As the number of retail investors in the stock market rises, Demat accounts have become a popular tool for trading and holding securities digitally. However, these accounts are now increasingly being targeted by cybercriminals. A single act of negligence can lead to serious financial loss, as fraudsters find new ways to steal shares and funds without investors’ knowledge.
Demat account fraud refers to the unauthorized transfer or sale of shares, mutual funds, or securities from an investor’s Demat account. In many cases, fraudsters access the account through phishing emails, hacking, fake calls, or by misusing login credentials. Sometimes, even brokerage firms may engage in unethical practices by misusing client data.
Phishing Emails: Fake login pages trick users into revealing account details.
Hacking: Criminals access accounts, change passwords, and transfer holdings.
OTP & Call Frauds: Fraudsters impersonate company executives and trick users into sharing OTPs.
Brokers Misusing PoA: Some brokers misuse the Power of Attorney (PoA) given by clients to make unauthorized transactions.
To safeguard your Demat account, follow these essential safety tips:
If you're planning to travel or won’t use your account for a while, request your Depository Participant (DP) to freeze it temporarily.
Never share your username or password. Update them regularly, and avoid using public Wi-Fi networks.
Avoid using predictable passwords. Combine alphabets, numbers, and special characters for added security.
Always review transaction alerts sent via SMS and email. Immediately report any suspicious activity.
Before selecting a brokerage firm, verify their regulatory record and customer reviews.
Only provide limited PoA to your broker. You can revoke it anytime if you feel your rights are being misused.
Treat the DIS like a cheque book. Never sign and leave a blank slip with your broker.
As technology advances, cyber fraud in the financial sector is becoming more sophisticated. Investors must remain vigilant and proactive in securing their digital investment tools. A few simple precautions can go a long way in preventing potential losses from Demat account cyber fraud.
