A high security physical layer encryption scheme for dual-mode orthogonal frequency division multiplexing with index modulation (DM-OFDM-IM) in magnetic induction communication is proposed. The scheme utilizes DM-OFDM-IM, where subcarriers within each subblock are divided into two groups, each modulated by distinct signal constellations. DM-OFDM-IM leverages the sequential information from the modulated constellation to transmit extra information, leading to a substantial enhancement in spectral efficiency. In order to improve the security of DM-OFDM-IM magnetic communication system, a 4D hyperchaos model is used to generate four columns of chaotic sequences for specific encryption, frequencies, and symbols scrambling of transmitted data to prevent attacks from illegal receivers. A DM-OFDM-IM magnetic communication signal encrypted by 23.76 kb/s is experimentally transmitted on a 36 cm magnetic induction coil. Due to the use of geometric shaping, the communication distance is increased by 0.316 cm compared with the traditional 8QAM modulation at the hard-decision FEC BER limit of 3.8 × 10-3. The experimental results show that the bit error rate (BER) performance of the signal before and after encryption does not significantly differ. In addition, the key space of the scheme can reach 10146, which effectively ensures the physical layer security of the system. This approach offers robust performance and enhanced security, making it a promising solution for short-distance magnetic communication applications.