How to Protect Your Demat Account from Online Fraud

The digital nature of demat accounts makes them efficient and accessible, but also vulnerable to cyber threats. With rising incidents of online fraud, investors need to be aware of risks and adopt proactive security habits. This article breaks down how fraudsters operate, outlines the most common scam tactics, and highlights key safety practices that help protect your demat account.

Fraud in the context of demat accounts involves unauthorised access, manipulation, or use of your account to conduct trades or transfer securities without consent. These activities often result from compromised login credentials, phishing attempts, or SIM‑related scams. Recognising these risks is the first step to strengthening account protection.

Fraudsters use several digital tactics to gain access to demat accounts. Knowing how these work helps you avoid them:

Phishing and Spoofed Communications

Scammers often send fake emails or SMS claiming to be from brokers or regulatory bodies. These messages may contain links that lead to imitation login pages or ask for sensitive details like account numbers or passwords. Once credentials are entered, attackers can access and misuse the account.

Unauthorised Access via Malware or Data Theft

Malicious software or keyloggers installed on unprotected devices can silently capture login data. Devices connected to unsecured Wi‑Fi networks are especially at risk if they lack security patches or updated antivirus protection.

SIM‑Swap and OTP Interception

In a SIM-swap fraud, attackers duplicate your mobile number onto a new SIM card. Once activated, they can receive all one-time passwords (OTPs) and verification codes needed to access and operate your demat account.

Simple but consistent precautions can reduce your exposure to most fraud risks:

Enable Two‑Factor Authentication and Secure OTP

Two-factor authentication (2FA) adds an extra verification layer. After entering your password, you’ll need to approve login via a time-based OTP or an authenticator app. Many brokers now support 2FA for demat login. Avoid sharing OTPs—even if the message appears legitimate.

Use Strong Passwords and Regular Updates

Your demat account password should include a mix of uppercase and lowercase letters, numbers and special characters. Avoid common words or personal information. Update your password regularly and never use the same one across multiple platforms.

Verify Communications and Avoid Phishing

Always cross-check messages or emails claiming to be from your stockbroker or depository. Avoid clicking on unfamiliar links. Official communications will never request confidential details or instant action.

Secure Your Devices and Networks

Use a personal firewall and ensure your system has up-to-date antivirus protection. Avoid transacting on public or unsecured Wi-Fi networks. Keep your operating system and apps updated to prevent malware exploitation.

Monitor Account Activity Regularly

Check transaction history, demat holdings and trade notifications frequently. Any unfamiliar activity, such as a change in linked email or mobile number, should be flagged and reported immediately.

Beyond basic security steps, a few more precautions can offer extra protection:

Set Transaction Alerts

Most brokers and depositories offer SMS or email alerts for every buy or sell order. These alerts act as immediate red flags if a trade is executed without your approval.

Link Trusted Mobile Number and Email

Ensure your contact details in the demat profile are updated and belong to you. Changes to these details often require OTP verification—another reason to prevent SIM swaps and phishing attacks.

Understand the Role of Depositories and SEBI

Depositories like NSDL and CDSL offer investor protection measures including transaction alerts and freeze features. SEBI mandates strong customer authentication norms and offers investor grievance redressal systems for suspected fraud.

If you believe your demat account has been compromised, act quickly:

1. Immediately block all transactions through your stockbroker or mobile app
   

2. Contact your Depository Participant (DP) and request a temporary freeze
   

3. Report the incident to the cybercrime unit and file a police FIR
   

4. Inform SEBI and your stock exchange for escalation and support

Prompt response increases the chance of containing damage and recovering funds.

While digital investing has made trading and holding securities more convenient, it also calls for personal vigilance. Staying informed about evolving threats and actively monitoring your demat activity are essential to protecting your investments. A combination of strong passwords, regular checks, device safety and two-factor authentication provides a robust defence against online fraud.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.