Fake Trading Apps: How They Are Scamming You – A Case Study

Introduction

In recent years, the rise of digital trading platforms has revolutionized the way people invest in stocks, forex, and other financial instruments. However, this digital transformation has also given rise to a new breed of cybercriminals who exploit unsuspecting investors through fake trading apps. This blog post delves into the alarming trend of fake trading apps in India, highlighting recent case studies and providing tips on how to protect yourself from these scams.

The Rise of Fake Trading Apps

The convenience of trading apps has made them immensely popular among investors. Unfortunately, this popularity has also attracted fraudsters who create fake apps to lure investors into their traps. These apps often promise high returns with minimal risk, making them appealing to both novice and experienced traders.

Recent Case Studies in India

Several high-profile cases in India have brought attention to the growing menace of fake trading apps. Here are some notable examples:

1. Mumbai Trading Scam: In August 2024, three individuals in Mumbai lost a staggering ₹2.37 crore within ten days due to an online trading scam. The victims were added to WhatsApp groups where so-called experts provided stock trading tips. They were then directed to download a fake trading app and deposit large sums of money. When they tried to withdraw their funds, they were asked to pay additional fees, leading to the realization that they had been scammed.
2. Ahmedabad CA Scam: An 88-year-old retired chartered accountant from Ahmedabad lost ₹1.97 crore in a similar scam. The victim was added to a WhatsApp group where investment tips were shared. Trusting the advice, he invested his money through a fake trading website. The fraudsters used sophisticated techniques to make the website appear legitimate, but when the victim tried to withdraw his funds, he was blocked.
3. Gurugram Doctor Scam: A doctor from Gurugram fell victim to an online trading scam, losing ₹2.5 crore. The victim was lured by promises of high returns and was directed to download a fake trading app. After depositing a significant amount of money, he found that he could not withdraw his funds and realized he had been duped.
4. Power Bank, Sun Factory, and EzPlan: In June 2021, the Cyber Cell department of Delhi Police busted a major investment racket involving these three fake trading apps. The scammers managed to deceive over 5 lakh people across India, making around ₹150 crore within two months.
5. QFX Markets, 2WinTrade, and Guru Trade7 Limited: These apps were added to the Reserve Bank of India’s (RBI) Alert List in 2023. They were found to be unauthorized forex trading platforms, and using them could land users in legal trouble.
6. Binomo and Expert Option: These apps were also listed by the RBI as unauthorized forex trading platforms. They often lure users with promises of high returns on investments but are not authorized to operate in India.
7. Fake Cryptocurrency and Trading Apps: In 2021, Sophos Group identified 167 counterfeit Android and iOS apps used by attackers to steal money. These apps mimicked well-known platforms like Barclays, Binance, Gemini, and Kraken to deceive users into investing in crypto currencies.

These examples highlight the importance of being cautious and conducting thorough research before investing through any trading app. Always verify the legitimacy of the app and ensure it is authorized by relevant financial authorities. If you have any doubts, it’s best to consult with a trusted financial advisor.

How To Check if an App is authorized by the RBI

To check if an app is authorized by the Reserve Bank of India (RBI), follow these steps:

1. Visit the RBI Website

Go to the official RBI website: rbi.org.in.

2. Check the Authorized List

Navigate to the section for authorized entities. You can find lists of authorized dealers, full-fledged money changers, and electronic trading platforms. Here are some direct links:

• Authorized Dealers: Authorized Dealers List
• Full-Fledged Money Changers: FFMC List

3. Search for the App or Platform

Use the search function on the RBI website to look up the name of the app or platform. This will help you verify if it is listed as an authorized entity.

4. Check the RBI Alert List

The RBI periodically updates an “Alert List” of unauthorized forex trading platforms and apps. Ensure the app you are checking is not on this list. You can find the latest alert list on the RBI website or through recent news articles.

