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Chargeback fraud results in loss of profits

In April, Jacque and two friends opened accounts with a foreign exchange trading platform. Jacque used his credit card to deposit USD $30,000 into his trading account as margin to support his trades.

Throughout April, Jacque placed a series of trades on the trading platform. Overall, Jacque’s trades were successful and generated a profit of approximately USD $67,000.

In late April, Jacque and his friends requested chargebacks from their credit card providers claiming the deposits paid to the trading platform had been processed in error.

The trading platform denied the chargebacks and stopped permitting withdrawals from Jacque’s account, pending resolution of the chargebacks. The trading platform and Jacque negotiated for Jacque to have his deposits returned to him, but the trading platform refused to release Jacque’s profits from his trading.

Jacque complained to FSCL saying that it was unreasonable for the trading platform to stop him from accessing the profits he had generated from his trading.



The trading platform completed an investigation and concluded that Jacque’s attempted chargeback had breached the terms of use by being dishonest and that it was withholding Jacque’s generated profits.

Jacque disagreed he had acted dishonestly and said he was owed his profits from successful trades.



We asked the trading platform to provide us with:

–          the trading platform’s terms of use

–          Jacque’s account details

–          a summary of his trading activity, and

–          the details of his trades.

We reviewed the evidence and were satisfied that Jacque and his friends had operated together and had acted dishonestly.

Emails supported that Jacque was working with his friends who also had accounts with the trading platform. Jacque and his friends entered trades on the trading platform from the same IP address, engaged in trading of the same currency pairs, and all filed requests for chargebacks within days of each other.    

We were satisfied that it had been Jacque’s intention from the outset to submit a chargeback for his deposits regardless of the outcome of his trading and that this constituted dishonest trading practices.

Under the trading platform’s terms of use, once the trading platform reasonably believed that an account holder had acted dishonestly, it could take a prescribed action including withholding any funds suspected to have been derived from any manipulation.

We considered that the trading platform had acted in accordance with its terms and conditions in withholding payment of Jacque’s profits because he and his friends had placed fraudulent chargeback requests, essentially seeking to trade with insufficient margin at no risk.  

We considered that the trading platform’s proposed settlement to Jacque, to refund his $30,000 deposit and close his account, was a reasonable offer of settlement.

Jacque accepted the settlement proposal, and the trading platform refunded Jacque $30,000 to his credit card.

Jacque was frustrated because he was an undischarged bankrupt and owed money on his credit card which the $30,000 would settle. Jacque complained that the trading platform had breached its settlement because Jacque wanted his refunds to be deposited to a new account which his creditors did not know about.

We were satisfied that the trading platform had followed its company policy in refunding the funds to the account from which they came, where possible. We considered that the trading platform’s policy to refund to the same card was reasonable because it complied with AML/CFT requirements. We also noted that Jacque had obligations to repay his creditors.



We issued a preliminary view outlining our findings to Jacque and our determination that Jacque should discontinue his complaint. Jacque did not respond to our preliminary view.


Insights for consumers

Your right to use a trading platform is governed by the terms of use of the trading platform provider. If the trading platform provider considers you have breached the terms of use, or otherwise acted fraudulently, it can take reserved action under the terms of use. These actions include cancelling or reinstating trades, changing buy or sell prices mistakenly generated by the platform, or any other action as necessary.