As old adage goes, “If something is too good to be true, it probably is.” That said, fake offers of doubling investments or fraudulent trading apps make it sound too attractive to resist, with scores of people falling prey.
According to data from the Indian Cybercrime Coordination Centre (I4C), in the first nine months of 2024, a whopping ₹4,636 crore was siphoned out of people’s bank accounts in stock market trading scams, making it the most widespread type of cyber fraud.
To understand this issue and to spread awareness, CNBC-TV18 spoke to Sandeep Walunj, Group CMO at Motilal Oswal; Ritesh Bhatia, a cybersecurity expert; and Ashutosh Naik, Chief Compliance Officer at Groww.
Edited Excerpt:
Q: This is the digital era — you at Motilal Oswal also advertise online. So, how exactly can our audience differentiate between a genuine offer and a scam?
Walunj: It can get a little confusing. But if your viewers can remember three small letters, OMG, that we typically use, it will be very easy to differentiate between a fraudster masquerading as a respectable person. So, O starts for outstanding past performance. No reputed brand would say, I have given you “x” or “y” returns in the past, etc, in order to gain your confidence. So typically, when you are invited to a group and someone says that so and so expert has given 150% returns over the last year, your antenna should go up.
M stands for magical future. If someone says that you can gain 70% in two days or something like that, or many a time, they say there is an IPO in which Motilal Oswal has a special quota, from which you will get shares, after listing, at a 10% discount to the trading price. So you need to understand that no one can do that. Capital markets are designed so that no one can do that. So this “magical future” is something that you should be very careful about.
The last part is G, that is, guarantee. No one can guarantee anything in capital markets. Uncertainty is the only constant. Volatility is the only constant. So if somebody is guaranteeing returns citing past success or promising magical returns for the future, you need to double-check, triple-check, and be certain that there’s something wrong going on.
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Q: First of all, what has been Groww’s experience because there are many trading houses, there are people — the scamsters claim to be from those trading houses and lure people. What has been your experience, and can I say that it has started impacting the business of legitimate trading houses?
Naik: We should be extremely careful. (Fraudsters_ use the name of the fintechs who have penetrated the retail world and lure people by contacting them on social media (apps) like WhatsApp or Telegram and give assurance of high returns. I think the simple thing we have learned, and what we have been advising through our social media forums or videos, is that first, all fintechs or apps, investment apps are highly regulated. No one will give any assured return, as we have already said on this forum.
Secondly, when any person contacts you through social media or adds you in any WhatsApp group, do a simple thing: try to connect with that person on a call. If it’s a fraudster, we all know they will not try to engage with you orally. They will try to be on chat. That’s the red flag we should always be aware of.
The next thing they will do is contact you in person and ask you to transfer money to a particular bank account. No regular entity is supposed to take money into any individual’s bank account. It always has to be in that entity’s account. It is very simple to check your UPI when you transfer money and whom you are transferring the money to. If it’s not that investment company’s name, please avoid it.
Thirdly, we have seen (fraudsters) give links to a website and a linked app. You can download any regulated company’s app from their legitimate website or only through Google Play Store or Apple App Store, and not from an APK link. So if you want to invest through any particular regulated company, download the (official, authorised) app and invest.
One more thing, no one can just ask you for PAN details and start investing on your behalf. Every investment company will have its own onboarding procedure — proper KYC, only after which you will be eligible to open an account with someone. After normal checks, your account is opened, and only through that app or to that website are you able to add money or invest. It’s you who make an investment in particular stocks, mutual funds or whatever securities are available on the platform, not anyone else. So these are the measures which you need to take care. A basic thing checks. It will help you.
Q: You have been dealing with multiple complaints on a daily basis. Today, we want to specifically talk about fake trading scams. What I want to understand from you is all these victims, most of them, and by that, I mean over 90% of them are educated people. Yes, some of them are senior citizens, but we are talking about highly educated people. How exactly do these scamsters end up extorting so much money from them?
Bhatia: Recently, when I wrote an article, I had said that most of the victims are always in the age group of 25 to like 40 and that too in case if you have to go and do a background check of all those 7,000 complaints that you have got, you will find them from two major industries, all these victims, they will be from IT and finance. So, I mean, just imagine how ironical it is that people from It and finance are falling to the cybercrimes.
So there is this one particular attitude, like, I know it all, and this will not happen to me. I have been saying this for since past 24 years in my profession that each and every one of us is going to be a victim of something or the other, as far as cybercrime is concerned. The other pattern that you will also see is when it comes to cybercrime is that there’s always one of these three elements—fear, greed, or emergency. We have seen that the fear element has given rise to things like digital arrest, the element of greed has resulted in what you are talking about today. So people get lured to all these particular things, and at that point in time, common sense is kept aside, and we just fall into the trap.
Of course, there is an element of rush also in this — do it now, download this app, don’t bother, just say yes, yes, yes, to all the settings and to all the permissions that you are putting, and these people don’t realise what they are actually putting the APK file that Ashutosh was also referring to it is nothing but spyware, which is actually like monitoring everything. It’s able to see all the images, all the SMS, even the passwords that you type, so all the keystrokes also.
For the full interview, watch the accompanying video
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