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What to do if your broker refuses to pay you your earnings
Any broker can find themselves in a situation where their brokerage company withholds payment for long periods of time without an explanation or right out refuses to release funds. There can be a wide variety of reasons for this, ranging from real problems processing a client withdrawal request to bare-faced lies and fraudulent management of client funds. If you’ve fallen into this situation, it isn’t worth panicking, as in the majority of situations it is nothing worth crying over and you can still receive your money.
In this article, we will go through the most common reasons for this. We will also provide answers as to what users should do if they find themselves in a similar situation.
Is the payment delayed or outright refused?
For starters, it is important to clarify what we are talking about specifically, be it a delay in releasing funds or a complete refusal to do so. If you look through the reviews online for the most popular companies, they flooded with posts claiming that their broker avoided releasing funds. However, 90% or more of these posts were written by panicked traders, who are often unfamiliar with the set time for processing fund withdrawal requests.
So, if a user requests to withdraw funds and, following the defined period of time, the funds don’t reach the account, take the following steps.
вЂў First, double check that the set payment period has in fact passed. You can usually find this information on the page for withdrawing funds, but sometimes it is hidden away somewhere deeper into the site. If you can’t find the information anywhere on in your personal account, then you need to open the user agreement (the one everyone agrees to during the registration process and never reads it). You can always find it there. As a shortcut, you can search the page (with a combination of “Ctrl + F”) using the keywords “payment, periods, withdrawal” and so on. You can also contact customer service about it through the online chat on the website.
вЂў If the necessary period hasn’t passed since you made the request, then you have to simply wait, you will receive the funds later. When a lot of time has passed since the withdrawal period ended, first and foremost, you need to check that there hasn’t been any recent holidays. There could be, for example, official holidays. Weekend days don’t count as well, only working days count.
вЂў If it is clear that the processing period has passed and the duns still haven’t arrived, then you should inquire to customer services about the reason for the delay. What to do next hinges on the kind of response you get from your operator. More often than not, it is due to some kind of technical issue with the server.
However, users should be warned in advance regarding these issues.
If the answer given by customer services is unclear or they are “feeding you empty promises”, then your problem is more likely an indirect refusal of funds rather than simply a delay. That being said, you’ll rarely encounter such situations with reputable organizations. Usually, company representatives give clear and concise answers to any problem related to payments.
Reasons brokers can refuse payment
For a start, let’s begin with the cases that don’t have anything to do with fraud, but touch on issues with specific formalities, various technical problems or human factors. In the majority of cases, these problems can be resolved by contacting customer services. If, however, we are talking about issues involving fraud, then it is more complicated to resolve, however far from every situation ends badly, without the return of funds.
Reason в„–1 вЂ” Lack of Verification
All brokerage companies work within the confines of legal regulation. Their actions are controlled by specific decisive bodies (excluding scams). The law dictates that they are unable to release funds to anonymous users. Hence, if you request the transfer of funds, especially if the sum is large, as a user, you may be required to go through a personal verification process.
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This process isn’t technologically complex. Everything can be done online remotely. Usually, you need to scan a copy of your passport. In some situations, you’ll need to send copies of additional documentation as well, to help verify your address. For this, any receipt of a utility bill will work. If you are transferring funds onto a bank card, several companies additionally request a photo of the card if your hands, with the number visible.
Serious companies complete the verification process within short periods outlines in the partnership agreement. If the process drags on, and customer services aren’t giving you a clear reason as to why, referring to all sorts of excuses, then it is possible that they are purposely taking their time so as to avoid releasing your funds.
Reason в„–2 вЂ” Funds of an Unearned Bonus
What replenishment bonuses are is a topic of its own, deserving of its own article entirely. However, common sense dictates that no one is going to simply give you money. Which is entirely true. Despite the fact that bonuses are credited to your account and merge seamlessly with the funds deposited, there is a clear difference. Bonuses can only be used for trading. You can only withdraw after you have used the entire bonus. For that, you need to finalize trades totaling specific amounts, usually 20-30 times higher than the amount accrued.
Here’s an example, to help make it clearer. Say you replenish your account with $100, and you get a 100% bonus, then the final balance will read $200 USD. After trading, for example, the balance is increased to $350 dollars, then $100 will be available for withdrawal. In the case of a loss, when there is $100 left of the deposit, you can withdraw $0, meaning that, first and foremost, you actual funds decrease, and only then does your bonus. Bonus politics are hidden by brokerage companies, however, it is all outlined in the terms and conditions.
