Better Business Bureau (BBB) is warning consumers across the country to be wary when considering any foreign currency investment, particularly the Iraqi dinar. Over the years, BBB complaints nationwide about dinar investments allege a number of scams surrounding the profit potential of dinar currency investments. For this reason, BBB advises consumers looking to buy dinar to familiarize themselves with the most popular scams involving Iraqi dinar and recommends making an informed decision.
According to the U.S. Commodity Futures Trading Commission (CFTC), the growing number of investment opportunities in recent years has been accompanied by a spike in foreign currency trading scams. While there are legitimate firms that trade foreign currency in foreign exchange markets, others utilize promises of large profits, religious associations, and charity affiliations to take consumers’ money.
“The web is filled with promises of making millions of dollars by investing in Iraqi currency,” said Catherine Ralls, BBB Trade Practices & Investigations Specialist. “Consumers should know that investing in promises of fast profits from currency trades could lead to potential losses.”
BBB provides the following tips to those considering investing in Iraqi dinar:
● Verify the product: To avoid buying counterfeit foreign bank notes, purchase currency from dealers registered with the U.S. Treasury as a Money Services Business (MSB). However, registration is not a reflection of experience in trading currency nor does it entail any qualifications on the part of the dealer, other than basic anti-money laundering requirements. Also, make sure you are receiving new dinar introduced in 2003; old dinar has a picture of Saddam Hussein.
● Be informed about exchange rates and fees: Iraqi dinar sells online in various denominations for a wide range of prices. Since Iraqi dinar does not trade freely in international markets, it is difficult to find objective exchange rates. The current exchange rate at the Central Bank of Iraq is 1170 dinars per US dollar. Consider the fees charged by dealers, which ultimately affect the price paid for dinar. Sellers have made a substantial amount of money through currency conversion fees they charge buyers.
● Be skeptical about predictions: The announcement that Iraq wants to delete three zeros from its currency has many believing the ‘revaluation’ will instantly give them 1,000 times the profit on their original investment. However, it is likely Iraq will issue new currency, exchanging 1,000 dinars for one new dinar if they delete three zeros.
While some sellers foresee the Iraqi currency substantially increasing in value, currency investors face considerable risk. If Iraq inflates its currency or devalues it, the value of the dinar could plummet. Further civil strife may also put downward pressure on the Iraqi currency.
● Don’t mix apples with oranges: Some sellers hype the dinar as an investment opportunity by citing the rise in the value of the Kuwaiti dinar after the Gulf War and the German mark after WWII. Neither Kuwait nor Germany had a free-floating currency. Their value was mostly a function of official policy. An economy in Iraq’s situation - with an unstable government, acts of terrorism and widespread corruption - is likely to experience a currency crash or international devaluation.
● Watch out for unsubstantiated, sweeping statements on religious or charity affiliations: Statements such as “pray for advice from God before making a purchase” or “our company has committed 10% of the profits towards providing for military based charities,” can be used in an attempt to connect with consumers and entice them to invest in dinar.
Other statements such as “everybody will want to get in on this,” are also used. However, remember there is currently no active market for dinars - you can buy them, but can you sell them?
Consumers are advised to avoid “opportunities” marketed by unregistered advisers to inexperienced currency investors. Legitimate opportunities should disclose all risks and avoid modifying or fabricating performance history to make an opportunity look better than it is.
Check the BBB Business Review of currency traders and other companies at www.bbb.org.
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BBB is an unbiased organization that sets and upholds high standards for fair and honest business behavior. Businesses that earn BBB accreditation contractually agree and adhere to the organization’s high standards of ethical business behavior. Incorporated locally in 1938, today your BBB serves communities in Central, Northern and Western Arizona, supported by over 9,600 BBB Accredited Businesses. BBB provides objective advice, free business BBB Business ReviewsTM and charity BBB Wise Giving ReportsTM, and educational information on topics affecting marketplace trust.