WhatsApp investing groups

September 11, 2024 7:44 AM

Someone I know has joined a WhatsApp group chat which gives investing advice. Is this type of group usually a scam, and if so, how does it work?

The advice is along the lines of, "Stock ABC is going to rise until X date". The predictions have been correct so far, so, the person has now followed the most recent suggestion to purchase a small amount of stock - about $1000, using a recognized platform not connected to the WhatsApp group. The stock is connected to a ride share company in Asia that's less than a year old, seems to be legit, and the price is climbing well.

The group leader's name and profile photo check out as being a real stock advisor based in the US with a company called Lido, although that doesn't mean it's actually this guy on WhatsApp. It's also possible the company the guy works for is fake although it seems legit.

In the WhatsApp group, the other group members' profiles look sketchy to me - they all have profile photos, for instance, and a handful of the profile photos don't match the gender or race of the name. There's some variety in how they communicate, although to me they all seem too well-written to be real.

When a person invests through this WhatApp group, they ask you to confirm you purchased by sending a screenshot of your transaction, showing date/time, purchase price, and number of shares. My friend was a bit skeptical about this, but did take a screenshot, cropped out personal info, changed some numbers on it, and sent it to the group leader when making their first purchase.

There's a "premium membership" in the group where you pay a monthly fee for ongoing advice. My friend asked them to call over the phone to get a better read on the person, and is considering joining this premium group.

When I heard this story, my spidey senses felt it was likely a scam, but I don't know enough about stocks to understand what the scam could be. Can you explain? Thanks!

posted by nouvelle-personne to Work & Money (19 answers total)

Pump and dump (probably).

Questions to ask your friend:

How would a person know that a stock is going to rise until [x] specific date?

If the person did know that, why would they tell other people about it instead of capturing the opportunity for themselves?

If this person got the information (supposedly) from working for a finance company (Lido appears to be private wealth management, but I don't have any experience with it), do you think the company would be fine with them giving the information away?

Why do they need "evidence" that your friend bought the stock, anyway? What do they get out of it?

Unfortunately, once some people's greed centers get activated, common sense has no chance, but you can try.
posted by praemunire at 7:56 AM on September 11 [13 favorites]

Your spidey senses are probably worth [paywalled] listening to. Not to say this exact group is a scam, but many groups like this have been found to be scams. As the first link says, it could go like this: the stocks they have been told to invest in will be being artifically pumped, and then sometime later they will be told to invest in something else, which will turn out to lose them all their money.

On preview - great qs from praemunire!
posted by london explorer girl at 7:57 AM on September 11

In addition to the above they can try to get you to do transactions in a portal that is not legit some so that when you try and sell they disappear. Smaller transactions are approved, but once you deposit a large amount of money then off they go to never be seen again.

Never use a link provided by the group to do any type of transaction ever.
posted by AlexiaSky at 7:59 AM on September 11 [1 favorite]

There is an old scam called the "newsletter scam" where the scammer sends out a dozen different stock predictions to different groups of marks. Some of the predictions come true, some don't. The scammer keeps pushing with the ones where the predictions came true. The mark can't believe it - the scammer accurately predicted stock movements every week! The mark now trusts the scammer and is willing to do whatever the real con is -- i.e., subscribe to a junk newsletter, send money for special opportunities, whatever.
posted by Mid at 8:17 AM on September 11 [18 favorites]

Are you clear on how / why this friend was invited to / found this group?

If it was cold outreach from someone in the group that your friend doesn’t know, they should RUN
posted by seemoorglass at 8:21 AM on September 11

What Mid is describing is sometimes called the Baltimore Stockbroker con.
posted by pickles_have_souls at 8:23 AM on September 11 [2 favorites]

I noticed this:

The predictions have been correct so far

This is not difficult to do. I'm not saying I, or anybody else, can predict which stocks are going to rise. But here's how you can trick some number of people into thinking you can:

1. Send a message to a large number of people, say 1000. Tell half of them that stock X is going to increase in value and the other half of them that it's going to decrease.
2. Wait a week or two and see what happens.
3. Half of the people will have seen a correct prediction and the other half will have seen an incorrect prediction.
4. Now contact only those 500 people who saw a correct prediction. Split them into two groups, each containing 250 people, and repeat from step 1 with a new stock prediction.
5. Keep doing it until you have a small group who have seen 3 or 4 correct predictions in a row.

On preview, Mid has already covered how this works.