Therefore, you de facto don’t receive an actual trading advantage in the majority of cases. It is only warranted in specific situations, such as, when diversifying your deposit.
Reason в„–3 вЂ” Violation of the System’s Rules
There are hundreds of point in the client partnership agreement. And, of course, nearly no one reads through it. Some more devious companies use this with success to their own advantage. If a user accidentally violates one of the terms or tried to manipulate the situation to receive some sort of advantage, then the company can freeze their funds. They will outline the specific point that has been violated either directly after refusing to release funds, or after the user contacts customer service. This is usually done in combination with blocking that user’s account.
Right away, we’d like to point out that even if the rule was actually broken, the client can still at least request the return of their initial deposit (transferred from a card or an account). This point is always in the user agreement. However, customer service representatives often “forget” about it, in hopes that users won’t argue the loss any further and will just make their peace with it. Therefore, if you find yourself in this situation, you should negotiate using this point specifically, so as to regain your initial investment.
What should you do if your broker turns out to be a fraud?
Above, we only outlined situations when companies, overall, legally withhold funds, meaning situations that arise with large brokerage organizations of good standing who have been on the market for many years. However, there are many fraudulent companies amongst them on the market, which offer a platform for trading with options, however, they, from the very start, aren’t prepared to release client funds. What should users who find themselves in this unenviable position do? We’ll go through a strategy of what users should do in order to increase their chances of getting their money back.
You need to document everything you’ve done with the broker, including your history of account replenishment, as well as all of your correspondence with customer service. If you contact them through the phone, it is also best to record it (Android smartphones have this function built-in as a default).
1. To begin with, it is worth taking relatively respectful approach to negotiating. If it doesn’t help, then slowly raise the “degree” of tension, politely make it clear that you won’t back off until you get your money back. You can openly say that you are prepared to make an official complaint to the police. In some situations, it clearly helps. Some fraudsters prefer to return the funds to persistent clients so they can continue on with their “con”, taking more money from less determined clients, who quickly give up regaining their lost funds.
2. If negotiation doesn’t produce results, then the next step is action. If the broker is regulated by CySEC (Cyprus Securities and Exchange Commission) or the FMRRC (Russia’s Financial Market Relations Regulation Center), then you need to contact these organizations. They were created especially for regulating company actions and resolving conflicts. To do this, you need to attach all the information you gathered in the first step. If you are unlucky enough to have entrusted your money with an uncertified company, then your chances of getting your money back are slim. Only the CySEC in EU and the FMRRC hold legal weight in Russia. Also, FCA should start regulation process in UK from 2020. All other organizations are imposters and exist only as a “smokescreen” for naive users, and give off the impression of a legally operating company.
3. If the transfer was done through WebMoney, then you can apply to internal arbitration to begin proceedings. This applies to payments made through bank accounts or cards as well. Banks set a period of 120 days in which you can report a fraud and regain funds if your case is proven. The first step of collecting information plays a key role in this as well. This process is called chargeback.
If everything outlined above is of no use, you can submit an official complaint to the police as a last step. However, to tell you the truth, in that case, your chances of regaining your funds are next to nothing, as the fraudsters usually act through foreign firms, and all the funds are promptly withdrawn from their accounts. Therefore, every beginner should, first and foremost, put a lot of thought into what broker to work with.
Mostly, certified companies are listed on our site, many of them have official certificates from either CySEC or FMRRC. They all have great reputations, and the worst that could happen to a user is they could have their account blocked due to a violation of the terms and conditions. However, in that case, the company is required to return everything the client deposited them self (if it hasn’t been lost in trades). And, if a conflict arises, you can always turn to the regulator for help.
Among other bargaining tools at your disposal, they have an insurance fund for user financial compensation, which pays out in cases where brokerage firms suddenly stop operating.
вЂњGeneral Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.вЂќ
What To Do When Your Insurance Company Won’t Pay
Each year, the National Association of Insurance Commissioners (NAIC) compiles a list of the most common complaints that consumers have with their insurance providers. The list is a compilation of records from state insurance departments, which are one of the primary tools that individuals can seek help from when they feel an insurance company isn’t treating them right. (Why buy for health insurance when your parents’ policy can cover you? Read on to avoid paying twice. See Health Insurance Tips For College Students.)
