Nithin Kamath, Chief Executive Officer (CEO) of Zerodha, expressed his views on the rise in fake trading app scams, which have become a “huge scourge”.
“Fake trading app scams have exploded and become a huge scourge,” Kamath said in a post on X on Monday, August 26.
Kamath explained how fake brokerage app scams initially trick people who want to invest into believing that it is easy to make money. They are added to a WhatsApp group and then asked to install fake trading apps that resemble the real ones.
“These scams work by luring you into trading and making you believe that it is easy to make money. So, you are first added to WhatsApp groups and then asked to install fake trading apps that look exactly like those of the big brokers,” the brokerage house boss explained in his post.
The number of fake trading app scams has exploded and become a huge scourge.
These scams work by tricking you into trading and making you believe that making money is easy. So, you are first added to WhatsApp groups and then asked to install fake trading apps that look exactly like those of… pic.twitter.com/3CXHVq3Hj0
— Nithin Kamath (@Nithin0dha) 26 August 2024
How are fake trading app scams structured?
The scams aim to trick investors into believing that they will make profits, but these are limited to the first few trades. Traders are then asked to transfer funds to continue trading. When they try to withdraw their money, they are asked to pay fees, taxes, etc.
“You will make money on the first few trades. This is to convince you that you can make a lot of money. Then you will be asked to transfer funds to trade. But when you try to withdraw money, you will first be asked to pay fees, taxes, etc.,” Kamath said in the post.
“After some time, the entire group and its members disappear,” he noted, referring to the fraud.
Kamath also spoke about how smart, sensible and educated people fall into the trap of fake trading app scams and highlighted the importance of being aware of one factor: “If something is too good to be true, it almost always is.” It is important to be skeptical of claims of easy money, he said.
Zero1 by Zerodha, an educational initiative by the brokerage house, in collaboration with the Cyber Security and Cyber Protection Department of the Ministry of Home Affairs, has also released a video to raise awareness about the rise in “fake trading app scams.” The post was shared by Nithin Kamath on X.
