IPO scams and fake allotment offers

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How a real IPO application works

Knowing the real process is the best protection. A genuine application always looks like this:

1. You apply yourself, in your registered broker’s app or your bank’s net banking.
2. Your bank blocks the money in your own account through a UPI mandate or ASBA. It is not sent anywhere.
3. The registrar runs the allotment, by lottery if the issue is oversubscribed, under the stock exchange’s supervision.
4. Shares arrive in your demat account on T+2, or the block is removed.

At no point do you transfer money to a person, a group or a separate app. Read how to apply for an IPO and how the UPI mandate works.

Why IPOs attract scams

Popular IPOs are heavily oversubscribed, so most applicants get nothing. That gap between demand and allotment is what fraudsters use. They offer a way around the lottery, which does not exist, at a moment when many people feel they are missing out.

News of large listing gains adds to the pull. A message that arrives the week an IPO is in the news feels more believable, especially if it names the IPO correctly and quotes real subscription figures.

Common IPO scams

The WhatsApp and Telegram pattern

Many recent frauds follow a script. You are added to a group with a name that suggests an expert or a well-known firm. Members post screenshots of large profits. You are then invited to download an app or open an account to get IPO allotment through a special quota.

The app shows rising balances, and the first small withdrawal may even work. When you invest more, withdrawals stop, fees are demanded, and the group disappears. The people in the group, the profits and the app are usually all fake.

Checking who you are paying

Since 1 October 2025, SEBI-registered brokers and other intermediaries collect money from investors through validated UPI IDs. These have a special format ending in @valid, such as a name followed by .brk for a broker, and show a thumbs-up inside a green triangle on the UPI payment screen.

Before paying any intermediary:

• Check the UPI ID on SEBI’s SEBI Check tool, by typing it or scanning the QR code.
• Check the bank account and IFSC there too, before any NEFT, RTGS or IMPS transfer.
• Check registration on SEBI’s website for the broker or adviser’s name.

None of this is needed for an IPO application itself, because no money leaves your account. It matters when someone asks you to pay them.

A worked example

Say a message reads: “BLS Polymers IPO, guaranteed allotment of 5 lots through our institutional desk. Pay ₹20,000 booking amount to this UPI ID.”

Here is what the real facts show:

1. Allotment was by lottery. BLS Polymers’ retail portion was subscribed 128.36 times according to NSE, so most retail applicants got nothing. No desk could change that.
2. Retail winners get one lot, not five, in an oversubscribed issue.
3. Institutions bid in their own category, as registered entities, not on behalf of individuals.
4. The payment is to a personal UPI ID, not a validated broker ID.

Every part of the message is false. This example is our illustration of a common pattern. A real broker would never ask for a booking amount, and a real allotment would never need one. If you are unsure about a message, check the IPO’s facts on the exchange website or our IPO page, and ask your own broker through its official app.

Fake messages that look official

Some frauds copy the names of real IPOs, registrars, exchanges or SEBI. A message may say your application was successful and ask for a fee to release the shares, or say your bid was rejected and offer to fix it for a payment.

Allotted shares never need an extra payment. The money for them is already blocked in your account and is debited on T+2. Check your allotment status only on the registrar’s own website, or on NSE or BSE, by typing the address yourself. Read how to check IPO allotment status.

Pre-IPO and unlisted share offers

Shares of unlisted companies can be bought and sold legally, through brokers that deal in them. But such deals are not traded on an exchange, prices are set privately, and you may wait months or years to sell.

Offers made through social media, with pressure to pay quickly, are a common route for fraud. Before paying, check who is selling, whether they are registered with SEBI, and how and when the shares will reach your demat account. If you cannot check these, do not pay.

Warning signs

• A promise of guaranteed allotment, listing gains or returns.
• A booking amount or fee paid to a person or UPI ID.
• A new app that is not from a SEBI-registered broker.
• Pressure to act fast, often “only today” or “last few slots”.
• A request for your UPI PIN, OTP or login. No genuine service asks for these.
• Messages that claim to be from SEBI, NSE or a registrar asking for payment.

If you have been cheated

Act quickly; speed improves the chance of recovering money.

1. Call 1930 or report at cybercrime.gov.in, the national cyber crime portal.
2. Tell your bank at once, so it can try to stop or reverse the payment.
3. Complain to SEBI on SCORES if a registered broker or intermediary is involved.
4. Keep the evidence: messages, app names, payment receipts and UPI IDs.

Common mistakes to avoid

• Believing screenshots of profits. They are easy to fake.
• Paying a small fee to test the offer. It is how many frauds begin.
• Sharing your UPI PIN or OTP. No genuine IPO process needs them.
• Installing apps from links. Use your registered broker’s official app only.
• Staying quiet out of embarrassment. Reporting quickly helps you and others.

What to do next

Read chances of getting an IPO allotment to see how allotment really works. Then check the subscription and dates for any open IPO from the exchanges’ own figures.

Sources: SEBI circular of 11 Jun 2025 on validated UPI handles (@valid) for collection of funds by registered intermediaries, in use from 1 Oct 2025, and the SEBI Check tool; SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, Schedule XIV: allotment by computerised lottery supervised by the designated stock exchange; National Cyber Crime Reporting Portal (cybercrime.gov.in) and helpline 1930; SEBI SCORES.

Frequently asked questions