Yesterday, I saw an article in one of the leading local english newspaper that a local businessman lost 2.96 crore in city’s biggest cyber heist to an online trading cyberscam. Just last week, I got a call from one the readers of my articles, that his brother-in-law who works as an executive engineer with Karnataka Power Corporation had invested 75 lakh rupees in an online trading app, which turned out to be a fraud App and there were no securities purchased against the fund invested through the app in any stock exchanges, though the app showed the securities were brought and sold as per the funds invested. As per the App, he is still on a profit of more than 50 lakh rupees, but when he tried to encash the profits, the App support team is telling him that he needs to pay 18% GST and 20% Income Tax first to encash the funds. As per Indian Cybercrime Coordination Centre’s report, across India it received 20,043 online trading scam complaints amounting to Rs 14,204.83 crore rupees between January and April this year. In this article, I try to explain how this online trading scam is carried out, precautions one can take and what the victim can do to recover his funds.
Online Trading in Indian stock markets and cryptocurrency has been a rage for last couple of years since covid days. Cyber fraudsters are using these trends to defraud people by creating their own fake online trading mobile apps or websites which sometimes resemble the real popular trading apps or websites. Then they lure people with fantastic returns by investing with them via phone calls, sms/social media messages and advertisements. People driven by greed of high returns in short span of time fall for this and are asked to join a Telegram or WhatsApp channel where their trust is won by showing many people making money and screenshots of profits and returns, crazy part is most of the people who are posting this are insiders or bots created by the fraudsters. Once the trust is won, the victim is asked to install their trading app and are asked to invest by transferring money to a bank account or to a mobile number. The mobile app allows them to invest the money transferred across various securities and crypto currencies, and they get to see how their investments are growing and also can download or get transaction reports to their emails. Only when they try to withdraw or encash the profits, they are asked to pay GST, Income Tax and many other charges them discourage from withdrawing the funds, if victim insists then they may disable victim’s login to the app or website, remove victim from the Telegram/WhatsApp group and stop responding to victim’s calls/messages.
How you can protect yourself from such Online Trading frauds :-
- Always follow the principle of ‘ Zero Trust, Pause and Authenticate’ for all digital transactions, basically respond after verification and not react instinctively.
- Never click on any link or scan a QR code or install any App sent by stranger as you may lose money or your device may get infected with a software virus.
- Always install App from the Google Playstore or Apple store after checking the review comments and rating.
- Check genuineness of the website URL & website, fake/cloned website URL typically start with “http” instead of “https” and website may have some glaring spelling/grammatical errors.
- Always verify whether the securities you have purchased are from SEBI authorized exchanges independently, you typically get a mail from exchange for every transaction and can also verify the stocks you own in respective exchange website.
- Only invest in SEBI approved trading companies and reputed crypto exchanges with good reviews.
If you are a victim of Online Trading Fraud :-
Immediately call 1930 cyber helpline number or file a complaint at www.cybercrime.gov.in or at any nearby police station. If you have transferred funds recently, then call up the bank and request for a debit freeze for the amount transferred with the help of police. If you have clicked on any link or scanned a QR code or installed any App given by strangers, your device may have been infected with a software virus, hence run a antivurus scan or format/data reset your device.