As technology is redefining the age of digitisation, everything is now at our fingertips.Various mobile apps are transforming the way we manage our finances with a single tap on a screen.
However, these technological conveniences are also making us vulnerable as fraudsters and scammers now have unprecedented access to us through our devices, and they’re using highly sophisticated tactics to lure unsuspecting investors into dangerous traps.
Here’s a look at a few recent case studies that expose these vulnerabilities. We’ll also discuss how we can safeguard ourselves against becoming the next victim.
A WEB OF LOVE, LIES AND LOSS
For 31-year-old Bengaluru-basedtechie named Ashish*, who had recently been laid off,it all began with a notification. While scouring an online professional platform, a user wanted to connect with him and sent a note saying that she thought that his profile was impressive.
She came across as unusual in terms of how she initiated the conversation. She appeared professional, outgoing, sincere, and disarming. And Ashish had his guard down almost right away.
Their conversations soon moved to a personal messaging site and the two started texting more and more and everything seemed organic and genuine. Soon, he became infatuated with the woman, who called herself 'Tara' —despite never meeting her.He thought that she could well be the true love of his life.
She started selling a dream to him. Not just a romantic dream, but also a financial one.
To win his trust, she showed him social media posts of her lavish lifestyle, including pictures from foreign locations, and rides in high-end cars. He believed her, thinking she was making enough money and wanted to ride on the same gravy train.
She convinced him to start investing in an investment scheme, which offered her high returns so that the two could retire early. And everything went according to the plan in the beginning.
Initially, they made couple of successful trades and he was able to move the profits to his bank account. This was enough to convince him that it was legit.
He then borrowed money from 15 of his friends to the tune of Rs 25 lakh. And then he doubled down and took out a loan of Rs 10 lakh to invest some more.
In just a few months, his investment had more than doubled on paper. However, he was now unable to withdraw it. Meanwhile, ‘Tara’ had stopped replying.
At the last count, Ashish had lost to the tune of Rs1.4 crore—this includes a substantial sum that he had saved for meeting the medical expenses of his mother, who was battling with cancer, besides money forthe marriage of his elder sister.
Today, Ashish is living in utter guilt—embarrassed, ashamed, financially devastated and heartbroken.
A FIX TO RICHES WITH NO RISK
A 45-year-old Hyderabad-based womannamed Shanti*, a private firm employee, came across an advertisement on a popular social media platform offering huge tips and huge returns on certain stocks. She had lost her husband in a mishap; and the single mother was looking forward to building a respectable corpus to meet the higher education costs of her teenage son, who aspired to study abroad.
She was contacted by a representative who appeared to be ‘financial savvy’ and promised her high returns on an investment opportunity with little to no risk.
Lured by the prospect of considerable financial gains, she started investing smaller amounts initially.
After the initial investment, she was presented with a fake statement. This fabricated document highlighted that her internal equity account had surged to a whopping Rs 10 crore, supposedly reflecting returns on her investments. The representative explained to her that these bumper returns were achieved with ‘sophisticated’ strategies that she found difficult to understand or verify.
Furthermore, the representative suggested raising the amount of her investment. However, when she opted not to make any additional payments, the situation changed course dramatically.
When she attempted to withdraw her money, she was unable to access the platform site and the representative ceased all communications and ghosted her.
She had been duped to the tune of Rs 3 crore—dashing her cherished dream of sending her only son for specialised studies overseas.
PROMISING THE MOON
Jagjit*, a 55-year-old ship captain from Mumbai, opted for an early retirement to take care of his ailing wife who had been diagnosed with a debilitating depression.
He dreamt of spending his sunset years in a lush hill station with her tending to a tiny poultry farm and looked forward to supplement their living expenses with occasional stock picks.
Last year, he received a cold call from a representative of a ‘renowned’ equity firm, touting a cannot-be-missed stock in a company that engaged in oil palm plantation.
His story is a text book case of how fraudsters use psychological tactics to win confidence and trust of investors.
He was told that a renowned group of investors were putting in their money—a tactic known as source credibility. The representative tried to convince him that he was poised to gain significant money in the future—a tactic referred to as phantom riches.
They came across as quite credible and professional. Jagjit was told that he could expect to triple his money. So, he invested Rs 10 crore – almost everything they had. A risky move indeed, but he had come to blindly trust the stock promoter.
While he adopted a practice of cautious investing all these years, but in this case, he was convinced in a way that he wanted to believe them.
However, by the time he came to his senses, it was too late and the promoter vanished in thin air. Jagit is a classic case of stock pump-and-dump and his investment is practically worthless today.
AVOID FALLING FOR THE BAIT
First and foremost, exercise caution when it comes to unsolicited messages and group chats, highlightsICICI Foundation, in their campaignto raise awareness about financial frauds among potential investors, as shown in the video below:
At apersonal level, you can look forward to taking a few steps to avoid falling into the trap of a hacker or scammer. For example, avoid installing a third-partyapplication apart from the ones available on the App Store and Play Store. Also, always consider these three points before installing any app or tool—the developer, the reviews and the permissions.
Check the privacy settings while sharing any form of data on a social media platform. Quite often, hackers will seek out your personal information and lock you out of a particular social media account, and then they would reach out to acquaintances and friends demanding money on your behalf.
Furthermore, hackers are known to deploy unethical tactics referred to as ‘Black Hat SEO’, whereby they manage to increase a page or fake website’s ranking higher in search results. Additionally, always remain wary if anyone asks you to download any app or tool.
Also, try and rely on Open-Source Intelligence (OSINT) techniques to gather more information about a particular individual. For example, searching for photographs and videos on common social media sites can reveal a lot about a person.
In case one has transferred funds to fake brokerage websites, reach out to an authority by lodging a complaint as soon as possible. Timing is important, so acting swiftly increases the scope of potentially recovering lost funds and also aids in preventing others from falling victim to a similar scam.
Besides, keep yourselves abreast of any information on emerging scam tactics. Moreover, promptly report any suspicious matter to regulators or governmentauthorities.
Finally, to register a cyber fraud complaint, log on to: www.cybercrime.gov.in or call the national helpline number at 1930.
Key Takeaways
- Exercise extreme caution against any unsolicited communication about an ‘investment opportunity’
- Any ‘investment’ that promises more than realistic annual returns should likely raise a red flag
- If there is no comparable business to understand returns, perhaps avoid investing in such schemes
- Understand the business model first, then decide if it’s worth investing in
- Before investing in any high-yielding equity-based project, conduct thorough research
- Check reliable sources of information online to learn about companies, business prospects, management, and financial statements
This article is sponsored by ICICI Foundation to promote awareness among potential investors about rising investment scams.
Disclaimer: No Business Standard Journalist was involved in creation of this content