Stock Market Fraud: 70 Year Old loses Rs.2 Crore in Big WhatsApp Stock Market Scam; Here How You Can Avoid It

Recently a 70 year old retired financial professional from Maharashtra fell victim and lost Rs.2 crore to a stock market investment fraud. The perpetrators of the fraud added the victim to a WhatsApp group using an unknown number.

The scamster is a woman who called the senior citizen via WhatsApp, promising an equity investment opportunity. To make it all look legitimate, he was also given access to a fake mobile phone application that looked like a well-known investing firm. They also created a WhatsApp group and added many people to the group.

Someone would routinely take turns boasting about the profits they purportedly gained from trading stocks based on the ‘tipster’s’ recommendations. This pretending was maintained for a month in order to tempt the victim, who eventually decided to take the leap and transfer roughly Rs 2 crore in 24 transactions.

A fake account statement that shows profit was also given to the victim, claiming that he had earned Rs.14 crore. When the victim decided to withdraw some money, he was asked to pay extra in the form of withdrawal tax and then he suspected something was off and raised questions. The police have filed a case of cheating under the Indian Penal Code (IPC) and the relevant sections of the Information Technology Act.

The reality is that a rising stock market has left many investors feeling like they’re missing out – The FOMO factor.

Here are some frequently received traps to avoid when navigating the stock market and investment sector.

High Returns on Investment

Everyone wants to reap rewards from their investments. But we overlook to account for the risk we must take to get there.

It is still okay to invest in genuine companies whose names and businesses we recognize and those are listed on stock exchanges. What happens if you don’t know where your money is being invested?

Anything that appears to be too good to be true, such as ‘schemes’ or ‘investment opportunities’ with extremely high returns but very no risk, is typically a red flag. Promises of huge returns with no risk at all are big red flags. Investments that are genuine involve some element of risk.

Avoid Phone Calls – Go for In-person Meetings insist

In the case mentioned above, the scamster contacted the victim over the phone. The victim never appears to have met the person posing as an investment professional. And transferring that huge amount of Rs.2 Crore without due diligence was such a big mistake by the victim.

If you received suggestions by text message (SMS), email, or social media in which someone attempted to persuade you that a specific stock is good and you should invest in it, they may be duping you into a pump-and-dump scheme.

So, it is advised that you should approach a qualified financial advisor personally if you get these types of offers.

Beware of WhatsApp Groups

These Scamsters create WhatsApp group and add you in it to deceive you into thinking they are experts in the equity market. Their modus operandi is simple – they create a WhatsApp group with several of their coworkers and make you a part of it. Some members may possibly be other foolish investors who were duped into joining the group and becoming accidental witnesses.

Then persons fell victim to this created group and were duped into not only joining this WhatsApp group where investment ideas were communicated but also into posting messages of fake gains alongside many other imposters.

A lot of misinformation is spreading via WhatsApp and nobody thinks first to verify the information. To make a solid investment and create money, you should listen to your financial adviser rather than these scamsters even if you are forced to join this group.

First thing for sure, never join a WhatsApp group unless you verify the claims they are making.

Invest Now or Never Thing

One way to recognize a scam caller is to detect hurriness or aggression. If the caller asks you to take immediate action like invest money now or join right away, this is a red signal. This is called a ‘boiler room’ tactic.

Be aware of aggressive sales practices that pressure you to invest instantly. Boiler room operations use high-pressure tactics to market inadequate stocks. If the salesperson is unable to provide extensive explanations of the investment or provide unverifiable information, then it cannot be trusted.

Check if the App is Authentic?

The victim of the aforementioned fraud also downloaded a so-called trading app that appeared to be from a well-known brokerage organization. So it looks like the caller did not simply mimic a completely unknown entity.

Now the question is, how do you identify a fake app?

It is suggested that you can check the number of downloads. If the app has a low number of downloads, it is most likely to be fake. However, simply having a huge number does not guarantee authenticity. Some fake apps may have a high number of downloads.

Look up reviews and testimonies on the internet. Add the phrase ‘fake app’ for good measure. If you do your research properly, something will come up to save the day.

However, investors must accept their share of the blame. If take the example of the above case, the victim himself was a finance professional, when he made an initial investment, his investment on the application turned up to Rs.14 crore, he didn’t even blink and verified the profit earned, eventually fell into the trap and invested more.

So, the communication regarding the allotment/ purchase of stocks in Demat or similar investments could have been verified if investments were made.

By following all these above-mentioned steps, you can save yourself from fraud or scams going on in the stock market.