Some Fake Trading Apps Banned by The RBI:

Alpari, AnyFX, Ava Trade, Binomo, eToro, Exness, Expert Option, FBS, FinFxPro, Forex.com, Forex4money, Foxorex, FTMO, FVP Trade, FXPrimus, FXStreet, FXCM, FxNice, FXTM, HotForex, ibell Markets, IC Markets, iFOREX, IG Markets, IQ Option, NTS Forex Trading, OctaFX, Olymp Trade, TD Ameritrade, TP Global FX, Trade Sight FX, Urban Forex, XM, and XTB.

5. Contact RBI

If you are still unsure, you can contact the RBI directly for confirmation. They can provide information on whether a specific app or platform is authorized.

By following these steps, you can verify the legitimacy of a trading app and ensure it is authorized by the RBI.

How Fake Trading Apps Operate

Fake trading apps typically follow a similar modus operandi:

1. Initial Contact: Fraudsters often use social media platforms like WhatsApp, Facebook, and Telegram to reach potential victims. They create fake profiles and groups where they share investment tips and success stories.
2. Building Trust: Once they have the victim’s attention, they build trust by providing seemingly genuine advice and showing fake profits. They may even conduct webinars or send books to make their operation appear legitimate.
3. Directing to Fake Apps: Victims are then directed to download fake trading apps from unofficial sources. These apps are designed to look like legitimate trading platforms but are controlled by the fraudsters.
4. Depositing Funds: Victims are asked to deposit money into the app’s wallet. Initially, they may see virtual profits, which encourage them to invest more.
5. Blocking Withdrawals: When victims try to withdraw their funds, they are asked to pay additional fees or are blocked altogether. By the time they realize they have been scammed, it is often too late to recover their money.

How Can We Recognize a Fake Trading App

Recognizing a fake trading app can be challenging, but there are several key indicators that can help you identify and avoid them. Here are some tips to help you spot a fake trading app:

1. Unrealistic Promises

Fake trading apps often promise high returns with little or no risk. If an app guarantees profits or offers returns that seem too good to be true, it’s likely a scam.

2. Unverified Sources

Always download trading apps from official app stores like Google Play or the Apple App Store. Avoid downloading apps from links sent via social media, email, or unofficial websites.

3. Lack of Regulatory Information

Legitimate trading apps are usually registered with recognized financial authorities. Check if the app is regulated by bodies such as the Securities and Exchange Board of India (SEBI) or other relevant authorities.

4. Poor Reviews and Ratings

Look for reviews and ratings of the app online. Fake apps often have poor reviews or very few reviews. Be cautious if the app has mostly negative feedback or if users report issues with withdrawals.

5. Developer Information

Check the developer’s information in the app store. Legitimate apps are usually developed by well-known financial institutions or reputable companies. Lack of information or vague details about the developer can be a red flag.

6. Website and Contact Information

Legitimate trading apps usually have a professional website with clear contact information. If the app’s website looks unprofessional or lacks contact details, it could be a scam.

7. Pressure Tactics

Be wary of any app or individual that pressures you to invest quickly. Scammers often create a sense of urgency to prevent you from doing proper research.

8. Suspicious Permissions

Check the permissions the app requests. Fake apps may ask for unnecessary permissions that could compromise your personal information.

9. Transparent Fee Structure

Legitimate trading apps have a clear and transparent fee structure. If the app is vague about fees or charges hidden fees, it could be a scam.

10. Check for Clones

Scammers often create apps that mimic legitimate ones. Look for slight differences in the app’s name, logo, or interface. Verify the app’s authenticity by comparing it with the official app.

How to Protect Yourself

Here are some steps you can take to protect yourself from fake trading apps:

1. Do Your Research: Before investing, research the app and the company behind it. Look for reviews, regulatory information, and any news articles about the app.
2. Verify the App: Only download apps from official app stores. Check the developer’s information and read user reviews.
3. Use Trusted Platforms: Stick to well-known and established trading platforms. These platforms have a reputation to uphold and are less likely to be involved in scams.
4. Be Sceptical of High Returns: Be cautious of any investment that promises high returns with little risk. Legitimate investments come with risks, and no one can guarantee high returns.
5. Report Suspicious Activity: If you come across a suspicious app or believe you have been scammed, report it to the relevant authorities. In India, you can report cybercrimes to the Cyber Crime Cell.

