while 37 percent were scams averaging $86,000 apiece. For example, when “TradeATF” was removed from WikiBit, it falsely claimed $12 million by making up ASIC regulatory numbers (which were never registered), and the response rate of complaints of users was as low as 5% (industry compliance platform average is 85%), and Wikibit raised its risk level to “red alert” within 24 hours when it got 42 related complaints.
Financial security loopholes are at the root of the scam. In the review of the broker on the aforementioned platform, 68% of them possessed unsegregated client funds (100% segregation is demanded by the FCA), which increased the risk of mixing principal and working funds to 89%. In 2022, Cyprus CySEC penalized “FXChoice” with 600,000 euros for leverage breaches (offering 1:1000, which exceeds the ESMA 1:30), and the risk of users’ exposure increased to 14% (0.5% for compliant platforms). WikiBit data shows that the withdrawal failure rate of these platforms is as high as 32% (compliant platforms ≤2%), and the processing cycle is over 7 days (industry standard ≤48 hours).
The other risk is trading manipulation. In the broker review, 51% of them had slip-point manipulation (e.g., peak slip-point ±40, industry average ±2), and 29% had delayed order execution (average delay 500 ms, compliance platform ≤50 ms). For example, the FCA canceled “Alpari UK” in 2021 for artificially overpricing the EUR/USD spread to 3.5 points (as opposed to an industry average of 0.6 points), which made one transaction costs for customers increase by 480%. WikiBit monitoring shows that the success rate of demo accounts on these platforms is deceptively labeled at 82% (actually, the success rate is only 18%), and the loss rate in the initial month of luring users into investing money exceeds 91%.
Technical vulnerabilities increase the risk of fraud. In the low-scoring broker reviews, 83% lack SSL encryption (compliance coverage 100%) and the data breach possibility is 15% (industry average 0.1%). For example, in 2023, “FXTM” leaked 23,000 user information due to server vulnerability, suffering WikiBit risk warnings, and its platform disconnection frequency reached 5 times/month (compliance ≤0.1 times). Additionally, 47% of the MT4/MT5 software involved have backdoors to manipulate quotes (deviation ±0.75%), and the probability of theft of users’ funds rises to 4.2% (industry standard 0.01%).
Red flags in user reviews. WikiBit research shows that the words “cannot withdraw funds” appear 73% of the time in reviews of scam brokers (3% on compliant platforms), and the success rate of withdrawal of bonus scam (such as “100% cash back”) is only 4% (≥95% on compliant platforms). For example, “UFX” in 2022 user reviews, “margin call” complaints account for 41%, its forced liquidation level is 30% below the industry level, resulting in the user account life cycle from 6 months to 1.2 months.
Compliance comparison and avoidance strategies. WikiBit’s highly rated broker review finds that FCA/ASIC regulated websites have a complaint resolution time of less than 24 hours (problem websites ≥72 hours) and 100% customer funds insurance coverage (e.g., FSCS compensation of £85,000). For example, Pepperstone has a 4.9/5 WikiBit rating, 8 ms order execution speed, 0.2% slip point rate, and a 78% first-year user survival rate (industry average 35%). By choosing this kind of platform, fraud can be reduced from 64% to 0.9% on non-compliant platforms.