Scams and red flags in Indian markets

🎯 In 30 seconds: Indians reported ₹22,845.73 crore lost to cyber fraud in 2024, according to the Ministry of Home Affairs, and SEBI has warned of a rise in securities scams on social media. Most market scams follow a few patterns: a Telegram or WhatsApp group that gives "free education" and then tips, a fake trading app with a "special institutional account", a pump and dump in a small or SME stock, off-exchange dabba trading, or an illegal forex platform. Guaranteed returns, payments to anyone other than a registered broker, and requests for your login or OTP are the clearest red flags. Check every person and app on SEBI's website, and if money is lost, call 1930 at once.

How big the problem is

In a written reply to the Lok Sabha in December 2025, the Ministry of Home Affairs put reported losses from cyber frauds in 2024 at ₹22,845.73 crore. That figure covers all kinds of online fraud, not only investment scams, and counts only what people reported. The same reply said more than ₹7,130 crore had been saved through the national helpline system across more than 23 lakh complaints, by getting banks to freeze money quickly.

In April 2025 SEBI issued a public caution that it had noticed "an increase in frauds related to securities market" on YouTube, Facebook, Instagram, X, WhatsApp, Telegram and the app stores. NSE and BSE issue warnings about named individuals and channels most months. You will meet these pitches. The goal of this chapter is that you recognise them.

Tip groups that start as "education"

The most common entry point is a social media ad or post promising free stock market classes, a "VIP group" or a "multibagger" list. You join a Telegram channel or WhatsApp group. SEBI's caution describes what happens next: scamsters give trading calls "in the name of providing education", post misleading testimonials and screenshots of profits, and promise assured or risk-free returns. Groups often have names like Institutional Trading Group, Official Stock Community or Investment Club, and some claim links to a well-known SEBI-registered firm.

The early tips may even work. That is part of the design: a few winners build trust before the real ask comes. The ask is either to buy a particular small stock (a pump and dump), to pay for a "premium" service, or to move your money onto the group's own app.

Education does not include telling you what to buy today

Since SEBI's circulars of October 2024 and January 2025, SEBI-registered brokers, advisers and other regulated entities may not associate with unregistered people who give advice or recommendations or make claims about returns. People who only teach are allowed. Someone who calls themselves an educator but posts "buy this at ₹48, target ₹70" is giving advice, and if they are not registered as an investment adviser or research analyst, that advice is outside SEBI's protection.

Fake trading apps and "institutional accounts"

The second stage of many group scams is an app. The group says members get special access through its platform: an "institutional trading account", IPO shares at a discount, block trades at below-market prices, or sure-shot IPO allotment. SEBI lists exactly these lures in its April 2025 caution, and NSE warns investors not to deal with anyone offering trading through "FPI or FII sub-accounts or institutional accounts" with special privileges, sometimes showing fake SEBI or exchange certificates.

The stages SEBI describes in its fake trading app warning. The trades shown in the app never reach NSE or BSE. Your money left at step 3, when you paid into an account that was not a registered broker's.

How to tell the app is fake:

You are asked to pay a person or a company that is not your broker, often a different bank account each time. A real broker collects money only into its own designated client accounts.
The app came as a link or an APK file rather than from the official app store listing named on the broker's own website.
The holdings never show up in your demat account. Shares you really buy appear in your demat account with NSDL or CDSL after settlement, and you can check through the depository's own app or statement, independent of the broker.
Withdrawing needs a "tax", "fee" or "unlock charge" first. Once you pay it, a new reason appears, and then contact stops.

SEBI publishes the official trading apps of registered brokers on its investor website. If the app is not there, do not deposit money in it.

Pump and dump in small and SME stocks

SEBI's investor poster on pump and dump scams describes the same sequence seen worldwide, with an Indian target: Telegram and WhatsApp channels "promising multi-bagger stock tips" that "often target small and medium-size company stocks (SMEs)". The operators buy quietly, build trust, flood the channel with "Buy now!" and "To the moon" messages, and sell their own shares into the rush. When they stop, the price falls and the last buyers are stuck.

A hypothetical SME stock. The operators bought around ₹40, pushed it to about ₹210 with tips, sold near the top, and left later buyers holding shares worth a fraction of what they paid.

Warning signs:

A small company you never heard of is suddenly in every channel at once, with targets and no filings to back them.
The stock keeps hitting its upper circuit on rising volume with no announcement on the exchange website.
The stock is already in a surveillance framework (ASM or GSM) or trade-for-trade. Exchanges put stocks there partly because of unusual price and volume patterns. See Trading rules.
You are told to buy "before the news comes out". If the news is real and not public, trading on it is insider trading. If it is not real, it is the pump.

Check the company's own announcements and results on NSE or BSE before acting on any tip (Market data sources, Reading company filings).

Dabba trading: the market that is not a market

Dabba trading ("box" trading) is betting on share or index prices with an operator, outside the exchange. You place a "trade" with the operator, who records it in a book or an app, and profits and losses are settled in cash between you. Nothing goes to NSE or BSE, no contract note is issued, and no shares or contracts exist. It often comes with promises of no brokerage, high leverage and no tax trail.

NSE has warned against dabba operators many times, including in September 2026, and says participation in such illegal platforms is at the investor's own risk because they are neither approved nor endorsed by the exchange. Exchange grievance and dispute mechanisms do not cover them. If the operator disappears or refuses to pay, you have no one to complain to except the police, and you may have broken the law yourself.

Unregistered advisers and "account handling"

Anyone in India who gives investment advice for a fee must be registered with SEBI as an investment adviser (IA), and anyone who publishes research or stock recommendations must be registered as a research analyst (RA). Registration does not guarantee good advice, but it means rules, disclosures and a complaint route.

