Securities regulators have done their best to protect Canadian investors from binary options, but this is proving difficult, and Canadians are still losing money to these schemes, the Ombudsman for Banking Services and Investments (OBSI) says in a bulletin published Friday.
The industry dispute resolution service is continuing to receive complaints from Canadian investors who are losing money to binary options schemes.
Although regulators formally banned the sale of binary options to retail investors in Canada last year, and major credit card providers have blocked payments for binary options, investors in Canada are still finding ways to buy these offerings “using other means and through other jurisdictions,” OBSI says.
“Because binary options are both a global and digital investment, a ban is challenging to enforce. Canadians unaware of the volatile and often fraudulent nature of these products may continue to purchase them over the internet,” it says.
Indeed, OBSI reports it has received multiple complaints from investors who purchased binary options using credit cards. “These investors later disputed credit card charges related to these transactions,” it says.
However, the credit card companies refused to allow chargebacks, and OBSI’s investigations found “the banks involved were not at fault for the failure of the chargeback request because they followed the normal chargeback policies and procedures,” it says.
The policies of payment card network operators prevented consumers from recovering any disputed charges. “As a result, we could not recommend that the banks compensate the cardholders,” OBSI says, “We identified this as a systemic risk and reported it to the Financial Consumer Agency of Canada.”
“We are concerned that Canadians may still invest with companies that are selling investments illegally and possibly fraudulently. Investors should be aware that many of the protections in place for Canadian investors and credit card users may not be available to them for such purchases,” OBSI cautions.