There are multiple opportunities of making money and earning profit. Stock market investment is one of those options. But profit is not only earning money, it is also about protecting your capital from fraudsters & scammers.
Unawareness of market regulations and other parameters leads beginner traders to fall into the trap of profit-sharing scams.
Let’s dive in to understand all about this scam, how scamsters use this for their own benefit, and how you can protect yourself from falling victim to it.
What is a Profit Sharing Scam?
Answer honestly, if someone approaches you and shows you fake P&Ls, fake money, and shows you dreams of getting rich overnight by trading in the stock market, how many of you get influenced?
Well, most of you!
This is what is happening nowadays and these scammers are taking advantage of this.
Among different types of scams profit sharing typically involves fraudulent investment advisory firms or individual advisors who promise investors a share of the profits from stock market trades.
These scamsters ask you to share your account details with them, which they use on your behalf to take trade positions using your capital, and in turn ask for 50:50 or 60:40 profit sharing.
In all funds are yours, the account is yours, but the one controlling & operating is the one who is using it for his or her benefit.
If you came across any such scheme, then it is time to get alert, your capital is in danger.
Trading Account Handling with Profit Sharing
So, it all starts with some ads on social media or reels showing fake money, P&L, etc, where they left some kind of link for you to get in touch.
Once you click on that link and add your details, you will be added to one of the WhatsApp or Telegram Groups. Not for your benefit, but to induce you more by showing fake P&Ls of their fake client and fake trades.
In no time, you get influenced and check his products & services.
Here, scammers leave no room for you to go back and offer you profit profit-sharing agreement with guaranteed profit and attractive numbers. That’s it, you end up getting into the agreement.
Now, the scam begins.
Scammers work to gain your confidence initially by delivering small profits. Once they gain your trust, they ask you to add more funds to your trading account.
As soon as you add more funds, the scammer takes maximum position in the market, resulting in loss of entire capital and then disappears from everywhere. By the time you realize what has happened, it’s often too late to recover the funds.
We came across one such story where Suryaprakash (name changed) got scammed and lost capital of ₹3,00,000. He narrated his story to one of our team members, explaining that he came across an Instagram page named Grow Investment (name changed) and entered his details.
Soon, he received a call from a person who claimed to provide a 100% profit on the amount and would keep 50% of the profit for himself.
Suryaprakash, not having enough understanding of the stock market and trading, soon agreed. The scammer asked him to share his account details so that he could take trade positions on his behalf.
Unaware of market regulations and the dangers behind this, he shared his details and added ₹2,00,000 to his Groww Demat Account. He then received a call where he was asked to add ₹100,000 more to maximize his profit.
Suryaprakash, not having enough capital and knowing that his trading app takes 24 hours to reflect the amount, denied at first. However, the scammer told him to add it, promising to take a trade the next day as the market was trending and offering a great opportunity to make a profit.
Suryaprakash followed him blindly. The scammer used the entire capital to trade Bank Nifty Options, and soon the victim lost almost 90% of his capital. When he asked the scammer to square off, the scammer didn’t listen, and later, all his capital was wiped off.
How to Protect Yourself
- Do Your Research: Check the background of the person who approaches you. Even if he or she is SEBI registered, don’t share your login credentials. You can take advice, recommendations, and any type of guidance for trading with proper documentation. If the person shows you dreams and claims s guaranteed return, take a step back as it is the biggest red flag that some kind of scam awaits you.
- Don’t Follow Anyone Blindly: YouTube, Instagram & other social media handles are there with multiple videos. It is your duty to find a reliable one. Even if you follow the best channel or page, always validate their details before taking any kind of advice or services.
- Be Wary of Pressure Tactics: Scammers often use high-pressure tactics to rush your decision. Don’t fall into the trap of such tactics.
- Report Suspicious Activity: If you suspect you are being scammed, report the activity to the relevant authorities immediately. In India, you can file a complaint with SEBI.
Conclusion
The profit-sharing scam works on the trust and aspirations of investors. Stay aware of market rules & regulations. By investing your little time in doing proper research, you can protect yourself from falling victim to such loss-making schemes.
Remember, if an investment opportunity sounds too good to be true, it probably is. Stay informed, stay cautious, and safeguard your hard-earned money.