- If you’ve been refused an insurance payout, or have been treated unfairly or feel like you’ve been defrauded by an insurance company or one of its agents, you have some options.
- The NAIC is a federal agency that handles customer complaints in the insurance industry. Many states additionally have their own agencies.
- Make sure to keep detailed records of your interactions with the insurer you are fielding a complaint against and keep all of your related documents.
- In complex cases, you may want to enlist the services of a lawyer who specializes in this type of complaint.
Not surprisingly, the vast majority of complaints stem from issues regarding the handling of claims, which is the reason that people take out insurance in the first place. The most current NAIC study states that just over 26% of all complaints stem from delays that policyholders experience when waiting to receive a claim. The denial of a claim is the next most frequent complaint and accounted for just over 14% of all complaints. In a related complaint, another 14% stemmed from unsatisfactory claim amounts offered by an insurance firm.
It’s also worth pointing out which types of insurance have the most complaints. The results are again are not surprising as accident and health insurance disputes are the most common, accounting for just over 48% of complaints. Auto is the next highest category at over 31% and is followed by homeowners at almost 10%. After life and annuity complaints at nearly 7%, the list drops off to more minor complaints.
Knowing the largest proportion of complaints per insurance category is important for consumers. For instance, be on high alert when you have a health insurance claim to make and stay equally vigilant when you have an auto or homeowners claim. Below are four steps to take to fight against an insurer who is delaying paying your claim, has denied your claim or has made what you feel is a low-ball offer to settle your claim.
Keep Pristine Records
When it comes to claims, the work you did before an accident occurred can be vitally important. In regard to insuring the contents in your home, it helps to keep receipts and records of your possessions – especially the more expensive assets. One industry source suggests taking a tour of your home and recording all of the contents with a video camera and then keeping the video in a safe place outside of home, such as at the office or in a safe deposit box. And when it comes to disputing a claim, keep a very detailed record of whom you talked to, when and what was discussed.
Shady insurance firms go out of their way to make the claims process difficult, so evidence to prove their elusiveness can help your case immensely. (Don’t go to work without this policy in place – especially if your work is in your home. Check out Insurance Coverage: A Business Necessity.)
Take Advantage of the State Regulator
Taking an insurance company to court should be used as a last resort as it can tie up a claim in court for many years and seriously delay receiving needed funds to replace a home or pay medical bills. The first steps are to attempt to work directly with your insurance agent or insurance firm provider in a calm, patient manner – documenting the entire process all the while. If they end up proving difficult to work with, utilizing the services of a state insurance regulator can help move the process forward.
Know Your Insurance Policy and Rights
A thorough review of an existing or new insurance policy will offer some of the best insight into what’s expected if an individual needs to make a claim. Details on what is covered, what needs to be done to file a claim, how quickly a claim must be submitted and what the process is to estimate damage reimbursement amounts are all contained within.
Having an attorney’s help during a deposition where an insurance firm interviews you to get details about an accident or the value of possessions in the case of property & casualty insurance can be a good idea, especially if the amounts are sizable. Equally important is knowing what your rights are in the case of a dispute, which should also be detailed in a policy or a discussion with your agent, insurance provider or state regulator.
At its worst, encountering difficulties in getting an insurance firm to honor their claims obligations can be an extremely frustrating and time-consuming process. The vast majority of cases should be much more straightforward, and most claims and disputes are actually handled correctly and ethically by insurance firms. But when challenges do arise, individuals must stay on top of their insurance provider with frequent follow-ups and the thorough documentation of the entire process.
(Consumer protection against insurance company failures actually falls into the hands of state governments. How much protection do you have? To learn more, read Are You Protected If Your Insurance Company Goes Belly-Up?)
The Bottom Line
Studies also exist that rate individual insurance providers, so it may be a good idea to do a background check on your current provider and refer to these studies when searching for a new provider. Again, most insurance claims are handled properly and in a timely manner, but it helps to be aware of the challenges you might encounter if the process doesn’t go as smoothly as it should.
Resolving Disputes With Your Financial Advisor
There’s no way around it: Losing money feels awful, and when losses start to stack up, it’s human nature to start looking for somebody to blame. For many investors, the obvious culprit is the broker or financial advisor. Here we focus on possible disputes with your financial professional and how to deal with these problems. (See also: Is Your Broker Acting In Your Best Interest?)
- If it hasn’t happened to you, you know somebody who feels like they’ve been burned by an incompetent or unethical financial advisor.
