Verify your trading account!
To fully activate a trading account with a broker each client is expected to verify the account.
When verifying a trading account, the investor would be asked to send these documents:
- Deposit confirmation form
- Copy of I.D/ Driver license/ Student I.D/ Senior citizen I.D.
- Copy of the credit card used to deposit funds to the account, front (with just the last 4 numbers showing) and back (with a valid signature)
- Proof of Address- a utility bill from the last period (some companies require a POA from the last 4 month and others from the last 6 months)
- Bank statement- from recent times
It is not uncommon for regulated authorities, such as banks around the world, to ask for these documents and details.
It is understandable that when you open an account that it would be linked to you and you alone.
While many Binary Option companies claim they are requesting these details for the same reason
(AML Law- Anti money laundering law) many Binary Option companies use this for several reasons:
- Client consent- when a client sends all the necessary docs to verify the account, this can be used as a proof that the client approved this account, agreed to the terms and conditions and knew about the high risk in trading.
- Real information- unlike what the client tells his broker, getting these doc's could show the broker a more intimate look to the clients life, for example- through the POA the broker can look up the client address and see what type of neighborhood and house he owns, this would give a strong and accurate indication of the client’s investment “potential".
- Bank statement- although the broker can’t see the client status in the bank, if the client is sending an informed statement, the broker can see the clients most common expenses, using the information to leverage sales.
- Copy of credit card- it’s very straight forward, a platinum credit card will have more benefits then a basic credit card. The brokers know each card for its benefits, limitations and line of credit- the most important information for them.
How and what to watch out:
If you found yourself activating a trading account but you are not sure if you like to continue or not do not verify the account!
Not verifying the account gives you an advantage especially if you’re unsure about trading,
- You would not be allowed to trade - This is an advantage since brokers tend to rely on the client eagerness to make money, to push him to trade excessively. When a trader is active, he is most likely to lose, therefore would have to deposit more funds to the platform.
A non-verified account will restrict the trader's actions, resulting in an extended time to decide if to continue or not. - You will become a risky client - Clients who don’t verify their account after activation are considered within the brokerage as risky clients, simply because they can argue the consent for the services provided with their credit card provider/ bank.
In fact, if the client would to open a chargeback dispute for the activation funds, he would be favored as there is no clear consent. - You would be unable to add more funds to the account - Just like the last section (2) once a client deposits funds but does not verify the account he is automatically classified as a “risky client”, meaning that if the client activated the account with the minimum amount the risk is quite low.
If the client deposited a large amount the risk is higher, and if the client would to charge it back through the credit card provider/ bank this could result in processor fines and even processor termination. - If you would ask for withdrawal you are most likely to get it - The broker/ customer support representative will still try to convince you to send all the verification docs, but if you stick to your gun, and claim that you want to cancel the account due to the request to supply sensitive information, the brokerage will eventually approve your withdrawal.
More than that, if you have activated an account, and didn’t send the docs and didn’t talk or communicate to the brokerage (like customer support, broker, account manager etc.) you will be classified as a risky client within a week, and most likely would be refunded automatically once the set time frame is completed (with every company it's different, some will refund after a week and some after 10 days..)
More industry secrets are yet to come stay tuned!