How Stock Brokers are fueling Fake Advisories!

Growing up in Indian families, how often have you had to face the brunt of the taunt, “You will never amount to anything! You’re worthless!”? As toxic as such parenting comments would be, I am sure they meant well. Right? Well, childhood trauma apart, how would you feel if someone quite literally reduced your value down to pennies? While the reduction in value is not quite literal, it is actually sensitive information about you that is sold at a discount.

“Caveat emptor” goes right out the window as users agree to the terms and conditions when signing up with these data mongers. “Who are these unscrupulous weasels?”- you may wonder. Think back to some of the most recent “Agree and Continue” you clicked on without reading the whole terms. Before you get lost in a list of irresponsible clicks, let me help you. I’m talking about your broker(s) that possess your phone number, age, location, and so much more. That’s more data about my personality than I’d like anyone to possess, let alone someone who sells that data. Yeah, some “terms” in those documents put sensitive data about you in a compromised “condition”.

A platform that charges its users to create an account where they can buy and sell securities also sells off the information about its users. While the users have to spend money to make money, brokers get free info to sell. Now, I’m no great economist, but the quid pro quo seems a bit off, don’t you think? The most common threat investors are exposed to is doxing.

What is Doxing?

Imagine you give your phone number to someone in confidence, only to have it published along with other distinguishing features about you. When observed on a large, digital scale, this phenomenon is known as doxing. Not only does it cause the victim's privacy to be invaded, but it also helps in the creation of a profile based on which the victims can be targeted.

Now you might be wondering, the information you give to your broker isn’t quite sensitive, but I’d like to ask you, isn’t it? Some of the very basic pieces of information submitted by you are your phone number, Aadhar card number, and PAN card number. Your PAN and Aadhar numbers cannot be given away, and the data linked to either is used just to cross reference your identification. This means that once you input your Aadhar or PAN number, the information submitted to either of the authorities is not provided to the platform that asks for these numbers. It is just a “yes” or “no” check to verify that you are who you claim to be.

When it comes to your phone number, however, have you noticed the number of cold calls increase ever since you opened your Demat account? Personally, I get calls from realtors trying to sell me land and banks offering me loans. I am a 24-year-old content writer; in what universe am I the right demographic to present these?

Sure, you might consider a few cold calls harmless, thanks to the awareness ingrained in you through interactions with the world that shun sharing personal information over calls or believing in con artists offering instant loans. Yet, imagine someone who has fallen to bleaker times, someone looking for that crack of light, that saving hand. The shadiest of cold calls sounds like an opportunity to someone so desperately looking for saving grace.

One such case came to our attention. The case of one Ankit, a young investor at 20, who had been the recent target of a similar scam. Ankit had been saving every penny that he could since his 18th birthday; stipends, pocket money, grandparents’ grace. All of it went down the drain because his broker did not value customer confidentiality! Now we do not want a defamation suit, so we won’t drop names, but Ankit’s broker’s name begins with the letter A.

Target Demographic

Based on data from the BSE, among the 7 crore retail investors, the age distribution looks something like this.

The 5.9% of investors between the ages of 18-20 years is an increase from the 3.9% in the previous year. So, while the youth of the country is taking an active interest in engaging with the stock market, the middle-aged populace is still holding the larger “share” of the financial market.

Ravi Kumar, founder and CEO of Upstox, said in a report that while around 80% of its clientele belong to the age group of 18-36 years, 70% of its user base consists of first-time investors.

To readers who invest, young and old, all of us have faced the initial angst and worry that’s territorial to being a newbie investor. Our susceptibility to false information is the highest at this time.

To readers who do not invest but are young, you have dealt with an older individual who’s had a tough time using technology. We are all too familiar with phones overflowing with bloatware and browsers filled with unnecessary extensions. When you ask about the person responsible, the only answer you get is…

The “older individuals” mentioned above, who are also reading this, I mean to throw no shade against you; the newer humans were born with this tech while you adapted to it. But in all honesty, it gets a little frustrating when you do not take our advice seriously. Trust us when we say, “this does not work like you think it does”.