Two offers to refuse outright:

Assured or guaranteed returns from stock market products. NSE's advisory says such schemes are prohibited by law.
Account handling or "profit sharing". Someone offers to trade your account for you if you share your user ID, password or OTP. NSE warns investors never to share trading credentials with anyone. Whatever they do in your account is legally your trade, and your losses are your own.

Illegal forex and CFD apps

Ads for "forex trading", currency CFDs and leveraged international trading apps are common on social media. For an Indian resident, forex trading is permitted only with entities authorised by the RBI and on authorised electronic trading platforms or recognised exchanges (NSE, BSE and MSE), and only in permitted products. The RBI keeps an Alert List of unauthorised forex trading platforms and of websites and apps that promote them. Its update of 19 November 2025 took the list to 95 names. The RBI says the list is not exhaustive and an entity missing from it should not be assumed to be authorised. See Leverage everywhere for the legal products.

Red flags in one list

Treat each of these as a stop sign:

Guaranteed, assured or fixed returns, such as "3% a month" or "no loss strategy".
Urgency and secrecy: "only today", "limited seats", "don't tell your family".
Payment to anyone other than a SEBI-registered intermediary's own account, especially a personal account, a different company's account or a crypto wallet.
Special access: institutional accounts, discounted IPO or block shares, guaranteed allotment.
An app sent as a link or file instead of being listed on SEBI's investor site and the official app store.
Requests for your login, password, TPIN or OTP, or to install screen-sharing software.
No registration number, or one that does not match SEBI's records for that name.
Calls from ordinary 10-digit mobile numbers claiming to be your broker. SEBI has asked regulated entities to use the 1600 number series for service and transaction calls.

How to check before you pay

Check registration. Search the person or firm on SEBI's list of registered intermediaries (brokers, IAs, RAs and others). Match the exact name and registration number.
Check the app. SEBI's investor website lists the trading apps of registered brokers. Download only that app from the official store.
Check the payment handle. Since 1 October 2025, SEBI-registered intermediaries collect UPI payments through validated "@valid" handles, such as a broker's handle ending in ".brk@valid" followed by the bank name. Supported UPI apps show a green thumbs-up icon in a triangle for these. The SEBI Check tool, on SEBI's website and the Saarthi app, lets you verify a UPI ID or bank account of a registered intermediary.
Check your demat. After any real purchase settles, the shares appear in your demat account. Look in the depository's statement, not only in the app that sold you the idea.
Wait 48 hours. A real opportunity survives two days. Scams depend on rushing you.

One simple rule

Never move money to any account, app or wallet because someone you met online told you to. Trade only through a SEBI-registered broker you found and checked yourself, using its official app, and make your own decisions from public filings. More on who regulates whom is in Who protects you.

How to report

Where	When to use it
Helpline 1930	Immediately, if money has left your account through fraud. Police take the details and you get an acknowledgement number by SMS. Speed matters: banks can freeze money still in the fraudster's accounts
cybercrime.gov.in	File the formal complaint within 24 hours of calling 1930, using the acknowledgement number. Also for online fraud where you have not paid yet
Your bank and broker	At once: report the transactions, block cards and UPI, change passwords
SEBI SCORES (scores.sebi.gov.in)	Complaints against SEBI-registered entities such as brokers, advisers and listed companies. The entity has 21 days to resolve, then it is reviewed and can be escalated to SEBI
SMART ODR (smartodr.in)	Online conciliation and arbitration of disputes with registered intermediaries
SEBI Market Intelligence portal (mi.sebi.gov.in)	Tell SEBI about unregistered entities or platforms offering advice or trading

SEBI points out that if you deal with unregistered entities or apps, investor protection under SEBI and the exchanges, SCORES and SMART ODR are not available to you. Police and the cybercrime system are then your only route.

Save everything: chat screenshots, group names and links, phone numbers, UPI IDs, bank account numbers, app names and transaction references.

The recovery scam that follows

Victims are often contacted again by someone claiming to be a lawyer, a "fund recovery agent" or even a SEBI or police official, offering to get the money back for an upfront fee. That is a second scam. Regulators and police do not charge you to investigate or recover money.

Try it

Find one stock tip posted on social media this month. Write down who posted it and search the name on SEBI's registered intermediaries list. Are they an IA or RA?
Look up the stock on NSE or BSE: its recent announcements, its price band and whether it is in ASM, GSM or trade-for-trade.
Check how its price and volume moved in the days after the tip was posted. Write a three-line verdict.
Look up your own broker's app on SEBI's investor website, and check that the UPI handle you pay into is an "@valid" handle.
Save 1930 in your phone's contacts now, so it is there if you or someone in your family ever needs it.

Check yourself

A Telegram group offers you an "institutional trading account" with IPO shares at a discount, through its own app. What is it? Answer: A fake trading app scam. SEBI lists institutional accounts and discounted IPO or block shares among the common lures. Trades in such apps never reach the exchange.
What is dabba trading, and why does the exchange's grievance system not help you? Answer: Off-exchange betting on prices with an operator, settled in cash. It is illegal and not approved by any exchange, so exchange and SEBI complaint routes do not cover it.
How can you check that a UPI ID belongs to a SEBI-registered intermediary? Answer: Look for a validated "@valid" handle and the green thumbs-up icon in your UPI app, and verify it with the SEBI Check tool.
Money has just been taken from your account through a fake app. What do you do first? Answer: Call 1930 immediately, then file the complaint on cybercrime.gov.in within 24 hours using the acknowledgement number, and inform your bank.
A forex app is not on the RBI's Alert List. Does that mean it is authorised? Answer: No. The RBI says the list is not exhaustive. Residents may trade forex only with RBI-authorised entities and platforms or on recognised exchanges.

🛡️ Scams and red flags in Indian markets