Social media platforms like Instagram were introduced to build connections with friends and other like-minded people around the globe. With time the platform got upgraded and many people and businesses started using it for building networks, marketing, etc. But apart from this many people misused the platform to run their evil objective of doing frauds and scams. One of the most common scams circulating on the platform today is the Instagram investment scam.
Many among you might have encountered some of the posts or ads on Instagram claiming ‘guaranteed returns’ or ‘high profit’ investment schemes. Right?
Now that is where such scams begin. Let’s understand these scams in detail and understand the ways to protect yourself from falling into the trap.
How Do Instagram Investment Scams Work?
Investment scams where scammers lure users with high return plans on platforms like Instagram are called Instagram Investment Scams.
It starts with some ads or posts or reels on Instagram where scammers try to lure users by displaying their fake success stories, luxurious lives, big cars, foreign trips, and money.
They do it just to build credibility. No doubt people soon start following them to know the secret of their success. Scammers take benefit of this blind trust of their followers and misguide them with an intention to loot their capital.
Step 1: Initial Contact & Building Trust
Now impressed by the posts or ads of the scammer, people generally try to build contact. For this, they either click on the ad and fill in their contact details or try to reach out to them by dropping a personal message on Instagram.
From there the scammer reaches out to the victim and starts pitching high-return investment schemes to them. They start displaying their profit screenshots which are usually fake and edited to build trust and convince people to invest in the scheme, plan, or platform they offer.
In short, taking advantage of their social presence they start selling dreams to people. Unfortunately, many go for it too ending up losing their hard-earned money.
Step 2: The Ask for Investment
Once they’ve built your trust, they’ll ask for an initial investment. Now most of the scammers these days are using clone trading apps. They ask people to download the app using the link provided.
Further, they guide them to make an initial investment starting with a small amount. Since everything is under their control, they display high profits on investment.
To build trust, they even allow them to withdraw some amount. Seeing such quick gains and high returns, people start adding more funds to their accounts.
But here is the catch, the scammer asks you to transfer the whole fund in his bank account. This means people have no control over their capital.
Step 3: The Trap
Now the same cycle of investment continues when the scammer displays high returns on their investment. However, when someone tries to withdraw it, the transaction is declined.
On this, the scammer asks them to add more funds to pay taxes and other platform fees which are quite high and sometimes higher than their initial investment.
By the time the person realizes that he has been scammed, the scammer vanishes with their money.
Common Types of Instagram Investment Scams
Types of investment scams occurring online, especially on the platforms like Instagram use creative ways and methods to pull money from the pockets of victims.
Here is a list of some of the common types on Instagram platform:
1. Crypto Scams
Many of you have heard about the option to invest in cryptocurrency. No doubt this investment option is a trend these days. The only risk associated with it is that it is unregulated in India.
Even if you choose to invest in crypto using some of the reliable platforms, you can do it.
However, some of the scammers use this trend to misguide people and offer platforms that are fake with the promise to double their capital on investment.
They claim that they have insider information that confirms the increase in value of the particular crypto asset.
2. Forex Trading Scams
Another popular scam involves forex trading. Now there are some regulated currencies and one can trade them on SEBI-registered trading platforms.
However, trading in foreign currencies is completely illegal in India. RBI has released a notice for the same with the list of forex trading platforms that are completely banned.
Still, people ignore such notices and choose to follow their favorite fininfluencers on Instagram who guide them to trade in forex to multiply their returns to multi-folds.
They not only recommend but guide people to invest in such platforms to gain quick profits.
3. Ponzi Schemes
Some Instagram investment scams are nothing more than Ponzi schemes. The scammer will use the money from new investors to pay ‘fake returns’ to older investors.
After building enough money from multiple investors, the scheme collapses and the scammer eventually disappears with all the money.
4. Clone Trading App
Most of the scammers on Instagram show their live trading activities in the Indian share market and display high-profit screenshots to lure their audience.
They then build contact with them and pitch them to download the app to make huge profits like them.
Now that app is fake and mimics most of the genuine trading apps. People without doing proper validation end up downloading the app and transferring money to Scammer’s bank account to begin investment.
They get trapped in the fake huge profit and add more money until scammers block the account and run away with their money.
How to Identify Instagram Investment Scams?
Now that you know how these scams work, let’s look at some warning signs. Spotting these red flags can help you avoid falling for Instagram investment scams:
1. Unrealistic Promises
One of the easiest ways to identify such scams is the word ‘Guaranteed Return’. Even the safest investment option comes with some risk.
If someone claims to offer you a high return on the investment on Instagram, unfollow that person immediately.
2. Pressure to Invest Quickly
Scammers often use high-pressure tactics, by creating FOMO (Fear Of Missing Out). In short, they don’t give time to people to think and make them act quickly to begin investment.
Once they choose to do so, it becomes difficult and almost impossible to come out of that trap.
3. Ask You to Transfer Money in Third-Party Bank Account
If you are already an investor or a trader, then you might be aware that to invest on a particular platform you need to transfer money to your account on that platform only.
However, the scammer asks you to transfer money to their bank accounts but to keep themselves safe they rent the bank accounts as well. Further, after collecting money from your scammer, circulate it to multiple bank accounts, making it difficult for the one to trace the final source.
So, if someone asks you to invest by transferring money to their or any third-party account, get alert and avoid making that investment.
4. Lack of Verifiable Information
Scammers do not reveal their complete information. They skip giving answers to most of your questions and do not share any agreement of investment with you.
In all they keep the whole investment plan hidden. Further, most of the scammers on Instagram do not have any verified registration details.
Hence following them for investment and further considering their advice for investment is the biggest red flag.
How to Protect Yourself from Instagram Investment Scams
The only way to protect yourself from any investment scam is to stay vigilant.
Further, here are a few ways that help you understand how to identify an investment scam.
- Verify the Person’s Identity
- Never Trust Unsolicited Investment Offers
- Avoid Making Quick Decisions
- Report Suspicious Accounts
What to Do If You’ve Been Scammed?
If you’ve fallen victim to an Instagram investment scam, all hope isn’t lost. Know the way how to report investment scams on different platforms:
1. File a Cyber Crime Complaint
If you have been trapped in a scam involving unregistered investment, then you can simply file a complaint on the Cyber Crime online portal by registering, followed by entering details of the scam and suspicious suspect.
Taking quick action and providing all the proof increases the chances of recovery of the lost amount.
2. File an FIR
You can also report an unregistered advisory or scam to your local police station. This further escalates the process and increases the chances of recovery.
3. Lodge a Complaint in SCORES
In case the Instagram, influencer, is registered with SEBI as a broker or Research Analyst, then you can go ahead by reporting the case to SEBI.
SEBI provides a SCORES portal to register a complaint online. Follow simple steps to register to complain about SCORES to claim your losses.
Conclusion
Instagram is a fun and exciting platform, but it’s also a breeding ground for scammers.
It is therefore important for you to stay cautious and verify the details before following any fin-influencer on Instagram. Identify red flags and stay alert while dealing with any transaction to protect yourself from falling victim to Instagram investment scams.
Always remember: if something seems too good to be true, it probably is.
Stay safe, stay informed, and protect your financial future!
