Online Scams

A Ponzi scheme attracts investors by offering guaranteed and unusually high returns, based on short-term and often complex investments. However, the underlying investments don’t exist. Returns are paid to the initial investors from the funds of subsequent investors, rather than from any actual profit earned. The perpetuation of the scheme requires a continued stream of money from new investors.

Tips to avoid a Ponzi scheme:

• Beware of claims of guaranteed investments with above average returns
• Ensure that you receive detailed written information to fully understand and assess the underlying investment details
• Assess the promoter of the investment and do your homework, i.e. background check, whether they are licensed to sell securities - if they claim they are exempt, check with the local regulator
• If you have already invested and you are pressured to reinvest your returns, or there is a disruption of services by the promoter, contact the local regulator
• Consult an unbiased third party—like an unconnected broker or licensed financial advisor—before investing
• Always deal with a SEBI registered or authorised intermediaries, only
• Although many investment transactions are conducted by phone or online, be cautious about investment companies without established premises or offices
• Do not respond to unsolicited e-mails about investments, job offers or any requests for personal information without independently verifying the contents of the e-mail or phone call
• Avoid investments you are uncomfortable with, or don't understand
• Be vary of "get-rich-quick" offers and "hot tips"— you may stand to lose much more than you'll gain.

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Extortion e-mails are a type of scam, where cybercriminals send threatening messages to individuals or organisations demanding payment in exchange for not releasing sensitive or embarrassing information. These e-mails typically claim that the sender has compromising information, such as private photos or personal data and threaten to share it with the recipient’s friends, family or the public unless a payment is made.

The goal of these e-mails is to scare the recipient into paying the demanded amount, even though there might not be any compromising information to release. 

Warning signs that it might be a scam

• You receive a call, message or e-mail unexpectedly from someone claiming to be from a government department, debt collection agency or trusted company
• They will claim that you owe money and threaten you with legal action or arrest
• The caller will tell you that to fix the matter, you will need to pay a fee or fine
• The caller may ask for your personal information, such as your passport details, date of birth or bank information
• The caller may claim that the police will come to your doorstep and arrest you if you do not pay the fee or fine right away
• You may be asked to transfer money to an account to ‘keep it safe’ or for ‘further investigation’.

Steps you can take to protect yourself

• Don’t be pressured by a threatening caller asking for money. Hang up and don’t respond
• Don’t pay anyone by unusual methods such as gifts, hampers, vouchers or wire transfers
• Don’t use any contact details provided by the caller. Verify their identity by calling the relevant organisation directly. Go to the organisation’s official website and search for the contact details
• Do not respond to texts or e-mails. If you do, the scammers will increase their extortion attempts to get your money.

Additional safety tips

• Never send money or give credit card, online account details or identity information like your driver’s licence or passport to anyone you don’t know or trust. Never share them by e-mail or over the phone
• If you are concerned for your safety, contact the police
• If the scam is sent by e-mail, don’t open any attachments, don’t click on links and never download files. They can infect your computer with malware
• Report such incidents immediately to 1930 or cybercrime.gov.in

Parcel/Courier scammers claim to be Customs Officials and contact their targets over calls, mentioning a parcel booked in their name that contains narcotic drugs or some other banned substances. They impersonate a police officer to inform the target about a possible arrest. The victim who is already scared, tries to settle the false case by offering money to avoid the arrest.

The scammers use psychological tactics during calls to threaten the victim and obtain personal identification and bank details. They ask the victim to give his/her Aadhaar and other identification details apart from bank information to steal the money.

Safety tips:

• Stop – Scammers will offer help or ask you to verify or share confidential/personal/sensitive information. Do not transfer money or share personal information with such people

• Think – Ask yourself if there is a possibility that the message or call could be fake

• Protect – Act quickly if something feels wrong and protect yourself from getting scammed

• Report – Call on 1930 immediately and report such incidents or visit cybercrime.gov.in.

An Investment Scam is a fraudulent scheme that entices people to invest money with the promise of high returns, but with the real intention of theft.

Scammers use various tactics to deceive investors, by making unrealistic promises and offering guaranteed high returns with little to no risk. Remember, the higher the promised return, higher is the risk involved. Scammers may rush you into making a quick decision before you can do your own research.

• Using fake or misleading information: Scammers may lie about the investment itself, the potential return, or even the qualifications of the people involved.

• Targeting specific groups: Scammers often prey on retirees, senior citizens, or people with limited financial knowledge.

How does an Investment Scam happen

Fraudsters impersonate legitimate brokers or investment advisers or spread market related misinformation on social media/the internet. For example, fraudsters may set up an account name, a profile, or a social media handle designed to mimic a particular individual or firm. They may go so far as to create a webpage or even an app that uses a real firm’s logo, link to the firm’s actual website, or references the name of an actual person that works for the firm. Fraudsters may also direct investors to imposter websites by commenting on the social media posts of brokers, investment advisers, or advertise other kinds of market misinformation.

Common types of Investment Scams include

• Ponzi schemes: These schemes pay existing investors with funds collected from new investors, creating the illusion of success. Eventually, the scheme collapses once it runs out of new investors.

• Pump-and-dump schemes: Scammers artificially inflate the price of a stock using false or misleading information. Then, they sell their own shares at a high price before the price of the stock crashes.

• Phishing scams: Scammers send e-mails or text messages that appear to be from legitimate financial institutions, tricking you into revealing your personal, confidential, or financial information.

• Scalping: Fraudsters will recommend a stock to drive up its share price and then sell the shares of the stock at an inflated price to generate profits.

• Touting: The process of promoting a stock without properly disclosing the compensation received for promoting it.

Here are some tips to protect yourself

• Never invest in anything you do not understand. Do your own research and ask questions before investing money.

• Be wary of unsolicited offers. If someone you do not know, calls, or e-mails you about an investment opportunity, it is probably a scam.

• Do not be pressured into making a quick decision. Take your time and do your research before investing.

• Get advice from a trusted financial advisor. A qualified advisor can help you evaluate investment opportunities and make informed choices.

• Be careful if someone claims to offer you an investment opportunity that is exclusive or based on ‘insider information’ or confidential information.

• Do not let anyone encourage you to make an investment through what appears to be a third-party website or app. The website or app may be owned by the fraudster, and it may be a scam.

• Also, be wary of any ‘opportunity’ that requires you to use ‘crypto’ assets (for example, Bitcoin or BTC) to purchase an investment.