69% surge in online trading scams in 2023: Your guide to identifying, dodging frauds

Hyderabad: Online trading scams in India have surged by a staggering 69 per cent since the fiscal year 2022-2023, according to a recent report by the National Crime Records Bureau (NCRB).

In recent months, reported cases of online investment scams have witnessed a surge with criminals employing increasingly sophisticated tactics to dupe unsuspecting individuals. Cryptocurrency-related Ponzi schemes, promising astronomical returns, have gained particular traction, targeting novice investors eager to capitalise on the digital currency boom. The allure of quick profits has become a common tactic fraudsters employ, entangling victims in elaborate financial scams.

This article aims to shed light on the characteristics of online trading scams, provide practical tips to avoid falling victim to these schemes and highlight real-life scenarios that underscore the urgency of caution in the digital age.

Allure of quick money through experimental sources

Financial experts emphasised the need for heightened awareness and caution among individuals seeking alternative sources of income who may become susceptible to fraudulent schemes.

In a recent revelation, Cyberabad DCP Shilpavalli Koganti shed light on a specific online trading scam on X which was orchestrated through WhatsApp.

“Participants are enticed to join a trading group, leading to a series of deceptive steps that eventually result in financial loss” the DCP explained and emphasised the importance of understanding the rules of online trading ‘games’ to avoid falling prey to such scams.

How do scammers scam?

Online trading scams come in various forms but share common traits that potential investors should be cautious of.

Promise of unrealistic profits: Scammers often employ tactics involving unrealistic promises of high returns, guaranteed profits, or exclusive investment opportunities. These claims, enticing as they may seem, are typically exaggerated or entirely false, enticing individuals to invest without proper scrutiny.

Establishing trust through deception: Unscrupulous individuals reach out through unsolicited phone calls, emails, social media messages, or text messages. By impersonating legitimate financial institutions or investment advisors, scammers create a false sense of trust and authority, paving the way for their deceptive schemes.

Urgency to cloud judgment: A common strategy involves creating a false sense of urgency, pressuring individuals to invest hastily before the supposed opportunity disappears. This tactic impedes due diligence, making it more likely for victims to succumb to the scam.

Camouflaging deceit: Scammers often direct victims to invest through counterfeit or unregulated online trading platforms or mobile apps. While these platforms may appear legitimate, they are designed to siphon off funds and complicate or prevent withdrawals later.

High fees and hidden charges: Beware of platforms or investments with exorbitant fees, commissions, or undisclosed charges. Legitimate investments typically maintain transparent and reasonable fee structures.

Requests for personal information: Legitimate financial institutions rarely request sensitive information, such as social security numbers or bank account details, through unsolicited communication. Individuals should take it as a red flag when a company asks for personal details while investing.

Tips to avoid online trading scams

1. Never invest based on unsolicited contact or promises of guaranteed returns.

2. Do your research before investing in any platform or opportunity.

3. Only invest through reputable and regulated financial institutions.

4. Never share personal information with someone you don’t know and trust.

5. Be cautious of platforms with high fees or hidden charges.

6. If something sounds too good to be true, it probably is.

“This cautionary tale underscores the critical need for vigilance, informed decision-making, and adherence to best practices to safeguard against the deceptive schemes prevalent in the online trading landscape,” said DCP Shilpavalli Koganti.