- The financial advisory industry is highly regulated and all investors and advisory clients have certain rights which must be upheld.
- If you feel a violation or mismanagement has occurred, first check to be sure that you have a leg to stand on – simply losing money on an investment is not grounds alone for a claim.
- If you feel like you have been legitimately wronged, file a complaint with FINRA, the SEC, or both. If your advisor has a professional certification after their name, you can also notify the credentialing body.
Know Your Rights
When you entrust your money to a financial professional, he or she has a duty to perform to a certain standard. In other words, as an investor, you have a number of rights. The North American Securities Administrators Association (NASAA) details your entitlements in its Investor Bill of Rights. Odds are, if any of these rights have been declined by your broker or advisor, you might have a case.
When you invest, you have the following rights:
- To ask for and receive information from a firm about the work history and background of the person handling your account, as well as information about the firm itself
- To receive complete information about the risks, obligations, and costs of any investment before investing
- To receive recommendations consistent with your financial needs and investment objectives
- To receive a copy of all completed account forms and agreements
- To receive account statements that are accurate and understandable
- To understand the terms and conditions of transactions you undertake
- To access your funds in a timely manner and receive information about restrictions or limitations on access
- To discuss account problems with the branch manager or compliance department of the firm and to receive prompt attention and fair consideration of your concerns
- To receive complete information about commissions, sales charges, maintenance or service charges, transaction or redemption fees, and penalties
- To contact your state or provincial securities agency for any the following reasons: to verify the employment and disciplinary history of a securities salesperson and the salesperson’s firm, to find out if an investment is permitted to be sold and to file complaints (Source: Financial Industry Regulatory Authority)
Don’t Jump the Gun
An important point is that simply losing money on an investment doesn’t mean you can sue your advisor for bad advice. Remember, nowhere in the Bill of Rights does it say that investors are guaranteed a return! Markets are risky by nature. When you invest, you must take on some risk against which no law or regulation can provide protection. You should file a complaint only if you believe you’ve been defrauded—simply losing money isn’t enough. (See also: Understanding Dishonest Broker Tactics.)
According to the Financial Industry Regulatory Authority (FINRA), the most common complaints against brokers and advisors are misrepresentation and unsuitability:
- Misrepresentation: Falsehood or omission of facts in relation to an investment. This is a classic case of a client believing he or she was told one thing and then finding out after the fact that what he or she understood to be true was not the case.
- Unsuitability: When a financial advisor or broker invests a client’s money in a security that is not suitable for the customer’s investment objectives. An example of this is an advisor investing large sums of money in high-risk securities for a person who is 75 years of age and has a low-risk tolerance. (See also: Evaluating Your Broker.)
How to File a Complaint
If you think that you have a legitimate dispute with your broker or advisor, there are a couple of steps you can take. If your complaint is against a stockbroker, you need to file a dispute with either the Securities and Exchange Commission or FINRA.
Many financial professionals are members of a charter organization (you can usually tell by the abbreviations after their name). These organizations also have standards and codes of ethics, so it’s worth lodging a complaint with them as well. For example, if your complaint is against a Certified Financial Planner, you can file with the Certified Financial Planner Board of Standards. If it is against a Chartered Financial Analyst, you can contact the Association of Investment and Research.
Contacting your state or provincial securities commission is another avenue to take. Each state or province has a division that handles complaints against brokers, advisors, and financial planners. If these options don’t work, your final course of action is to hire an attorney.
Choosing the Right Broker
The best way to avoid unscrupulous or fraudulent brokers is to do your homework beforehand. Always check the background of the firm and broker or planner for any disciplinary problems in the past. Ask the planner about his or her investment style and what style they feel would be best for you. Asking these questions not only gives you a better understanding of the broker but gives you something to fall back on if you feel that your money has been placed in investments that do not coincide with your original objectives.
Securities regulators in the United States have made most of this information relatively accessible through the Central Registration Depository (CRD), a disciplinary and employment database available from NASD Regulation. On the FINRA website, you can perform online searches for certain information and request that a detailed report be sent to you with a free tool called ‘BrokerCheck’.
Finally, perhaps the most important thing an investor can do is be honest. If your broker or advisor suggests an investment that you don’t understand, say so. An honest and credible advisor is one who will spend the time to ensure that you fully understand an investment beforehand. (See also: Picking Your First Broker.)
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