Digital Fear: How Stock Trading Scams, Investment Frauds, Digital Arrest and Threats From Foreign Lands are Crippling Since 2021, CFCFRMS has recorded a staggering 30.05 lakh complaints, resulting in losses of INR 27,914 crore

Roaming in the digital space without proper attention to digital fraud is costing Indians dearly in terms of data, information, and money. According to the Indian Cyber Crime Coordination Centre (I4C), India lost INR 11,333 crore to cyber fraud in the first nine months of 2024, highlighting the alarming rise in digital scams and frauds.

Unsurprisingly, stock trading scams accounted for the largest share, amounting to INR 4,636 crore across 2,28,094 complaints. Investment-based scams followed, with losses worth INR 3,216 crore and 1,00,360 complaints. Additionally, INR 1,616 crore was lost to digital arrest frauds, with 63,481 complaints reported.

Investment scams are gaining traction in India as people are susceptible to the promise of making significant profits in the stock market. Fraudsters exploit this by targeting users on social media platforms such as Instagram, Facebook, WhatsApp forwards, and X (formerly Twitter). Many Indians come across advertisements for stock market investments, promotional videos with links, or other enticing offers on these platforms. Unfortunately, many blindly follow these links, only to end up losing money through registration fees, consulting fees or initial investments.

Expressing concern over stock scams after a Bengaluru techie lost INR 91 lakh in an online stock market fraud. Nithin Kamath, CEO of Zerodha posted on X,"I dread to think what it will be like once fraudsters use AI." The scam began with a WhatsApp message on July 29, offering stock market training in exchange for votes in a "Global AI Smart Trading Competition."

Rohit Jha, CTO of ArthAlpha shares, "Leveraging emerging technologies such as Artificial Intelligence (AI) for real-time fraud detection and adopting blockchain for secure transactions are key technological solutions to stay ahead of cybercriminals." He also emphasises on public awareness campaigns and regular updates to cybersecurity protocols should be in place to prevent such scams—which are obviously going to hit the sky if companies, government and the public didn't take such scams seriously.

Adding to this, Manish Tewari, Co-Founder of Spydra Technologies says, "Knowledge is the first step towards prevention. Citizens and organisations need to be trained on how to look out for phishing emails or tainted links or scams. Certain cyber hygiene habits of users, including creating strong passwords, using unique ones not more than one for each account, and updating software frequently can minimize risks and many vulnerabilities."

Additionally, as per the Citizen Financial Cyber Fraud Reporting and Management System (CFCFRMS), approximately twelve lakh cyber scam complaints were reported in 2024, with 45 per cent traced back to Southeast Asian countries such as Cambodia, Myanmar, and Laos. Since 2021, CFCFRMS has recorded a staggering 30.05 lakh complaints, resulting in losses of INR 27,914 crore. To break it down further, 11,31,221 complaints were registered in 2023, 5,14,741 in 2022, and 1,35,242 in 2021.

Also, in a recent anti-terror conference, the I4C again highlighted the challenges posed by the anonymity of digital wallets, foreign money exchanges, lack of KYC protocols, VPN access, and cryptocurrency frauds originating from abroad.

Amit Jaju, Senior Managing Director at Ankura Consulting, believes to prevent and curb growing frauds in India from abroad, "International cooperation is critical for tracking cybercriminals across borders. Incentivizing cybersecurity investments through tax benefits encourages wider adoption of best practices. Additionally, mandating prompt reporting of cyber incidents ensures timely responses and effective counter-strategies."

While addressing "digital arrest" in the 115th edition of the Mann Ki Baat radio program, Prime Minister Narendra Modi warned listeners that no government agency contacts individuals via phone or video calls for investigations. Stressing the rise of digital frauds, he stated, "There is no system like digital arrest under the law." He urged people to remain vigilant and cautious.

Discussing the same, Sunil Sharma, Vice President – Sales, Sophos India and SAARC, said, "Digital arrest impacts individuals by trapping them in cyber scams that lead to financial losses, reputational harm, or even legal consequences. Scammers often exploit personal vulnerabilities or digital weaknesses, leaving victims unaware until the damage is done. These attacks are becoming increasingly sophisticated, with scammers impersonating trusted entities or using urgent, fear-driven tactics to deceive individuals."

Sharma further emphasized the importance of recognizing warning signs to prevent such frauds, such as unexpected requests for personal information or unusual account activity.

Data shows that stolen money is often withdrawn using cheques, central bank digital currency (CBDC), fintech crypto platforms, ATMs, merchant payments, and e-wallets. In 2024, the I4C froze nearly 4.5 lakh mule bank accounts, which are typically used to launder proceeds from cybercrime.

As digital users actively utilising online payment modes and other online services, it is crucial for Indians to prioritize basic cyber hygiene. This is especially important for the most vulnerable sections of society, including the digitally illiterate urban population, individuals aged 70 and above, and children under the age of 18. It is the responsibility of every individual to become a responsible digital user and support/help campaigns aimed at spreading awareness within urban populations to combat such frauds.