With technology at our fingertips, trading and investing has become easier than ever. However, all good things come at a cost. This time around, it is online fraud and stock market scams.
As online stock market frauds become increasingly common, the Securities and Exchange Board of India (SEBI) and stock exchanges like NSE are actively warning investors about fraudulent entities and individuals who scam people through digital means and social media platforms.
These scams can leave you financially drained, so it's crucial to stay vigilant against potential threats.
Six essential tips to help you mitigate these risks:
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Avoid Unsolicited Offers: Be cautious of unsolicited investment advice or promises of high returns. These tips can come via emails, messages, phone calls, or social media. Always treat them with scepticism. Do not trust any investment tips that suddenly appear on social media, through phone calls, or in text messages.
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Choose Legitimate Investment Firms: Do a background check to verify the track record of investment firms. Reputed firms will never send you any unsolicited advice or promise exorbitant returns.
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Engage with Registered and Regulated Entities: Work only with SEBI-registered brokers and platforms that adhere to strict regulatory oversight and follow investor protection measures.
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Be Wary of Guaranteed Profits: Avoid individuals or entities that offer returns that seem too good to be true. The stock market inherently involves risks, and there is no foolproof way to make money in investments. Hence, as tempting as it may seem, it is better to avoid such offers.
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Stay Informed About New Cyber Threats: Educate yourself about the latest cyber threats and the tactics used by fraudsters to protect your investments.
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Secure Your Digital Assets: Do not click on spam links that reach your inbox. These could be potential threats that may be tracking your online activity and downloading your data. Update your antivirus pack from time to time to further protect your software. Be careful about downloading investment apps that seem dubious. Scammers often create fake apps or websites that resemble legitimate ones to trap unsuspecting individuals. If something seems untrustworthy, it probably is. Trust your instincts and avoid engaging.
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Protect Your Demat Account Credentials: Your Demat account credentials are the keys to your financial assets. Never share them with anyone. Trusted investment professionals will never ask for your Demat account login details. If someone does, it is a clear sign of a potential scam.
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Don’t Be Rushed into Transferring Money: Conduct a thorough research before investing your money on any platform. Scammers often use high-pressure tactics to rush you into making a decision before you can properly investigate the opportunity. Never let anyone pressurise you into transferring money to unknown bank accounts or investing directly from your bank account without fully understanding the implications.
Stock Market Frauds are present in the current times
Promise of High Returns
It is one of the most prevalent stock market scams out there. Many scammers act as investment gurus and provide stock market tips on their WhatsApp groups.
As you delve further into these groups, they share past wins of other investors who allegedly succeeded in the stock market based on their tips. These wins are presented in large numbers to convince you to buy their tips.
Once you are convinced, they might ask you to invest through a particular application. After you experience a few wins and become fully convinced, these scammers persuade you to take bigger bets on these websites.
When you do, it becomes increasingly difficult to withdraw your funds from these apps as they impose restrictions on withdrawals and charge unusually high commissions.
WhatsApp and Telegram Groups
Many fraudsters duplicate the names of famous YouTube investors and create fake channels on WhatsApp and Telegram. They provide some free advice and then ask new joiners to pay for premium tips.
Make sure to join only authentic and reputable YouTube channels for advice. However, use caution even with these channels, as these YouTubers are not SEBI registered and may provide manipulated advice for higher views.
Use your judgement before making any investment. Also, make sure you know how to exit investments if you invest through new apps.
By following these tips, you can better protect yourself from falling victim to stock market frauds and scams.
Conclusion
As long as there are stock markets and humans who invest and trade, there will be scams. So, it is up to you to exercise caution before you invest your money anywhere.​​​​​​​
In the long run, your knowledge of the stock market will help you navigate safely.
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