Economic Fraud
WhatsApp, Facebook, Telegram: The New Hunting Grounds for Stock Market Scammers
Recently, two separate incidents surfaced in which individual investors lost over Rs 3 crore due to stock market scams. These types of fraudulent schemes are becoming increasingly common, causing ordinary people to lose their hard-earned savings. To safeguard yourself and your finances, it is essential to understand how these scams operate and learn how to recognize the warning signs. Here’s what you need to know to protect yourself:.
Elderly Chartered Accountant Loses Rs 1.97 Crore in Stock Market Scam
An 88-year-old retired chartered accountant from Vasana, Ahmedabad, reported losing Rs 1.97 crore in a stock market scam, according to a complaint filed with the Ahmedabad cybercrime branch. The scam began in February, when Madhukant Patel received a WhatsApp message from an unknown number. The sender, identifying himself as Sunil Singhania, claimed to work with a stock market expert named Karanveer Dhillon.
Singhania invited Patel to join a WhatsApp group called “Stock Vanguard 150,” where he and Dhillon shared stock market tips and strategies. Patel was later added to another group named “Stock Vanguard (XM-5).” The duo conducted video conferences on WhatsApp to offer investment advice, and some group members posted about their stock market profits based on these tips. Believing these claims to be genuine, Patel started investing in the stock market.
The fraudsters directed Patel to a website they operated, “app.alicexa.com,” which appeared legitimate, showing real-time stock updates, prices, and transaction details. Patel began with small investments and soon saw significant profits, boosting his confidence to invest Rs 1.97 crore in various stocks between March 12 and May 3, 2024, following Singhania’s advice.
ALSO READ: UN Approves First Global Cybercrime Treaty Amid Rising Cybercrimes
However, Patel grew suspicious when Singhania offered to secure shares after an IPO had closed and sell shares on the website even when prices hit the upper circuit. Despite these red flags, Patel continued to invest until he was asked to pay 15% tax to withdraw Rs 1.5 crore. After paying Rs 18.7 lakh, the fraudsters demanded an additional 1% of his total portfolio value, approximately Rs 5 crore. Realizing he had been scammed, Patel reported the incident to the Ahmedabad cybercrime branch, leading to an FIR against an “unknown person” under various sections of the IPC.
Deputy Mamlatdar Duped of Rs 1.13 Crore in Another Stock Market Fraud
In a separate incident, Jayendra Chauhan, a deputy mamlatdar from Vastral, Ahmedabad, lost Rs 1.13 crore in a stock market scam. Chauhan’s ordeal began on April 3 when he discovered a Facebook page called Vanguard Club V5, featuring a well-known investment analyst. He joined the club’s app and, upon logging in, received a link to F&FTPL with instructions to share his Aadhaar card details and deposit Rs 25,000 to open an account.
Following investment tips from a so-called “Professor Ganesh Ranga” on the app, Chauhan began trading and initially booked profits. Encouraged by these early gains, he invested Rs 1.13 crore between April 4 and April 29, 2024. However, his situation took a turn for the worse when he received a message on April 30 claiming that Ranga had been arrested for money laundering, and members were asked to deposit 30% of their balance as a refundable deposit to aid Ranga. Chauhan, unable to access his funds, approached the Gandhinagar cybercrime branch for help.
How to Spot and Protect Yourself from Stock Market Scams
Chauhan and Patel’s experiences are just two examples of the numerous stock market frauds targeting unsuspecting individuals through social media platforms like Facebook, Instagram, WhatsApp, and Telegram. These scams, often referred to as “pig-butchering” schemes, lure victims with promises of high returns but ultimately steal their money.
Scammers employ various tactics, such as creating fake websites, developing fraudulent stock investment apps, and establishing dubious WhatsApp groups where members falsely claim success. They often pose as representatives of reputable firms or market analysts, using personal anecdotes and promises of high returns to build trust and manipulate individuals into investing large sums.
Tips for Identifying and Avoiding Stock Market Scams
- Beware of Unrealistic Promises: Be cautious of anyone promising unrealistically high returns, such as doubling or tripling your investment in a short period of time. According to Vikas Gupta, CEO and Chief Investment Strategist at OmniScience Capital, such promises are usually too good to be true and should raise suspicion.
- Verify Credentials: Always ask for a valid SEBI/RBI license before accepting any investment advice. Gaurav Jalan, Founder & CEO of mPokket, advises verifying the credentials of anyone offering financial advice, especially if they contact you unexpectedly through platforms like WhatsApp.
- Check the Legitimacy of Apps and Websites: Before investing through any app or website, ensure it is legitimate by checking for SEBI or RBI licenses. Jalan also suggests avoiding APK apps not listed on Google Play Store or Apple Store.
- Protect Your Personal Information: Change your passwords regularly, enable two-factor authentication, and never share your financial details, passwords, or OTPs with anyone, even if they claim to be from a reputable firm. Using common credentials for multiple accounts can also increase the risk of being scammed.
By staying vigilant and following these tips, you can protect yourself from falling victim to stock market frauds and safeguard your hard-earned savings.