A trading forum that can scam you
Imagine that you buy a car from your local dealer. You get your keys, you sign your agreement, which you probably did not even read carefully enough because who really reads all this fine print, and you think you have made a great deal.
Now, imagine that hidden in this agreement is a clause that allows the dealer to remotely lock you out of your car, whenever it pleases him without giving you any reason whatsoever. In other words, you may at any time lose access to your car per the purchase agreement you signed when buying the automobile.
Would you still think of this as a great deal? Or would think that you have been scammed? Probably, the latter.
Imagine that there is a trading forum out there, run by a guy who blew more than one trading account. You would think that's impossible because a guy like that cannot possibly justify running a trading forum after proving to be such a miserable trading failure. That, of course, assumes that the guy is honest with himself, but what if he is not?
Remember Lance Armstrong? He was able to function and even prosper in his own bubble of self-deception for quite a while. When it did finally burst, he did not seem to be particularly remorseful about anything. Rather just pissed off that he was caught with his pants down. What if this guy too is living in his own bubble surrounded by the people who understand his "business model" and are more than willing to benefit from it?
Now, imagine that you pay $50 to join a special section of the forum. According to the terms of service (TOS) of the forum, that most people never bother to read anyway, you can be banned from the forum (including its special section), at any time, for any reason, and may even never be told what the reason was. There does not have to be any reason, anyway. Or it could be fictitious.
Can you see a parallel between these two things? I bet you can.
You may think that this should be a warning to all those who don't read the fine print. I totally agree. But any legal agreement structured like a scam (you pay for something that can be taken away from you at the total discretion of the seller) is highly questionable in its own right.
I am not aware of any car dealer that would treat his customers in the way described, but the story of the forum is not made up. What's more, the price for the dubious privilege of getting scammed has recently gone up and it is now twice as much. Apparently, people love to be scammed.
But you can protect yourself from a scam. I address this issue in a broader manner in another article in this section, here I would like to mention only two things that are particularly applicable to forums like the one mentioned in this article. Two measures that you can take to protect yourself from a scam artist.
First, make sure that you know the name of the forum owner. An owner who cares about his business reputation is unlikely to hide his name. Those who do withhold their names from the public send a wrong message, at the very least. My name is on every page of this site. I have no need to hide it.
Second, do read the forum TOS. But don't just read this boring fine print, observe if the terms of service are actually respected. You may find that they are violated. If that's the case and if there are some other red flags (such as the anonymity of the owner), you probably don't want to do business with the people who run the forum.
Posted on September 4th, 2013.