How to avoid WhatsApp and Telegram investing scams in the stock market

Stock Market Scams on WhatsApp and Telegram

The stock market has significantly surged as one of the major vehicles for increasing wealth in today’s interconnected digital finance space. The promises made by this investment option often tempt numerous first-time investors to put their money into equities with the dream of earning exceedingly high returns. According to data revealed by Statista, the global domestic equity market has undergone massive growth jumping from $65.04 trillion in 2013 to $111 trillion in 2023. Amid all the excitement, there are several threats lurking in the darkness with scammers conducting fraudulent ways of investment scams, thanks to technological advancements.

These fraudsters are leveraging the escalating popularity of messaging apps (like WhatsApp and Telegram) to orchestrate financial scandals. These platforms have become the one-stop destination for financial discussions, thus opening a Pandora’s box of investment scams. As per the Cybercrime Coordination Centre, about 85% of cases were related to financial crimes out of INR 1,750 crore cyber frauds from January to April this year. With these messaging apps blurring the lines between casual chitchat and financial advice, it is time for increased investor awareness about these scams.

Understanding the common fraudulent scams on Messaging Apps

Instant messaging apps allow us to communicate in real-time via text, voice messages, and video calls. This is why scammers tap these apps’ potential and utilise various ill-intentioned tactics to dupe investors into sharing their personal information, making payments, accessing unverified links, downloading malicious files, etc. Here are examples of such fraudulent schemes:

Pump and dump schemes

Pump-and-dump schemes involve artificially inflating a stock’s price. Fraudsters spread false or misleading information to profitably sell their shares once the prices increase, leaving unsuspecting investors with worthless stocks. These schemes start with texts or even personal emails, which are shared through group chats and private messages found in WhatsApp and Telegram. 

Recently, the Securities and Exchange Board of India slapped 19 entities with penalties amounting to INR 11.90 crore and also restricted them from engaging in securities trading for a maximum of five years for engaging in a “pump and dump scheme” concerning the shares of Superior Finlease Ltd.

Ponzi schemes

The Ponzi scheme refers to Charles Ponzi, who, in 1919, operated a fraudulent investment scheme that assured the doubling of an investment within 90 days. This scheme lures people with the promise of highly profitable returns with little or no risks, using money from new investors to pay earlier ones. Their survival mostly depends on the continuous influx of new participants who mask the false image of profitability. Messaging applications are a great way to recruit new victims and maintain the scheme’s momentum.

Fake investment opportunities

Scammers sell fake investment opportunities promising guaranteed high returns with almost zero risks. They use persuasive language and made-up testimonials to convince victims to invest their money. These fake opportunities can range from non-existent stocks to fraudulent cryptocurrency investments.

Misleading stock market profit-gaining tips

Fraudsters share false stock market predictions and tips and claim insider information or advanced algorithms for their trading activities. These highly luring tips are intended to induce victims into certain trades that ultimately benefit the scammers. Usually, they share fake success stories of people to create a sense of trust.

Impersonation of reputed companies or investors

Impostors pretend to be well-known enterprises or successful investors to win the trust of first-time investors. They fail to recognise scammers’ fake profiles designed with logos and branding to prove authenticity. After building confidence, scammers encourage the victims to invest in fraudulent schemes.

Why do fraudsters target WhatsApp and Telegram?

Messaging apps become a household name in digital communication capabilities worldwide. Here are good reasons why these applications have become the primary target of scammers.

Advantages of creating fake accounts

Fraudsters target messaging apps primarily due to how easy it is to create anonymous accounts on them. WhatsApp and Telegram require minimal details when creating new accounts, which enables scammers to use them without showing their real faces. Such anonymity makes it hard for law enforcement to track and apprehend them.

Vast reach and potential to become viral

As of 2024, WhatsApp has more than 2.78 billion users, while Telegram has around 900 million active monthly users, a 12.5% increase from last year. With such a vast user base, messages on these platforms can be forwarded to multiple people at once and become viral. This, in turn benefits scammers to lure in more victims.

