Online trading has seen a surge in popularity, but with it comes the rise of fraudulent brokers preying on unsuspecting investors. Here are some insights on how to spot scammers before investing your money.

Guaranteed profits

Markets are volatile, and even seasoned investors face fluctuations. Legitimate brokers cannot guarantee profits.

“A broker promising assured returns is likely a fraud,” warns Sarvjeet Singh Virk, Co-Founder and Managing Director of Shoonya by Finvasia.

According to SEBI guidelines, no registered broker can offer such guarantees. If it sounds too good to be true, it probably is.

Pressure to deposit money immediately

Genuine brokers, registered with SEBI, follow a transparent subscription model. They never rush you into depositing money.

“Scammers often create a sense of urgency, pressuring you to act quickly,” says Virk.

Be wary if they claim you’ll miss out on a big opportunity unless you deposit funds immediately.

No proper registration or licence

A legitimate broker is SEBI-registered. Always verify their credentials on official websites. “If you can’t find proof of registration, consider it a major red flag,” advises Virk.

Scammers often avoid such verifications.

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Requests for payments via unofficial channels

Real brokers use verified payment gateways and official platforms. Fraudsters, however, may ask you to make payments through social media or personal accounts.

Virk explains, “If someone asks you to transfer money via WhatsApp or Telegram, it’s a clear sign of fraud.”

Stick to official websites or apps for transactions.

Lack of transparency in fees and withdrawals

Scammers often complicate withdrawals, demanding extra payments for “processing fees” or “taxes.” A trustworthy broker has clear, upfront policies.

“If withdrawals are delayed or hidden charges pop up, it’s a scam,” says Virk.

Tips to stay safe

Individuals should always do their research before trusting any broker.

Virk emphasises, “Don’t trust celebrity endorsements, as they may be part of a fraudulent scheme. Ensure you’re dealing with registered brokers and check official channels, websites, and apps on trusted platforms like Google Play and the App Store.”

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