YouTube, Facebook to WhatsApp: SEBI cautions against THESE four types of fraudulent activities on social media platforms

Stock market fraud: With retail participation in the Indian stock market at record highs and social media usage surging, incidents of fraud have escalated sharply. In response, the Securities and Exchange Board of India (SEBI) has issued fresh advisories, urging investors to remain vigilant and avoid falling prey to these increasingly sophisticated stock market scams.

Last year, some 150,000 people reported being victims of stock frauds, an all-time high in India, according to a Bloomberg report.

The report, citing government data, said that in 2024, there were more than 400 stock-market-linked scams reported every day, amounting to more than $1 billion lost. So far, less than 10% of that money has been recovered.

This has come at a time when there are 130 million unique trading accounts — almost triple the number five years ago, putting gullible retail investors at risk.

Four common stock market scams on social media

Meanwhile, SEBI said it has noticed an increase in stock market frauds on various social media platforms (SMPs) such as YouTube, Facebook, Instagram, X (previously Twitter), WhatsApp, Telegram, Google Play Store, Apple Store etc.

“With increasing adoption of digital communication platforms, it is observed that scammers are enticing victims by giving trading calls in the name of providing education. They also provide misleading or deceptive testimonials, promise or guarantee of assured or risk-free return etc, through various SMPs,” said SEBI.

Against this development and to protect investor interest, SEBI has highlighted four common types of fraud relating to the securities market through social media platforms.

1. Unregistered Investment Advisory Services

Unregistered investment advisory services provided by entities that falsely claim to be registered intermediaries with SEBI or by showcasing fake certificates purportedly issued by SEBI.

2. Impersonation of SEBI-Registered Entities

Impersonation of SEBI-registered entities by fraudulent trading platforms, WhatsApp, Telegram channels, which deceptively claim or suggest affiliation with a SEBI-registered entity, claiming to provide assured or risk-free returns.

3. Misleading and Manipulative Content on Social Media

Misleading/manipulative content designed by scamsters to entice investors to join private chat groups or channels on WhatsApp/Telegram (e.g., VIP group, Discounted Trading group, Institutional Trading group, Official Stock Community, Investment Club, etc.) through fraudulent ads/posts on various social media platforms.

4. Fake Platforms Offering 'Exclusive' Services

Scamsters are enticing gullible investors by claiming to provide exclusive services on their platforms (fake trading/advisory apps) that facilitate securities trading. They lure subscribers with promises of preferential services related to trades and share prices, such as:

• Institutional trading accounts
• IPOs at discounted prices
• Block trades at discounted prices
• Sure-shot allocation of IPOs

How to identify authentic trading apps?

To identify SEBI-registered intermediaries and authentic trading apps, SEBI has provided these details on its website.

Any investor can verify the registration status and trading apps of SEBI-registered intermediaries at the following web links:

• Registered Intermediaries: https://www.sebi.gov.in/intermediaries.html
• Trading Apps: https://investor.sebi.gov.in/Investor-support.html

SEBI, in its circular, also advised all intermediaries to use the ‘1600’ phone number series exclusively for service and transactional voice calls to their existing customers. This way, investors can easily identify and attend service and transactional calls from SEBI-regulated/registered entities, reducing the risk of falling prey to stock market scams.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.