So, the newly initiated and the previous generation are the two segments of the investing public that suffer predators that want to turn a quick buck at the expense of another’s lifetime of hard work.

The retail investor in these contexts that truly needs to worry about is the “new money” DIY investors like you, the reader and me. “Old money,” on the contrary, does not quite engage with the bourses like us. They are kaafi well off to pay someone else to handle their investments for them, and these “someone-s” know better than to get scammed like us.

Human Data Trafficking

Coming to the meat of the article; the data sale. You would think that information about you that causes exposure to such threats would be sold on some dank, dark corner of the web. You would assume that these sales are made by some shady hacker that has strongarmed your details from some well-guarded cache of data (we have all read of the news “hacker leaks sensitive user data”). You might be grossly incorrect.

Ever heard or read the line, “If you are not paying for it, you are the product.” Well, unread and unlearn it because, you are paying your broker for its services, and you are the product. Well, not quite you, but a version of you that an algorithm reads.

This version of you is called a user profile and is a digital representation of your identity online. This user profile is not who you are but a culmination of your habits in regard to your money, location, age, and more. The more time you spend on a platform, the more depth is added to your character. Think of a video game persona that gets more defined with every click. Beware, you are being watched…

As much as you would like to believe it, the various pleasantries from your service providers are not because they like you; you are not special. The various versions of “service with a smile” are less for you and more for the business. “How?” you ask? Well, the “happier” your experience is, the longer you stay, the more “depth” that gets added to your character.

A person’s online persona being more valuable than their living, breathing self, begs a dialogue about what society has come to, but that’s neither here nor there.

The shady situation mentioned above is more suited for a movie set in a dystopian future. There are dedicated platforms where user data is collected and sold by gigabytes. Brokers are one of the sellers on these platforms. Your user profile is one among millions filling server spaces globally. These profiles help in targeted advertising, better online navigation, and more to enhance your journey by learning your preferences.

While these user profiles are meant for A.I.-based companies, it’s a free market… the same toothbrush that cleans teeth can also be used as a shank.

Hook, Line and Sinker

The shady scene mentioned above of a hooded figure selling your data is more suited for a movie set in a dark, distant future. However, a situation that’s a lot more real is the fact that there are dedicated platforms where user data is collected and sold by gigabytes. While brokers collect data from the users and can be considered the primary miners, they do not actively sell user data (they wouldn’t want to attract a lawsuit like that). Sub-brokers, who act as agents of stockbrokers, are the sellers on these platforms.

Ankit’s story is just one among oh so many hapless victims of fake advisories that come into existence and try to prey on new investors. Based on user profiles, the buyers of user data can discern first-time investors. These new entrants are then targeted, attacked and exploited for the money they are willing to spend as investments, as these are the most vulnerable points of the crowd.

These “advisors” (read: spineless saps), then sell fake promises of quick wealth and impossible returns to every one of these new investors. 7 crore investors in India, and with the level of financial or general literacy, the odds of fraudulent calls and claims succeeding in finding victims are stacked tall against the retail investors. At 31%, India registers the highest number of victims of financial scams globally (some numbers to help you gauge how screwed we are).

Now you, as a reader, are already exposed to the truth of the situation and know better than to trust these leeches. Realistically,  however, do you think each of these fraudulent calls is opened with a precautionary warning? Do you think a person that would end up being a victim of this ploy, gets to hear a pre-recorded message warning them of the possibility of losing most or all of their hard-earned money? Amitabh Bachchan will warn you against Covid-19, and your cellular brand will warn you against your balance running out, but there will be no messiah (except yourself) to save you from these thefts.

Closing the Account

Investing in shares is not a gamble, but too many people approach it as a way to get rich quick and treat it as such. These are the perfect prey for these attacks.

As someone who has closely experienced a similar drain of a person’s years of hard work, I do not and could not blame people for trusting these claims, as obviously unrealistic they may seem in hindsight. In times when desperations are high, the need for help can blind even the most collected individuals.

Better checks need to be put in place as far as user data is concerned because India’s financial and cyber literacy are still a far cry from ideal.