Also, as seemoorglass asked, how did they get into this group? Anybody who is randomly contacting you with investment advice has their own interests in mind, not yours.
posted by number9dream at 8:25 AM on September 11 [5 favorites]

Needing the screenshot of the transaction is sketchy as hell. Your friend should run.
posted by Tell Me No Lies at 8:42 AM on September 11 [4 favorites]

These are generally in my experience crypto scams or similar things. Run.
posted by Alensin at 9:08 AM on September 11 [1 favorite]

...and even if it's not the same ol' stock-tip scam, and not leading up to a crypto scam, there's still the VERY problematic meme-stock universe to avoid.

Run away, run away, run away.
posted by aramaic at 9:25 AM on September 11

Social Media ‘Investment Group’ Imposter Scams on the Rise

Pig butchering scams

Pig butchering scams are extremely patient and very high-touch. They're staffed by essentially slave labor, so they can afford to seem very personalized. It's more like catfishing than anything.

using a recognized platform not connected to the WhatsApp group

Well, for now. Maybe once he buys into the "premium" group, he'll be encouraged to join another "platform" that they control. These cons are long-term, sophisticated, and can be assumed to have optimized ways to suck people in and bleed them dry. Alternatively, maybe he got sent a link to schwab.info and believes he's signed up to a real trading platform but hasn't.

But it doesn't matter how they're planning to screw their marks, all that matters is that they will, and he's not going to come out ahead.

although that doesn't mean it's actually this guy on WhatsApp

Okay, put it this way: why would a successful American stock advisor be giving out tips on WhatsApp? The probability that it's really this guy is 0%.

Keep doing it until you have a small group who have seen 3 or 4 correct predictions in a row.

It can be even easier than that: with penny stocks, you're just telling 500 people to buy into it at the same time. When some proportion of them do, the stock rises, just as you predicted.
posted by BungaDunga at 9:27 AM on September 11 [2 favorites]

A target date to sell a stock or bond is definitely bad or scam investment advice unless it's before or after the scheduled release of news that could be market moving. (Selling ahead or behind a dividend or coupon payment is always bad advice, because that's netted from the price.)
posted by MattD at 11:23 AM on September 11

Needing the screenshot of the transaction is sketchy as hell. Your friend should run.

I've been trying to think of a possible use for this screenshot and I just came up with one: this person is being paid a commission for every share he sells.
posted by Tell Me No Lies at 1:45 PM on September 11 [2 favorites]

I suspect it's psychological, to make the mark feel like he's committing to the group.
posted by praemunire at 5:17 PM on September 11

I've recently been added in random Whatsapp groups about this and I'm pretty sure it's a scam. I have no idea how they got my number and it looks really fake
posted by winterportage at 7:48 PM on September 11

I assume this stock was RYDE — it was pumped, it was dumped, down 85% today, I hope your friend didn’t lose any money they couldn’t afford.
posted by goingonit at 6:41 PM on September 12

Response by poster: OMG yes it was Ryde! How on earth did you know, was it a big story?

Thanks all for the quick responses. My friend was mildly skeptical so they did have an automatic "sell" order on their Ryde stocks already, but it was only at $18 which was their original buy-in price.

In the morning, when I wrote this question, Ryde was at around $21.50 and the WhatsApp person was predicting it would go to $26 in the next couple days, so my friend was planning to buy a bunch more.

After reading your responses here, I suggested my friend NOT buy more, and also adjust their "sell" plan to trigger at a higher price (ie less tolerance for price fluctuation). So if the stock dipped even a teeny bit, just to $21, everything would be sold instantly. I don't know anything about stocks but I figured if it was a scam and the price started dropping, it might plummet so fast there would be no time to sell.

As it turns out, the dump started just a couple hours later and was extremely fast - within 90 minutes - and RYDE ended the day super low, around $4.25!!

My friend had bought it at around $18 and auto-sold at $21, so they actually ended up making a little profit, AND also learned about Pump-and-Dump and the Baltimore Con from this thread, so that knowledge and skepticism should be very helpful going forward. Thanks again!
posted by nouvelle-personne at 7:34 PM on September 12 [4 favorites]

So I work in a finance adjacent role and it happened that someone was discussing this chart yesterday, and I immediately thought of this thread. Long story short, this stock got its trading halted because it fell so fast so $21 ended up being a very lucky place to have a limit order. If it was $18 they would have ended up a lot worse off. Good job!
posted by goingonit at 1:20 PM on September 13

Thanks for updating us on what happened, I'm glad this turned out ok in the end. For your friend, at least.
posted by number9dream at 6:27 AM on September 16