According to a report from CloudSEK, a cyber-security firm, share market scams in India could lead to staggering losses of Rs 20,000 crore by 2025. To safeguard themselves, investors are encouraged to select reliable brokers, steer clear of unrealistic profit promises, and protect their personal information. Awareness is crucial in combating these cyber threats. The report highlights that cybercriminals are exploiting share market investments to deceive individuals in India. The banking and financial sectors are anticipated to bear the brunt of these scams, predicted to suffer losses of approximately Rs 8,200 crore, followed closely by the retail and e-commerce sectors with estimated losses of Rs 5,800 crore.
‘Modus Operandi’ of Fraud Investments Scams
Cybercriminals employ various tactics to lure individuals into investing in fraudulent share market schemes. Often utilizing online platforms, social media, phone calls, and WhatsApp groups, these schemes are becoming increasingly sophisticated. Notably, CloudSEK estimates that the use of fake brand names alone could account for losses of Rs 9,000 crore.
Common Methods of Deception
Fraudulent Trading Apps and Websites: Scammers create fake applications or websites that promise enormous profits to attract unsuspecting investors.
Phishing: Cybercriminals send counterfeit emails or messages designed to harvest bank details, OTPs, or other sensitive information.
Pump and Dump Schemes: Fraudsters promote worthless stocks, artificially inflating their prices before selling them off and leaving investors with significant losses.
Imposter Brokers: Unregistered brokers lure investors with promises of high returns, take their money, and subsequently vanish.
Projected Loss Breakdowns for 2025
Banking and Financial Sector: Rs 8,200 crore (41% of total losses)
Retail and E-commerce: Rs 5,800 crore (29%)
Fake Brand Names: Rs 9,000 crore (45%)
Other Sectors: Rs 6,000 crore (30%)
These statistics highlight that financial scams, especially those related to the share market, pose a growing threat as online trading gains popularity.
Significant Scams in the Telugu States
Kadapa Scam (2025): Somasekhar Reddy defrauded 30 individuals out of Rs 12 crore in Kadapa by falsely promising substantial returns in share market trading. Police initiated an investigation following complaints from victims who faced intimidation when demanding their money back.
Mahabubnagar Scam (2023): A young artist in Mahabubnagar amassed Rs 9 crore from 70 victims since 2014, claiming monthly profits of 5-10%. He initially paid some interest to build trust before absconding with his family. The victims included women, workers, and day labourers.
Narayanapet Scam (2025): Mahbub Subhani swindled crores from thousands in Narayanapet from 2019 to 2021 by promising Rs30, 000 weekly profits for a Rs 1 lakh investment. After a three-year manhunt, police apprehended him in Nellore.
How to Protect Yourself?
To mitigate the risk of falling victim to share market scams, investors should adhere to some precautions.
1. Use SEBI-Registered Brokers: Always verify that brokers or trading platforms are registered with the Securities and Exchange Board of India (SEBI). A comprehensive list can be found on SEBI’s official website.
2. Be Skeptical of High-Profit Promises: Be wary of offers claiming guaranteed returns, such as "Rs 30,000 in weekly profits," as they are often fraudulent. Understanding the inherent risks of share market investments is essential.
3. Keep Personal Information Secure: Do not share bank details, OTPs, or passwords with anyone. Avoid entering sensitive information on unfamiliar apps or websites.
4. Conduct Thorough Research: Prior to investing, review feedback and information about the company. Utilize trusted sources to gather insights and stay informed about potential scams. If you suspect fraud, report it to local authorities or contact the cybercrime helpline at 1930.
Why Are Scams on the Rise?
The surge in online trading apps is significantly contributing to the prevalence of stock market scams. While some apps in digital platforms facilitate easier trading, unscrupulous individuals leverage this trend to deceive others. A lack of awareness among new investors about market risks and SEBI regulations further exposes them to exploitation. Criminals often utilize social media to target and manipulate unsuspecting individuals, with platforms like WhatsApp and Telegram used to create fake groups and disseminate misleading "stock tips" to attract victims.