Stock Market Fraud Via Social Media: Tips To Protect Yourself
Overview
Social media has opened new possibilities for investors. At the same time, new threats have emerged with them. Two investors have been defrauded in separate stock market related franking deals in the last one month through applications such as WhatsApp, Facebook and Telegram among others, with each investor losing more than Rs 3 crore. As highlighted by these incidents, more people are falling victim to the internet investment frauds, and this portrays an alarming trend.
Modus Operandi of Scammers
Several tricks are used by scammers to solicit money from investors for fake investment ventures. They especially develop fake accounts and groups or pages on the social platforms and pose as financial specialists or wealthy speculative stock traders
They may use the following strategies:
Creating Trust: It is common that the fraudsters engage in endearing themselves by providing what might appear to be genuine investment advice, reports, and even real life testimonials. They can produce fake identification or certifications to give a speck of overall credibility.
High-Pressure Tactics: The con artists tend to put pressure on the targets to act fast and have them believe that it is only one opportunity of that kind left or that promised high profits are to be expected shortly.
Fake Apps and Platforms: It could guide them to download bogus investment apps or websites that seem real but, in actual sense, are designed to defraud the victims of their hard-earned cash and other valuable information.
Incidents Highlighting the Issue
Case 1: CA's Loss
An 88-year-old Chartered Accountant lost Rs 1. 97 crore after being duped into joining a get-rich facility WhatsApp Group. The group provided him with forged information about successful stocks and other investment tips to encourage him into investing a lot of money. In this case, the fraudsters branched out and requested for more money under different reasons causing a lot of financial losses.
Case 2: Deputy Mamlatdar experience
Another victim, a deputy mamlatdar, was looted of Rs 1. Rs. 13 crores at the instance of a Facebook investment tips group. The fraudsters deployed a real looking android app whereby the victim has no reason not to invest. They later demanded more deposits on one or the other preserved right as tax or fee among others, which contributed to the loss.
Identifying Red Flags
Being aware of common red flags can help you avoid falling victim to stock market scams:
Unrealistic Returns: Avoid claims about very high possible returns within a short time span. It is imperative to note that any real investment entails risks and there is no real and competent adviser who can offer you a sure shot strategy of making more and more riches without taking any real risk.
Unverified Credentials: It should be noted that all the scammers are eager to present themselves as reliable investment advisors or trading platforms, so one must always check the bonafide of these persons and companies. Analyze that it holds the registration with the necessary bodies such as SEBI or RBI for Investing in India.
Enrich Money , a trusted SEBI registered wealth management company, through which a trader can invest in the stock market.
App Legitimacy: Always, check if that investment app has necessary licenses and it must be available for download from formal outlets such as Google Play Store or Apple App Store. Download Enrich Money’s Orca app from Google Play Store or Apple Play store to invest through a safe and secure trading platform from anywhere and at any time.
Pressure Tactics: Avoid any tactics that put pressure on a client and insist on making the investment immediately. Reputable advisors like Enrich Money will not rush you into making the decisions.
Protect Personal Information: DO NOT give out passwords, OTPs or other personal financial information to anyone, including over the phone if the call is not verified as genuine.
Protecting Yourself
Taking proactive steps can significantly reduce your risk of falling victim to stock market fraud:
Do Your Research: For any form of investment, one should ensure that they investigate adequate amounts of the advisor, platform, or the investment opportunity of their desire. Search for feedback, clients’ testimonials and complaints, as well as the results of the official investigations into the company’s activity.
Verify Registration: Make sure the investment advisor or the online investment platform is registered with SEBI or RBI as the case maybe. You can go to their websites or get a hold of them to confirm the information.
Use Trusted Platforms: When investing, always ensure to use trusted platforms like Orca app and investment applications. Do not download apps from 3rd parties or sources different from original application stores or unknown links received in social networks.
Educate Yourself: Be aware of common frauds and their appearance. SEBI and other similar authorities always post warnings and pieces of advice on their official websites.
Consult a Financial Advisor: If in doubt you should seek advice from a certified financial advisor or a financial specialist of your trust like Enrich Money.
Conclusion
Various stock market scams fill social media feeds and people can lose their money easily. Awareness of these tactics specific to fraudsters and other threats and taking preventive measures one can save his money and personal details. Bear in mind that one ought not to take chances on any investment, which appears to be more profitable than it exists to be.
Additional Resources
For further reading and resources on protecting yourself from investment fraud, consider the following:
SEBI Investor Education: SEBI provides tutorials as well as alerts on investment scams on the SEBI official website.
RBI Consumer Education: The RBI shares details of the common financial frauds and ways in which people can guard themselves against them in RBI official website.
CERT-In: The Indian Computer Emergency Response Team (CERT-In) also provides Counselling and Current Affairs Updates on various Cyber Threats – Financial Frauds, etc in CERT official website.
It is important to make any investment, including the stock market, with awareness and appropriate precautions, so that you wouldn’t fall prey to the notorious ‘get rich quick’ schemes and be financially secure.
Frequently Asked Questions
How do scammers engage investors on the sites on social media?
Fraudsters are engaging in fake identities with realistic-looking profiles and groups, appearing to be genuine financial experts or traders. They use fake stories of achievement and great returns to gain the investors’ confidence and attract them to invest.
What are some indicators that one may be dealing with stock market cons?
Unreasonable and unachievable high profits, fake resume, high-pressure to invest promptly, and phony applications. Ensure that the advisors or any of the platforms are registered by SEBI or RBI which is a regulator of Indian markets.
What are the measures I should take to avoid falling victim to investment scams?
The recommendations made include conducting an extensive examination and cross-checking the authenticity of the recruitment agent’s phone number, website, and social media accounts; and it is recommended that the candidates should not disclose much of their personal details. Get professional financial advice from a certified financial planner like Enrich Money and never give a blind monopoly of your capital to get high returns with little risks.
What should I do if the fraud alert was received?
Cease all correspondences and conduct business with the company right now. In case of forgery, take the matter to SEBI or RBI, and present all supporting material. That is why it is necessary to familiarize yourself with common fraud schemes.
Are there governmental and other official sources on the matters of investment fraud?
Yes, SEBI, RBI, and CERT-In have documents and contacts for alerts on their websites. Such resources assist the investors to be knowledgeable in matters relating to the various cons around and how to avoid the same.
Disclaimer: This blog is dedicated exclusively for educational purposes. Please note that the securities and investments mentioned here are provided for informative purposes only and should not be construed as recommendations. Kindly ensure thorough research prior to making any investment decisions. Participation in the securities market carries inherent risks, and it's important to carefully review all associated documents before committing to investments. Please be aware that the attainment of investment objectives is not guaranteed. It's important to note that the past performance of securities and instruments does not reliably predict future performance.
