Where the trap begins

A woman, identified as Ms. Wu, recently shared her experience with The Paper, explaining how she was contacted by a stranger on the social platform Xiaohongshu (Little Red Book). The person offered "public welfare stock recommendations," introducing her to a "teacher" for investment guidance. This was the first step in a carefully orchestrated scheme to lure her into downloading a third-party securities trading app.

To build trust, the scammers required Ms. Wu to click on a link and make a charitable donation of 280 yuan, sending a screenshot as proof before she could be connected to the so-called "teacher." The bait was irresistible: the promise of being able to trade on the ChiNext and STAR Market boards without the standard 500,000 yuan asset threshold.

The allure of a no-barrier market

After the donation, Ms. Wu was introduced to someone claiming to be from Guotai Haitong (Guotai Junan Securities). This individual told her that a "Guotai Haitong Securities Zhizhen Edition Trading Account" would allow her to buy stocks on the ChiNext and STAR Market boards with no minimum asset requirement. The scammers claimed this was a "mainstream channel" for institutional investors and major players. They sent daily messages boasting "today's profit +9.8%" and saying things like "this is a super short-term trade, buy today, sell tomorrow," creating a sense of exclusive access.

Ms. Wu initially deposited 50,000 yuan. The scammers gave her small returns, such as 500 or 1,000 yuan on a 10,000 yuan investment, but these payments came from personal Alipay accounts, not company accounts. When questioned, the scammers claimed this was to "avoid taxes." They constantly shared fake profit screenshots and created a sense of urgency, telling Ms. Wu that if she did not have enough money, she should take out loans. Guotai Haitong later confirmed to The Paper that it has never launched a "Zhizhen Edition Trading Account," and any claims of bypassing market access rules are fraudulent.

How the scam escalated

Under the pressure of the scammers' tactics, Ms. Wu transferred over 500,000 yuan to various third-party accounts. When she tried to make a large withdrawal, the scammers threw up obstacles, including demands for extra fees. A second victim, Ms. Chen, had a similar experience. She had left a comment on a stock forum post about her losses, and a scammer befriended her, sharing fake profit screenshots to build her confidence. The scammer eventually sent her a link to download a fake trading app that looked identical to a legitimate broker's interface.

Ms. Chen explained that the app could only be downloaded via a third-party link, not from official app stores. All transactions were handled by transferring money to personal accounts, with the excuse that the process required converting to Hong Kong dollars. When she tried to withdraw her profits, the app sent a message stating she needed to pay an additional 132,407 Hong Kong dollars to "upgrade" her account to a "regular" one. She eventually lost over 600,000 yuan, most of which was borrowed from financial institutions and loan apps, leaving her in heavy debt.

Recognizing the red flags

The scammers used a variety of fake trading apps, such as "SLine" and "Zhiliao Hui," and some even recommended overseas chat apps to avoid platform monitoring. They often claimed that their "channel accounts" could buy stocks that regular accounts could not. The Paper's investigation found that these scams rely on victims being emotionally invested in recovering their initial losses, leading them to continue borrowing and investing money that is ultimately lost.

On June 3, the Xiaohongshu platform announced a crackdown on fraudulent financial accounts, stating that it would block accounts that violate rules and report them to the police. The Shenzhen Longgang police also recently dismantled a major stock recommendation scam, arresting 247 suspects and freezing 24.08 million yuan in funds. The gang used fake "original stock" investment opportunities in shell companies to lure victims.

Shanghai Jiucheng Law Firm's chief partner, Xu Feng, advises victims to report scams to the police immediately to try to intercept funds. He emphasizes that the best defense is to manage investment expectations, improve financial knowledge, and avoid unrealistic promises of guaranteed profits.