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Woman loses Rs 23 lakh in online stock market scam: How to protect yourself

Mohammad Daud targeted a 32-year-old woman with a website on social media that promised high profits from stock market trading

Stock market fraud

Photo: Shutterstock

Surbhi Gloria Singh New Delhi
Delhi police arrested a 29-year-old man, Mohammad Daud, on Wednesday for allegedly duping a woman out of Rs 23.5 lakh by promising high returns on investments in the stock market through a website.

Here's what happened

Perpetrator: Mohammad Daud

Modus Operandi

Mohammad Daud targeted a 32-year-old woman with a website on social media that promised high profits from stock market trading. When she contacted the number on the website, he persuaded her to invest Rs 1,000 initially, which yielded a return of Rs 1,300. This small success convinced her to invest a larger amount. However, after she invested more money, Daud stopped responding to her calls. The police investigation revealed that the money was deposited into 11 different bank accounts.

How did the scam unravel?

On April 10, the woman filed a complaint at the Northeast Cyber Police Station, stating she had been duped of Rs 23.5 lakh. Acting on her complaint, the Delhi police traced Daud to the Maujpur area and conducted a raid.

During the raid, the police recovered 17 SIM cards, 11 debit cards, four passbooks, 15 cheque books, two stamps, and one phone. The police managed to recover Rs 8.55 lakh, a portion of the defrauded amount, from Daud's bank account. The remaining money had been transferred to various other accounts.

The police stated, "Daud used to dupe people with the help of an associate who will be arrested soon."

Stock market scam menace

Online stock investment scams are rampant in India. In the past few months, hundreds of individuals across the country have fallen victim to these scams, losing significant sums of money. For example, in April, a businessman in Jayanagar lost Rs 5.2 crore in a sophisticated cybercrime. He was tricked into downloading a fraudulent app and transferring money under the guise of high-return investments.

Similarly, in March, a woman from Pune lost Rs 24.12 lakh of her savings in an online share trading fraud. She had sold her jewellery to invest in a get-rich-quick scheme promoted by conmen, who asked her to download a mobile phone application to start trading.

NSE warns investors of fraudsters

The National Stock Exchange (NSE) has cautioned investors against entities falsely claiming to be associated with reputed financial institutions and showing 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.

The NSE also advised investors not to subscribe to any schemes or products offering guaranteed returns in the stock market, as these are prohibited by law. "Investors are advised not to share their trading credentials such as user ID/password or any other sensitive information with anyone," the NSE added. They emphasised that high-return investments usually involve high risk, including fraud, and that there can be no guarantee of assured returns in the securities market.

The exchange urged investors to verify the registered status of entities on Sebi's website.

A guide to protect yourself from online stock market scams
While the stock market offers exciting opportunities, but it also attracts scammers. Here's a guide to protecting yourself from online stock market scams:

Guaranteed high returns: If someone promises unrealistic returns, especially with little risk, it's a red flag. Legitimate investments involve inherent risks, and high returns usually come with higher risk.

Unfamiliar investment schemes: Be wary of complex or unfamiliar investment options pitched online. Research thoroughly before committing your money.

Never share login details: Never share your Demat account login information (username, password, or MPIN) with anyone, not even seemingly legitimate advisors or platforms. Legitimate institutions will never ask for this information.

Beware of phishing links: Phishing emails or messages often mimic real institutions and try to trick you into clicking malicious links that steal your login details. Be cautious of unsolicited emails, even if they appear to be from your bank or broker.

Don't be pressured: Fraudsters often use high-pressure tactics to rush you into decisions. Take your time, research any investment opportunity, and only invest when you fully understand the risks involved.

Verify information: Independently research any investment advisor or platform. Check their registration with Sebi (Securities and Exchange Board of India) and verify their legitimacy.

Invest through reputable brokers: Open your Demat account and invest only through Sebi-registered brokers with a good reputation.

Official sources for information: Rely on official sources like the Sebi website or your broker's platform for investment-related information.

Beware of social media hype: Don't blindly follow stock recommendations on social media. These could be from scammers or based on misinformation.

Enable two-factor authentication (2FA): Enable 2FA on your Demat account and other financial platforms for an extra layer of security.

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First Published: May 16 2024 | 11:43 AM IST

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