New Delhi: The 27-year-old has no idea how he managed to lose Rs 46 lakh in five months. It had seemed like a good investment in September last year, when the woman told him about profits in small-time trading investments — but now, he’s a victim of what the police suspect is the latest scam in the market, in which Chinese apps have been looting Indians of crores.
He first got in touch with her after he contacted a number that was put up on social media: “earn money now sitting at home. For more contact 9xxxxxxxx”. The initial investments were minimal and the returns were about 5 per cent. He was thrilled — she was guiding him on all the investments.
Seeing the benefits, he thought it was a great scheme, and even sold ancestral land to make a larger investment. But eventually, he realised that something was off — and found that his money was gone. Finally, he approached the Delhi Police Special Cell’s cyber unit.
According to the police, the scam works by first enticing people with small payouts on investments, and once they’ve built up genuine trust in the ‘scheme’, the victims lose all their money in the blink of an eye.
These ‘schemes’ include instant-return benefits, which promise returns on a daily, weekly or monthly basis, with interest ranging from 5-25 per cent on the invested money, and coupons that can be redeemed.
Some trading schemes entice the targets by first helping them make profits, and then after a larger amount is invested, blocking them.
Another way is through betting, where users are asked to bid their money, and then after some initial returns, the individual is blocked and the amount disappears. The targets range from a rickshaw puller trying to make a Rs 5 profit on an investment of Rs 100, to people making investments in lakhs.
These scams, police say, began during the first Covid-19 lockdown that started in March 2020, and actively target lakhs of Indians every minute of the day. According to sources in the Delhi Police, these app scams took off as working from home became widespread.
Data accessed by ThePrint shows that more than seven such cases of elaborate scams, allegedly controlled by China-based entities, have been registered with the Special Cell’s Intelligence Fusion and Strategic Operations (IFSO) unit from 2020 to 2022. Five of these have been solved. A total of 40 people, including Chinese nationals, have been arrested so far in these cases.
Power Bank app case
One instance is the Power Bank app case, in which more than 5 lakh Indians across the country were looted of over Rs 300 crore. Eleven people were arrested in June last year, and the Delhi Police in their charge sheet said, “The Power Bank app projected itself as a Bengaluru-based company involved in quick charging technology; the server of the app was found to be based in China.”
The Enforcement Directorate (ED) is probing money laundering by this syndicate.
The Power Bank app, then listed on Google’s Play Store, was found to be at the epicentre of a larger cyber fraud racket that cajoled victims to invest their money on the promise of doubling it in a month’s time, and sometimes remitting interest on weekly or daily basis. At the time, another such app about which the police received complaints was EZ Plan, hosted on its own website.
Then DCP cyber, Anyesh Roy, had said that the owners and masterminds of the app were China-based and worked with perpetrators based in India. Police claimed that this syndicate targeted people through fake websites and apps, and created shell companies to hide the money trail.
“The modus operandi of all these scams is similar — entice the targets with money by initially giving them satisfactory returns. Once the rapport is established, they ask them to make more investments, and then block their access,” a source in the Delhi Police said.
Types of scams and the MO
These scams are broadly classified into four categories — trading and crypto investments, simple investments that come with offers like coupons on e-commerce sites, gaming applications, and betting.
“The targets can be anyone who has an Android mobile phone with internet access, ranging from homemakers looking for extra income to students and businessmen. Each category targets different sections of society. For instance, gaming apps target mostly students. This became lucrative after classes went into online mode,” another source said.
How do they find the targets? Look around, it’s almost everyone who uses the internet. Hashtags are used to get these apps and websites trending on social media sites such as Facebook and Instagram, and anyone scrolling through becomes a target. Whatsapp and Telegram groups also foster posts pertaining to these apps. You’ll find phishing links posted in YouTube comments sections and pirated movie sites, too.
“Most of the time, the perpetrators who are posting these links and working for the apps are unaware of the scam — they are dummies. They think of it as a job,” said the source.
For instance, explained the source, there might be a post that advertises working from home for an investment or crypto start-up to earn a quick buck. When interested people contact the number given, they’re hired as partners after a short interview — and will be used to make bogus bank accounts and shell companies to hide the money trail.
“They are also victims of the scam in a way, as the main handlers are based in China. They are asked by the company heads to circulate the messages about these schemes on Whatsapp, Telegram, Facebook,” added the source.
These rackets, sources said, are multi-layered, and the chain of command isn’t direct.
“The dummies are asked to create bank accounts, apart from handling the social media accounts. The money from the first victim who has been looted is transferred here. The dummy is told that this is your cut — Rs 5,000 out of the 50,000 that is transferred to his or her account or wallet. And then, he or she is asked to send the remaining amount to another account,” the source said.
Another partner is then asked to transfer the money directly to the shell companies’ accounts, or to create an account on the crypto exchange Binance.
“They’re then asked to share the details of the Binance account with the main handler, who takes the money and blocks these dummies after a point. Sometimes, they are also asked to send the money into wallets like PhonePe and Paytm,” added the source.
While betting is illegal in India, gaming is not. But some gaming apps, sources said, also cheat in the algorithm. “They first ask you to buy coins to play, and at first you keep winning. After a while, the amount of money that needs to be put in increases, and you keep losing the game,” the source said.
“Simple investments come with small-time investment offers. For instance, it says invest XXXX amount and get a referral code. The referral code can be used to get coupons and discounts. Once the victim makes a larger amount of investment, the app or website blocks the user,” the source added.
In most cases, the sources said, the primary contacts of the victims are women, who get in touch with them using numbers from outside the country.
“A rapport is built with the target. Once he starts trusting the person, he is asked to make the investments. One target can be looted multiple times before he realises the scam,” the source said.
Hurdles in investigation
Most of these apps are part of a single webpage with URLs that keep changing.
Sources said that one of the biggest hurdles in the investigation is that people often don’t report the fraud at the first instance. “They file a complaint after a lot of money is lost. By the time the investigation starts, the URLs, IDs, and bank accounts are all closed and the trail is broken,” a third source said.
Through these shell companies, the money is syphoned outside the country, making recovery next to impossible, sources said. “When the money is converted into crypto and moved out, there is little that can be done to get the full amount back,” the source said.
“Instant loan app scams started during the lockdown. This is a systematic cyber offence that has targeted a large number of Indians. Whether through games, or work from home, these apps target Indians every minute of the day,” said K.P.S. Malhotra, DCP Cyber Cell, IFSO.
“However the actual culprits are often based out of the country, which is a major hurdle in tracking all the looted money. In most cases, the money transactions through fraudulently obtained accounts and VoIP (Voice-over-Internet Protocol) communication increase the hurdles in the investigation,” he added.