The Rise of Fake Trading Apps in India: Safe Investing Guide

The Indian stock markets have experienced significant growth in the last few years, attracting a surge of new investors. This boom has been fuelled by the advent of easy-to-use trading apps, making the stock market more accessible. Unfortunately, the increased interest in stock markets has also attracted the attention of fraudsters who exploit people's lack of awareness.

Data from the Indian Cybercrime Coordination Centre (I4C) shows that in the first nine months of 2024, a staggering ₹4,636 crore was stolen from people's bank accounts through stock market trading scams, making it the most common type of cyber fraud.

Sophisticated tactics like fake stock trading apps have become the new way to cheat gullible investors. Whether you're an experienced investor or just starting out, it's important to recognize genuine trading apps and avoid falling for fake ones.   

Stock trading through SEBI-registered entities is permitted in India and stock brokers offer mobile trading applications to their clients to make trading easier and accessible. However, scammers have exploited this by creating fake trading apps that mimic legitimate ones to deceive investors.

These fraudulent apps are often promoted via social media platforms like YouTube, Instagram and Telegram and WhatsApp groups, luring unsuspecting individuals with promises of quick profits.  

Many incidents involving fake stock trading or investment apps have been reported recently, involving huge financial losses. These apps initially show good returns to build investors’ trust. However, when the investors try to withdraw money, they find out they can't. The funds were never invested; they were siphoned off from the start. This highlights the serious risk and the need for vigilance to protect your hard-earned money from such fraudulent schemes.

Recently, a man named Hussain was arrested in Hyderabad for defrauding a Kannur resident of ₹29.25 lakh through a fake trading app called EltAs Fud. The victim initially saw impressive returns but faced issues when trying to withdraw funds, eventually realizing he had been scammed. Investigations revealed multiple transactions and flagged accounts, with Hussain's account showing over ₹8 crore in transactions in a single month 

In another incident, a Hyderabad businessman lost ₹5.9 crore after falling for fake IPO scam. The victim received a WhatsApp message promoting a supposed "Goldman Sachs Business School" for block trading and preferential IPO access.

A woman posing as the assistant to the managing director of Goldman Sachs contacted the victim, adding credibility to the scam. She presented him a lucrative investment opportunity. Convinced of the legitimacy of the offer, he was instructed to download a trading app called “GSIN” through which he invested ₹5.9 crore.

When he tried to withdraw money, he realised he was tricked. The woman asked him to pay 20% of the profits to access his money. This raised his suspicions, and he reported the matter to the police. Investigations revealed that the money he had invested had been funnelled into 11 different bank accounts, making it difficult to trace and recover the funds

These are just two of many such incidents where scammers have exploited the growing interest in stock market investments through fake trading apps. 

Fake trading apps can confuse you in many ways, such as: 

• They first message you on regular social media sites and messaging apps or you start noticing their promotions everywhere.
• These apps even copy the design of famous trading apps, including the company brand name, logo and colors, making it look legit. This confuses the investors between the real and the fake.
• Their usual attractive offers are fairytale investments with dreams of massive gains, without any risk or fees, with lower or no legal compliance like Aadhar card or PAN card authentication.
• Finally, they receive money from investors and trap them. They do not allow you to withdraw, ask you for fees or even leave you hanging without consideration. 

But you can safeguard yourselves from all these scenarios by keeping in mind some easy steps! 

• Do your research: Ascertain the credibility of any trading app before engaging. Never download apps from any insecure and unknown links especially be cautious when you find such apps through social media. Always download the app only through the website of the SEBI-registered entity redirecting you to their Google Play Store or AppStore page. Check the reviews of the app and verify regulatory compliance to determine their credibility.

   

• Be skeptical of investment offers promising exceptionally high returns or if you are not taken through a rigorous KYC process during onboarding. If it sounds too good to be true, it probably is!

   

• Verify and go through the right channel: You can find the list of registered stock brokers, investment advisors and research analysts on SEBI’s website. Verify the company’s existence there, and then directly go to the website of the entity to learn more about them, their offers and download the app through their official page.

The proliferation of fake stock trading app in India is a pressing concern. Investors need to be vigilant and cautious to avoid falling prey to these sophisticated scams.

If you come across a suspicious link or get added to a WhatsApp group promoting investments, report and block it immediately. If you fall victim to such a scam, report it immediately to the police (cybercrime unit). The earlier you report, the higher are your chances of getting the money tracked and recovered.