Lack of regulation and security

Compared to instant messaging apps, regulated financial platforms have more security measures and rigorous oversight regulatory mechanisms. Due to the lack of regulations on these platforms, scammers take advantage of unsuspected users who are unaware of this fact. The end-to-end encryption offered by these applications provides an essential shield for fraudsters to conduct illegal activities covertly.

Exploring a real-life incident of fraudulent activity on WhatsApp

An 88-year-old retired chartered accountant lost INR 1.97 crore in an intricate WhatsApp stock trading scam, according to a disturbing case reported to Ahmedabad’s cybercrime division. The scam was initiated with a message from an alleged stock exchange professional named Sunil Singhania welcoming the person to join an investment-centric WhatsApp group “Stock Vanguard 150”. They posed as financial planners to scam people through video calls, showed fabricated success stories to claim legitimacy, and then made the victim visit a convincingly designed trading website that seemed real, where he initially made some profits. 

The elderly man invested INR 1.97 crore in two months as a result of the previous success. Fraudsters cemented the image by using tactics such as false IPO allotments and promises of unique trading prospects. Additional payments for taxes and fees were necessitated whenever the victim tried to withdraw his funds. Consequently, he was compelled to pay a hefty tax of 15% to withdraw his money which totalled INR 18,70,000 and later around INR 5 crore as part of the total portfolio value. Upon realising the deception, he filed a police complaint against unknown persons, highlighting the sophisticated nature of modern cybercrime targeting vulnerable individuals.

Ways to safeguard ourselves against investment scams

Before you fall victim to stock market Telegram and WhatsApp scams in India, please take note of the following critical points to stay protected:

Awareness regarding guaranteed high returns

Be cautious with investment offers that appear to yield unrealistic high returns yet involve almost no risk. Educate yourself about the risks associated with investments and the unrealistic nature of assured high returns. Remember that all investments involve some risks, so don’t fall for fraudulent schemes.

Verifying SEBI/RBI licenses for investment tips

Ensure to verify the advisor’s or platform’s credentials before investing. Confirm any authorised license granted by organisations like RBI(Reserve Bank of India) or SEBI(Securities and Exchange Board of India).

Trust reputed investment platforms

You should trust only those investment platforms that have a proven track record. These platforms are more transparent and secure as they follow strict regulatory guidelines.

Cross-check the legitimacy of unknown apps and websites

Before investing, verify whether the apps have a SEBI license for stock investing or an RBI license for NBFCs. Check out for reviews and ratings that highlight potential scams. Also, strictly avoid red flag applications like APK that aren’t listed on the Google Play Store.

Avoid clicking suspicious links

Never click on unknown links forwarded from random people or sources on messaging apps. The 88-year-old retired CA’s example above proves that these links lead to phishing websites that can steal your personal information and money.

Diversify investments

Mastermind investors prefer diversifying their investments across multiple asset classes. First-time investors should follow this ideology and avoid putting all their money in a single investment vehicle even if it guarantees high returns.

Protect your passwords and OTPs

Always set strong and unique passwords and ensure they are changed regularly with two-factor authentication. Additionally, sharing passwords, login credentials, and OTPs is a big no, even if the request seems legitimate.

Implement strong privacy settings

To avoid being targeted by scammers, one can set strong privacy settings on messaging apps to limit who can contact them, view their profile, or add them to unwanted groups. Many people report to WhatsApp for being unwillingly added to suspicious groups from international numbers. In such cases, leave the group and report the chat to WhatsApp, and those groups will be automatically blocked. 

Avid phone calls and demand in-person meetings

Avoid phone calls from unknown numbers that offer random investment opportunities. Try to arrange one-on-one meetings every time to know the identity and credibility of the person or organisation.

Consult financial advisors

Seeking guidance from certified financial advisors is always advisable, as these professionals offer impartial recommendations that help you deal with the complexities of financial markets.

Conclusion

Ensuring a culture of responsible investing is critical for our future financial well-being by protecting ourselves and spreading community awareness. When encountering scams, always report to SEBI, RBI, and local cyber cells and don’t forget to share the links of such fraudulent apps and channels.

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