Rs.3,216 Crore lost to Investment Frauds in India till November 2024!

A businessman from Noida lost Rs. 9 crores, a woman from Faridabad was conned out of Rs. 7 crores, and a doctor from Bathinda was defrauded of Rs. 6 crores. This is not it; we have been hearing such scam stories every other day.

According to the Indian Cyber Crime Coordination Center, cyber-related investment frauds have been on a steep rise. As per their report, Indians have lost a whopping Rs. 11,333 crores to cyber crimes in the first nine months of 2024 alone. Out of this, Rs. 3,216 crores were lost only to investment frauds.

With rising cyber investment scams, you need to be extra cautious to safeguard your hard-earned money. Here’s how to spot and avoid investment scams.

Understanding Investment Scams

“10x guaranteed returns in 30 days”

“Assured IPO allocation at discounted rates”

“High returns and 100% guaranteed allotment”

The scam often begins with scammers sending promissory messages guaranteeing IPO allotment or unusually high returns on your investments with little or no risk. They often lure you by posting or sharing fake success stories on social media platforms which might look very convincing and credible.

These scams often involve downloading fake apps for investment, joining random WhatsApp groups to get investment recommendations, and fraudulent platforms designed to mimic legitimate financial services. And, it might not be easy for you to differentiate between real and fake investments.

The stolen money is often funnelled abroad and then converted to cryptocurrency, making it difficult to track down.

Such scenarios are elucidated in the video film by ICICI Foundation, where the protagonist almost falls for the allure of a very confident fraudster online:

How to Identify Investment Scams

While different scams operate through different tactics, here are some of the common warning signs. So, watch out for the below common red flags before you act:

• Unrealistic promises – High returns with little or no risk? That’s too good to be true. As a thumb rule, always remember that high returns usually come with high risks. So, if someone promises you ‘100% guaranteed returns’, know it is a red flag.

• Aggressive sales tactics - Scammers often create urgency using high-pressure tactics to push you to make an immediate decision about your investment or prompt you to ‘act now’. You should steer clear of pushy salespersons who want your decision, money or signature right away.

• Lack of transparency – Fraudsters typically avoid providing detailed information on investments and disclosure documents. If someone tries to sell you a security with no documentation such as a prospectus or circular, they are probably hiding something.

• Unregistered investments - Many investment scams involve unlicensed or unregistered individuals selling unregistered securities, which lack the protection of regulatory oversight.

• Complex strategies - Overly complicated investment techniques or strategies that are difficult to understand are another red flag and should be avoided. It is crucial that you fully understand your investments along with their risks.

How to Safeguard Against Investment Fraud

With the growing sophistication of cyber investment frauds, it is our responsibility to exercise more vigilance. Here’s a handy checklist to help you protect yourself from falling prey to cyber investment scams:

• Do not respond to unsolicited messages offering quick money through online investments.
• Do not join unknown or unverified investment chat groups.
• Avoid investment opportunities that promise unrealistic returns or guarantee IPO allotment.
• Verify and ensure that the investment company is registered with SEBI. You cancheck for the broker's National Stock Exchange (NSE) or Bombay Stock Exchange (BSE) registered ID on the exchange website under the ‘know your broker’ tab.
• Beware of unsolicited investment offers through email, social media, or phone calls.
• Never rush into sending money or personal information. When in doubt, contact your relationship manager or the regulator for verification.
• Never download unknown apps or files or click on URLs at the request of unfamiliar contacts.
• Watch out for things that appear out of place; typos, poor grammar, and awkward phrasing are serious red flags. Scammers often use slightly altered URLs or email addresses to trap you, so beware of that.
• Call the cyber helpline on 1930 or visit https://www.cybercrime.gov.in or https://sancharsaathi.gov.in/sfc/ to report investment fraud

The key to avoiding investment scams lies in being informed and cautious. Whether you are a seasoned investor or just starting out, this article will serve as a guide to help you spot investment scams and help you stay safe.

Stay alert, stay informed, and invest wisely!

Moneycontrol Journalists are not involved in creation of this article.