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Don’t make a bad Trade


With the increasing use of internet-based information, more and more people are using the internet and social media to help them formulate their investment decisions, as everything is obtainable at your fingertips. Scammers quickly adapt to new ways to cheat people who are looking for investments in online trading.

Many advertisements keep popping up when we’re all scrolling through social media platforms, and their main takeaway are brokerage-free, easy-to-trade portals, and instant settlements; many of these agencies aren’t registered, but they put up fancy advertisements that are more powerful than the leading official corporate trading companies.

Beginners find the exchange process difficult and end up registering on these bogus apps and websites, looking at the flashy advertisements, and following social media influencers who claim to have made money by depositing money into a training app or website. Then 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 scams used by scammers:

a) Ponzi Scheme – It’s an investment fraud that usually pays existing investors with money collected from new (future) investors.
b) Pump and Dump Scheme – It’s an investment fraud where advisers try to pump (Inflate) the price of shares by providing misleading information to investors. Then these investment advisers sell (dump) their shares (When they are good value) and get good returns and vanish in thin air.
c) Apps Based Schemes – Scammer’s trick to investors is through fake websites appearing to be legitimate and also they use fake apps (Not in App store / Play store) and often 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 discuss quick earning opportunities through online trading. Below are some techniques through which scammers persuade investors via fake recommendations, unsolicited investment tips, and misleading information under a fake identity or anonymity.

Most investors initially receive some returns from the firm. With this the scammers give impression that the investors trading has been a success. The scammers encourage further to invest more or introduce a disciple or friend to invest. However, eventually the returns stop, the customer’s account is suspended, or money is stuck in the wallet, and there will be no further contact with the firm.

  • Scammers make claims of being successful traders and offering guaranteed returns and trading advice
  • Scammers use phoney 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 the workshops with a promise to make the investors technical analysts or trading experts but not hosting them

Modus operandi:

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

Few red flags to keep a watch:

Fraudsters hit their target with different persuasion techniques that are crafted to aim at the victim’s psychology, and a few red flags are listed below.

  • Promising abnormally high guaranteed returns
  • Requesting a high initial investment
  • complicated and unsustainable business model
  • promising to pay back losses
  • pressurise to invest money immediately.
  • Investing in apps those are not listed in the App Store or Play Store
  • Supported by social media influencers claiming to have gained high returns
  • Offer bonuses if you recruit your friends and family into the investment scheme.
  • The offices of scammers are either based out of India or doesn’t show up address on websites or apps.