When the Bait Looks Familiar: How Chinese Fraudsters Exploited Indian Ad Firms to Lure Investors

A recent study by the Mumbai Police Cyber Crime Cell has found that there is an organised international operation where Chinese fraudsters solicited the help of Indian digital advertising agencies to market counterfeit trading sites on social media. The scheme, which was supposed to appear above board, created loopholes in the digital advertising system and the increasing demand for online trading by Indian investors.

A web of friendship and fraud

The plan of action was pretentious. Deep-fake videos were produced by fraudsters who were sitting in China or another part of Southeast Asia, with the faces of well-known Indian business anchors and market experts. 

These videos were then spread across the traditional advertising platforms like Facebook, Instagram, and YouTube, but the advertising accounts utilised to publish them belonged to Indian digital marketing agencies.

Valueleaf India Services Pvt. Ltd was one of the agencies currently under investigation that was reported to have allowed its advertising ID to be utilised by Chinese clients to conduct promotional campaigns by fraudulent so-called investment platforms. After clicking the ads, the users were redirected to the WhatsApp or Telegram groups, where they were instructed on how to get registered in the fake trading applications step-by-step.

In the beginning, victims were presented with little and fast earnings as a psychological strategy in order to gain trust. The moment they tried to withdraw more, they blocked off their withdrawals and communication was cut off. The whole process was plotted in such a way that it created a feeling of reality, including websites that would look like professional pages and social media profiles with paid followers.

The Chinese web with an Indian connection

According to police investigations, the Indian online advertising that the Chinese operators were supposed to buy could not be bought directly because of compliance barriers. To avoid this, they used to contract Indian ad agencies, posing as marketing agents to foreign customers. 

Unaware (or preferring not to know) of the actual content of these advertisements, the agencies allowed the fraudulent campaigns to use their certified ad IDs, which made them look legitimate.

The extent of such fraud is in the hundreds of crores of rupees, according to the authorities. Others were Indian companies that were offered up to 3 crore commissions as campaign management. This alliance gave the foreign syndicates the reputation of an Indian digital presence, which is a critical ingredient in gaining credibility among Indian users.

How the scam unfolded

The bait: A deep-fake advertisement of a popular Indian financial expert or anchor is posted on social media and invites people to invest in a new trading opportunity.

The catchphrase: Clicking the link sends the reader to a WhatsApp/Telegram chat run by scam merchants who pretend to be market analysts.

The deception: The victims are advised to make small deposits, and they are allowed to take away small profits, which boosts their self-esteem.

The trap: Bigger investments are drawn, after which the withdrawals are blocked and all contacts are cut off.

The exit: The money is transferred via mule bank accounts in India, which is then transferred to other countries using crypto or shell companies.

The digital deceit finds a rich soil

The retail investment culture has been on a booming trend, making India a favourite target. The distinction between real and fake financial platforms has become more unclear with the attraction of millions of first-time investors to the stock market via mobile applications.

According to a senior officer of the Indian Cyber Crime Coordination Centre, almost 45 per cent of the financial frauds targeting Indians over the internet have their roots in Southeast Asia, with China-based syndicates being very prominent. Detection and regulation have been a much greater challenge due to the use of AI-generated deepfakes and the involvement of the Indian middlemen.

The regulatory challenge

The episode reveals another weakness of the Indian digital advertising system. Large social media companies are using third-party agencies to run advertisement campaigns, but due diligence on the end-client is usually insufficient. An authenticated Indian advertisement ID gives it an automatic credibility, even in cases where the source of content is foreign.

RBI and the Securities and Exchange Board of India (SEBI) have time and again cautioned investors against trading platforms that have not been registered. However, it is not easily enforced when scams are formulated with the help of legitimate domestic ad agencies. It has been proposed by experts that tighter verification standards, end-to-end ad audits, and coordination on cybercrime on the international level are now necessary.

Lessons for investors

The emergence of investment scams caused by deep-fakes has become a concerning development in the realm of online fraud. Scepticism can be overcome by visual familiarity, the recognition of a familiar face or by listening to a familiar voice. Simple watchfulness is the greatest defence:

• Take all claims of the guaranteed returns with a grain of salt.
• Check to see whether a trading application or platform has been registered with SEBI.
• Never invest with WhatsApp or Telegram groups.
• Immediately send suspicious ads and content to cyber authorities.

According to one investigator, the fraud does not start with an email or a phone message anymore. It starts with paid advertisement, and that is what causes trouble.

The broader picture

What comes out is not merely a story of fraud, but of an amorphous line between legal online business and fraudulent manipulation. Chinese fraudsters used the trust in a system designed to be open by abusing the reputation of Indian ad agencies.

In India, a country that is fast turning digital with its economy, the event acts as an eye-opener; the digital success should go hand in hand with digital responsible behaviour. Until all the links within the online advertising chain are put under tighter responsibility, the following scam is only a sponsored post away.