How We Can Report a Suspicious App to Authorities

Reporting a suspicious app is crucial to help authorities take action and protect others from potential scams. Here are the steps you can follow to report a suspicious trading app in India:

1. Collect Evidence

Before reporting, gather as much evidence as possible. This includes:

• Screenshots of the app and any suspicious activity.
• Transaction records or receipts.
• Communication with the app’s support team or any individuals involved.
• Details of the app, such as its name, developer information, and download source.

2. Report to the Cyber Crime Cell

In India, you can report cybercrimes, including fake trading apps, to the Cyber Crime Cell. Here’s how:

• Visit the National Cyber Crime Reporting Portal: cybercrime.gov.in.
• Click on “Report Other Cyber Crimes” and then “File a Complaint.”
• Fill in the required details and upload any evidence you have collected.
• Submit the complaint.

3. Contact the Reserve Bank of India (RBI)

If the app involves financial transactions, you can also report it to the RBI. The RBI has an alert list of unauthorized trading platforms. You can contact them through their official website or email.

4. Notify the App Store

Report the suspicious app to the platform from which you downloaded it:

• Google Play Store: Open the app’s page, scroll down, and click on “Flag as inappropriate.” Follow the prompts to report the app.
• Apple App Store: Open the app’s page, scroll down, and click on “Report a Problem.” Follow the instructions to report the app.

5. File a Police Report

You can also file a report with your local police station. Provide them with all the evidence you have collected. They may direct you to the Cyber Crime Cell if necessary.

6. Inform Your Bank

If you have made any transactions through the app, inform your bank immediately. They can help you secure your account and may assist in recovering lost funds.

7. Spread Awareness

Share your experience on social media and online forums to warn others about the suspicious app. This can help prevent others from falling victim to the same scam.

Conclusion

The rise of fake trading apps is a worrying trend that has affected many investors in India. By being aware of the red flags and taking steps to protect yourself, you can avoid falling victim to these scams. Always does your research, verify the legitimacy of the app, and be sceptical of promises of high returns. Stay informed and stays safe.

Frequently Asked Questions

1. What are fake trading apps? 

Fake trading apps are fraudulent applications designed to look like legitimate trading platforms. They lure investors with promises of high returns and then steal their money.

2. How do fake trading apps operate? 

Fake trading apps typically operate by building trust with victims through social media, directing them to download the app, and then blocking withdrawals after the victims deposit money.

3. What are the red flags of a fake trading app? 

Red flags include unrealistic returns, unverified sources, and lack of regulation, pressure tactics, and poor reviews.

4. How can I protect myself from fake trading apps? 

Protect yourself by doing thorough research, verifying the app, using trusted platforms, being sceptical of high returns, and reporting suspicious activity.

5. What should I do if I have been scammed by a fake trading app? 

Report the scam to the relevant authorities, such as the Cyber Crime Cell in India. Provide as much information as possible to help them track down the fraudsters.

6. Are there any legitimate trading apps? 

Yes, there are many legitimate trading apps regulated by recognized financial authorities. Always check for regulatory information and reviews before investing.

7. Can I recover my money if I have been scammed? 

Recovering money lost to a scam can be challenging, but reporting the scam to authorities increases the chances of tracking down the fraudsters and recovering funds.

8. Why are fake trading apps on the rise? 

The rise of digital trading and the popularity of mobile apps have made it easier for fraudsters to create fake apps and reach a large number of potential victims.

9. What should I do if I receive unsolicited investment advice? 

Be cautious of unsolicited investment advice, especially from unknown sources. Verify the information and consult with a trusted financial advisor before making any decisions.

10. How can I stay informed about the latest scams? 

Stay informed by following news updates, subscribing to alerts from regulatory bodies, and joining online communities where investors share information about scams.