Cyber Talk: Don’t make a bad trade!

With the increasing use of internet-based information, more people are using the internet and social media to help in investment decisions.

With the increasing use of internet-based information, more people are using the internet and social media to help in investment decisions. Scammers quickly adapt to new ways to cheat people who are looking for investments in online trading.

Many advertisements keep popping up on social media platforms, with takeaways such as free brokerage, easy-to-trade portals and instant settlements. Many of these agencies aren’t registered, but put up fancy advertisements that are more powerful than those of official corporate trading companies.

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Beginners find the exchange process difficult and end up registering on these bogus apps and websites, looking at flashy advertisements and following social media influencers who claim to have made money by depositing money in a training app or website. They are then asked to deposit money into the app’s wallet in exchange for points, which might later be used for trading. The money put into the web wallet of the portal winds up being locked, leading to a dead end.

Few schemes used by scammers:
• Ponzi Scheme – It’s an investment fraud that usually pays existing investors with money collected from new (future) investors
• Pump and Dump Scheme – An investment fraud where advisers try to pump (inflate) prices of shares through misleading information to investors. They then sell (dump) their shares (when they are good value) and get good returns and vanish into thin air
• App-based Schemes – Scammers trick investors through fake websites appearing to be legitimate and use fake apps (not in App Store / Play Store) and send phishing emails showing fake images of wallet balances to lure them to invest in cryptocurrencies, stocks or e-commerce products.

Scams in online trading on social media:

Investors use social media platforms such as Facebook, Twitter, Telegram, WhatsApp and YouTube to gather information on investment trends, research stocks and quick earning opportunities through online trading. Below are some techniques which scammers use to persuade investors.
• Scammers claim to be successful traders offering guaranteed returns and trading advice
• Scammers use fake testimonial YouTube videos made by social media influencers
• Scammers disseminate false information through platforms like Twitter and Facebook to hold out ‘pump and dump’ activities
• Sending online investment tips and fake endorsements about online investment with fake information
• Displaying screenshots of their purported stock portfolio so as to extract a subscription fee in exchange for stock recommendations or investment advice
• Scammers take registration fees for workshops with a promise to make investors technical analysts or trading experts but do not host them

Modus operandi

• Step 1 – Victims are requested to join WhatsApp / Telegram groups
• Step 2 – They are asked to download apps via links, get a joining bonus that shows up in their wallet
• Step 3 – Trading happens (victims are asked to perform tasks), i.e., the selling / buying of shares, or sometimes are asked to buy or sell e-commerce products
• Step 4 – Victims are asked to introduce new people, and get an incentive for tasks they perform; introduced person gets incentive added to wallet
• Step 5 – Based on tasks performed, wallet accumulates money
• Step 6 – When victim tries to withdraw earnings from wallets, they will not be able to do so and are asked to pay income tax, processing fee, GST fee etc.
• Step 7 – Once the fees are paid, apps don’t work and show error; any efforts to reach customer service are futile

Red flags:

• Fraudsters hit their target with different persuasion techniques that are crafted to aim at the victim’s psychology. A few red flags are listed below:
• Promising abnormally high guaranteed returns
• Requesting high initial investment
• Complicated and unsustainable business model
• Promising to pay back losses
• Pressurise to invest money immediately
• Investing in apps that are not listed in App Store or Play Store
• Supported by social media influencers claiming to have gained high returns
• Offer bonuses for recruiting friends and family
• Offices of scammers are either based out of India, have no address on websites or apps