Woman Loses Over Rs 24 Lakh In Online Investment Fraud: How To Avoid Such Scams?

A woman in Delhi recently lost over Rs 24 lakh in an Upstox online investment fraud in just about two months. With the increasing adoption of AI, many investors recently have incurred substantial financial losses wherein scammers create and spread fake social media accounts, apps, WhatsApp groups, and websites pretending to be wealth managers offering educational courses, stock tips, and promising guaranteed returns. Upstox recently issued a cautionary advisory regarding an uptick in impersonation scams targeting investors in its name.

In another incident in Kerala, a businessman lost over Rs 7.55 crores in an elaborate and what is being known as the ‘biggest’ online investment scam yet. Fraudsters introduced themselves to him as ‘representatives’ of two renowned financial firms, namely Invesco Capital and Goldman Sachs. The fraudsters offered him a ‘once in a lifetime’ opportunity to invest in a supposedly lucrative share trading scheme, assuring him of substantial returns. Little did the businessman know that upon debit, he would be credited with financial loss.

The stress of losing a huge amount of money could be greater for a middle-class person who would fall for such scams to multiply their hard-earned money. A Delhi couple Shruti and Shiv Sharma (name changed) recently fell for a similar fraud.

Modus Operandi: How Investment Scammers Fraud People Online?

On June 27, 2024, while browsing Facebook, Shruti encountered a link promoting stock market investments through Upstox Securities. Intrigued, she clicked on the link and was added to a WhatsApp group named "V5-VIP Upstox Services Group."  Shruti was given stock trading tips on this channel and was later lured into a fake application.

3 Red Flags To Watch Out For:

1. Social Media Ads: Scammers target potential victims through targeted advertisements on popular social media platforms like Facebook, Instagram, Linkedin, etc. These ads may promote

“High Return” schemes, exclusive investment opportunities, or free stock tips.

2. Fake Investment Groups: They will lure you into joining seemingly legitimate investment groups on platforms like WhatsApp and Telegram. These groups promise exclusive stock picks,

investment courses, or expert guidance.

3. Brand Spoofing: The scammers will create social media groups or websites with names and logos that closely resemble those of established firms, hoping to trick victims into believing they are interacting with a legitimate entity. In Shruti’s case, the spoofed brand turned out to be Upstox.

The group administrator, Rajat Upstox VIP (mobile number: 7297834796), instructed members to join a competition called GTC, promising attractive returns. Following their instructions, she joined a mobile application via the link - www.bristox.com/app/android, provided through the WhatsApp number mentioned above (Upstox Securities No. 106). 

Shruti submitted her Aadhaar card and PAN card, after which the fraudsters activated her account. Starting from June 7, 2024, she made 19 financial transfers totaling Rs 24,35,000/- for shares and IPOs. She saw her money grow on this app and was lured into buying stocks, and IPO allotments by the fake advisors.

Fake Apps, False Profits:

1. Rigged Trading Platform: The fraudsters will send you an app that operates as a rigged platform, posting fake trading options to entice victims with seemingly genuine opportunities.

2. Initial Investments: Scammers ask victims to invest in suggested stocks through the app.

3. Illusion of Success: Purported profits are displayed within the app, creating a false sense of success and encouraging further investments.

4. Virtual Profits: Displayed profits are virtual and non-withdrawable, designed to keep victims invested without any real financial gain.

Beware of these Intimidation Tactics!

When Shruti requested to sell her shares, they refused and insisted she take a loan, raising suspicions.

1. Pressure to Invest More: Victims are pressured to invest more with promises of higher returns, leveraging the illusion of success.

2. Blocked Withdrawals: After significant (fake) investments, scammers make it impossible for victims to withdraw funds, executing the ultimate scam.

Realising she had been scammed, Shruti filed a complaint with the Cyber Crime unit attaching copies of the chat conversations and transaction details.

Similarly, a retired PSU director fell victim to an investment scam after clicking on a Facebook advertisement that landed him in a WhatsApp group named Dalal Street Traders. Run by people claiming affiliation with a global investment management firm, the group lured him into weeks of training sessions. He invested nearly Rs 40 lakh, however, when attempted to withdraw around 1.5 lakh the director also caught hold of the deception.

Upstox Fake Channels!

Upstox recently notified about certain fake channels, such as ‘Upstox Facilities Group’ and ‘Upstox Investment Academy’, that falsely claim affiliation with Upstox and pose as Upstox employees. “These groups are claiming to conduct educational courses and sessions on the Stock Market under Upstox’s name,” the wealth management platform stated in a release.

The wealth management platform also noted that customers from Tier 2 and Tier 3 are especially affected by these impersonation scams due to a lack of awareness and limited access to reliable information sources. Anybody who uses this platform would receive recurring email campaigns alerting new, active, and dormant users, in-app product banners alerting logged-in users, and frequent push notifications and social media campaigns.

How Not To Fall For This Scam?

A recent report by CloudSEK, a cyber security firm, notes that scammers have been observed creating hundreds of WhatsApp groups to target victims. “They have also been using Twitter to attract victims. We have identified over 1,500 fake profiles using the names of financial institutions,” the report finds.

The Security Exchange Board of India (Sebi) notes that legitimate investment schemes are not promoted through unsolicited calls or spam emails. The scammers often target unsuspecting individuals with promises of quick and high returns in a short period, however after taking huge some of money from you, they block mediums for you to extract funds. This is what investors should do to prevent such scams:

1. Check broker legitimacy: Always conduct thorough research before engaging with any individual or platform. Look for Sebi registration and Stock Exchange membership to ensure credibility.

2. Beware of unsolicited offers: Exercise caution with unexpected calls, emails, or messages promising quick profits. Block and ignore such communications to avoid falling victim to scams.

3. Verify communication channels: Pay close attention to the communication handles of brokers offering quick returns.

4. Protect personal information: Keep sensitive information private, especially when dealing with unknown individuals or suspicious requests.

5. Check for Red Flags: Be alert to common red flags, such as guaranteed returns, lack of transparency in investment strategies, or refusal to provide detailed information about the investment.

6. Report Suspected Scams: If you come across a potential investment Fraud or fraudulent activity, report it to the appropriate regulatory, cyber crime unit, or police authorities.