SEBI Strengthens Measures to Combat Online Investment Scams: A Step Toward Safer Digital Markets

The rapid growth of digital finance has made investing more accessible than ever—but it has also opened the door to a surge in online investment scams. Fake trading apps, misleading advertisements, cloned intermediary websites, and fraudulent UPI handles have increasingly targeted retail investors. Recognising this evolving threat, SEBI has intensified its efforts to safeguard investors by calling for stronger action from social media platforms and search engines.

In its latest press release (PR No. 69/2025), SEBI confirmed that it has formally communicated with major global and Indian digital platforms urging them to adopt more robust mechanisms to curb misuse. This step is not just a domestic initiative—it aligns with the International Organization of Securities Commissions (IOSCO), which in May 2025 highlighted the crucial role of digital platforms in preventing financial harm. SEBI’s directive signals that investor safety must be a shared responsibility in today’s interconnected digital environment.

Key Measures SEBI Has Asked Platforms to Fast-Track

1. Mandatory Advertiser Verification
Digital platforms must ensure that only SEBI-registered intermediaries are allowed to advertise investment products. This prevents fraudulent entities from promoting high-return schemes or unregulated advisory services.

2. Verified Labels for Genuine Trading Apps
SEBI has recommended that app stores introduce a distinct verification badge for authorised trading and investment applications. This helps users easily identify authentic apps and avoid look-alikes that steal data or funds.

These two measures aim to reduce the visibility of fraudulent actors at the entry point—where unsuspecting investors often fall prey to flashy ads or professional-looking scam apps.

Stronger Investor Precautions Recommended by SEBI

Alongside these platform-level actions, SEBI has once again urged investors to follow essential safety steps:

• Verify intermediary registration before investing: https://www.sebi.gov.in/intermediaries.html
• Use only authentic trading apps after checking legitimacy: https://investor.sebi.gov.in/Investor-support.html
• Make payments only through “Validated UPI Handles” (@valid IDs) belonging to SEBI-registered entities
• Use the SEBI Check platform (and Saarthi app) to confirm authenticity of intermediaries

These measures, when followed consistently, significantly reduce the risk of falling victim to digital investment fraud.

A Stronger Digital Ecosystem for Investors

SEBI’s proactive approach underscores a broader shift in regulatory thinking: the fight against financial fraud cannot be won by regulators alone. Collaboration between regulators, digital platforms, financial institutions, and investors is essential. By pushing for structural changes at the digital platform level and empowering investors with verification tools, SEBI aims to build a safer, more trustworthy digital investment ecosystem.

As online investing becomes the default, such initiatives are not just timely—they are critical for maintaining confidence, transparency, and integrity in India’s financial markets.