Canadian regulators call for Google to ban all Binary Options ads

The Times of Israel is reporting that the Canadian financial regulator overseeing Binary Options has explained to Google how the advertising enables scammers to find victims and has asked it to follow Facebook’s lead in barring the ads. On January 30, Facebook announced that it was banning all advertising for binary options, cryptocurrencies and initial coin offerings, following many months of pressure from the FBI and Canadian securities regulators who have been investigating online investment fraud.
Jason Roy, was himself the subject of a fraudulent cold call from a binary options broker, in early 2016.Jason Roy, a senior investigator at the Manitoba Securities Commission and chairman of Canada’s Binary Options Task Force, told The Times of Israel that “we’re very pleased with Facebook’s decision. My hope is that Google will enact a similar policy, where they specifically name products like binary options, ICOs and cryptocurrencies.”

Binary options fraud was estimated to bring in $5-10 billion a year at its peak about 2-3 years ago.

Asked by The Times of Israel whether it was going to enact a similar ban, Google spokeswoman Roni Levin replied by email that “we already ban and enforce against misleading ads and misrepresentation (across all categories). Here are the policies — Misrepresentation and Misleading Ads.”

A quick search for “binary options” or “cryptocurrencies” in the Google search bar reveals that the company is still selling ads for these products.

Roy and the FBI have for months been discussing with Google and Facebook the prevalence of advertising for the widely fraudulent binary options industry.

According to a source familiar with the binary options industry, some Israeli (and other) binary options companies have simply changed the product they are selling to cryptocurrency and ICOs, and continued to defraud customers using similar scripts and techniques.

They just took a sticker down from a door and put up a new sticker and said now we’re doing ICOs,” the source said of one company. “Nothing about the company changed. Maybe some of the legal filings.

How Google AdWords helps fraudsters find customers

Several weeks ago, the Times of Israel was contacted by a former PPC (pay-per-click) expert for the online gambling industry who worked briefly in binary options. Joshua, who asked that we not reveal his real name, said that most of the paid traffic for binary options websites comes from Google AdWords.

I think Facebook represented about 15 to 20% of the paid-click traffic, but these companies’ largest budget goes to Google AdWords.

He said that lately he keeps seeing ads for initial coin offerings (ICOs) everywhere on the internet, and that he recently had a flash of insight that compelled him to contact The Times of Israel.

When I worked in binary options, one of the things that made me realize it was fraudulent is that they would give investors bonuses. If someone invests $100, and then you give them $100 in equity, well then it’s obvious you’re not planning to return any of their money. A few weeks ago I was going through my Facebook and I see these ICOs. And I see they’re starting to offer ICOs with bonuses. I put two and two together and I said, these ICO people are binary options people!

According to Joshua, binary options companies used to bid more than $100 per click to occupy the advertising spot at the top of a page of Google search results. He believes that the going rate for cryptocurrencies may be similarly high.

In other words, if you click on a Google ad for binary options, the company may have to pay Google $100 or more, depending on what other companies are bidding.

Usually a legitimate company that advertises on Google will pay 50 cents a click, or maybe a dollar or two, because they’re just trying to get normal people to come in. But you’re bidding against your competitors. If your competitor started bidding $20, they would show up above you. If you wanted to show up above them, you would have to bid $21.

Joshua said that this explains why scammers are willing to bid $100 or more.

These fraudulent companies, they want to take people’s money and they want to take it fast. They’ll bid at $100 to make sure they get that top position.

This works out economically for binary options companies because they carefully track customer behavior and know exactly what percentage of people who click on a Google ad will deposit money. Joshua said that the lifetime customer value (the average amount of money earned per customer) in the gambling companies he worked for was $1,200 and in some binary options companies he believes it may have been between $1,500 and $2,000.

That’s their strategy. If they have to pay $400 to Google to get five clicks and then one of them converts (makes an initial deposit), that’s a money-making venture.

According to Joshua, reliance on Google AdWords is the Achilles heel of fraudulent forex, CFD, binary options and cryptocurrency companies. If a whole bunch of angry, defrauded investors were to start clicking on the ads without actually depositing money, their business model would fall apart, he said.

Even a few thousand people doing this would be detrimental to them,” he added.

The Times of Israel contacted Google to ask what it thought of this suggestion. Google spokeswoman Roni Levin replied that such a scheme would not work.

Our Ad Traffic Quality team is dedicated to stopping all types of invalid traffic,” she wrote in an email, “including clicks that don’t represent genuine user interest, so that advertisers don’t have to pay for it and the people who cause it don’t profit from it.


read more: