A 36-year-old woman from Delhi recently fell victim to a scam, losing over Rs 24 lakh due to fraudulent investment ads on social media. The incident highlights the increasing danger of deceptive advertisements luring individuals into fake investments “endorsed” by renowned entrepreneurs or financial firms.
Incident Overview
While browsing Facebook, the woman encountered an ad promoting stock market investments through Upstox Securities, a well-known trading app in India. Intrigued, she clicked on the link and was added to a WhatsApp group named “V5-VIP Upstox Services Group.” According to her FIR, the group provided stock trading tips and eventually directed her to a fraudulent application.
The group administrator, identified as Rajat Upstox VIP, urged members to participate in a competition called GTC, promising substantial returns. Following their guidance, she joined a mobile app via a provided link and submitted her Aadhaar and PAN cards to activate her account. Between July 4 and July 17, 2024, she conducted 19 transactions totaling Rs 24,35,000 to 10 different accounts for shares and IPOs. The app showed her investments growing, convincing her to buy more stocks. However, when she tried to sell her shares, they refused and suggested she take a loan instead.
Growing Problem
Nidhi Sagar, a resident of North Pitampura, is among many individuals tricked by such schemes, desperately hoping to recover their lost money. Many of these fraudulent ads appear on Facebook and Instagram, platforms operated by Meta.
Response from Upstox
Reacting to the scam, Upstox clarified, “We, at Upstox, would like to clarify that we have no association with Rajat Chopra in any form or capacity. Upon learning of such issues, we promptly file police complaints.” They further emphasized, “To combat impersonation incidents in our industry, we have ongoing public awareness campaigns. Our customers’ security and trust are our top priority. We would like to reiterate that Upstox and its employees will never ask for personal or financial information through unofficial communication channels. We do not share stock tips offering guaranteed returns. Investors are urged to stay vigilant, verify all communications, and report any suspicious activities immediately.”
Warning from the National Stock Exchange (NSE)
The National Stock Exchange (NSE) has also cautioned investors about entities falsely claiming to be associated with reputable financial institutions and displaying fake certificates. “Investors are cautioned and advised NOT to deal with such persons/entities in any manner including participation on their illegal platforms. Such participation is at the investor’s own risk, cost, and consequences as such illegal trading platforms are neither approved nor endorsed by Sebi/Exchanges,” the NSE stated. They advised investors against subscribing to any schemes or products offering guaranteed returns in the stock market and not to share their trading credentials, such as user ID/password or any other sensitive information.
Stock Market Scam Menace
Online stock investment scams are rampant in India. For instance, a man from Thane city in Maharashtra was reportedly cheated out of more than Rs 73 lakh under the pretext of share trading. Similarly, a Pune woman lost Rs 1.8 crore in a share trading fraud, lured by promises of tenfold returns after clicking on a social media link and joining a phone messenger group misusing the name of a global investment banking major. In April, a Bengaluru man lost Rs 5.2 crore after downloading a stock market app from WhatsApp. Many such ads have been found on WhatsApp, Facebook, Instagram, and Telegram.
How to Avoid Falling Prey to Scams
Upstox has shared crucial measures to help investors avoid scams:
- Check Broker Legitimacy: Always research before engaging with any individual or platform. Look for Sebi registration and Stock Exchange membership to ensure credibility.
- Beware of Unsolicited Offers: Be cautious with unexpected calls, emails, or messages promising quick profits. Block and ignore such communications.
- Verify Communication Channels: Pay close attention to the communication handles of brokers offering quick returns.
- Protect Personal Information: Keep sensitive information private, especially when dealing with unknown individuals or suspicious requests. Upstox or its employees or any other registered broker will never ask for personal details without proper verification.
- Report Suspicious Activity: Promptly report any suspicious activities to cybersafety@upstox.com.
Staying vigilant and informed can help protect against falling victim to these sophisticated scams.
