SEBI intensifies efforts to combat online investment scams; seeks stronger action from social media platforms

SEBI intensifies efforts to combat online investment scams; seeks stronger action from social media platforms

To strengthen investor protection, the Securities and Exchange Board of India (SEBI) has formally written to major social media platforms and internet search engine providers, urging them to deploy stronger and more reliable mechanisms to prevent misuse of their platforms for fraudulent investment activities.

SEBI said this move is aligned with International Organization of Securities Commissions’ (IOSCO’s) global call to action. Supporting IOSCO’s recommendations, SEBI has asked platforms to prioritise and urgently fast-track the Mandatory Advertiser Verification in the securities market domain and also implement the verified status or clear labelling of registered intermediary apps. In its May 21, 2025 statement, IOSCO the highlighted the critical role of platform providers in mitigating online harm, and specifically called upon them to enhance efforts to reduce financial risk to retail investors.

On advertisement verification, SEBI said verification must ensure only SEBI-registered entities are allowed to advertise investment products and investment-related services. On verified labelling of apps, SEBI said regulated trading and investment apps available on app stores should carry a distinct, visible label that helps investors easily differentiate genuine, regulated apps from unregulated and fraudulent applications.

SEBI said that this reinforcement of responsibility at the platform level will be a critical layer in addressing the rapid growth of mis-selling, misinformation, pump & dump activity, illegal profit-sharing schemes, unregistered advisory, and online investment frauds that have proliferated via open social media ecosystem.

The major platforms that run major social media firms that own major platforms include Meta which owns Facebook, Instagram, WhatsApp, Messenger and Threads. While Google owns YouTube, Meta has started verification of advertisers from July 31st this year. SEBI is now trying to deal with fake apps identical to genuine brokers, through writing to Google so that such fake apps are not listed on their Play Store platform.

There have been instances where investors were lured to invest through fake mobile applications looking similar to genuine brokers and lost their money. Such fake apps showed big profits in a genuine like account statement but when investors tried to withdraw they were blocked and money was lost.

SEBI has now implemented secured payment through UPI Valid and introduced SEBI Check, so that investors can check if they are dealing with SEBI regulated genuine entities.