Spammers turn to 'pump & dump' share scams

Stan Beer
Wednesday, 11 May 2005 05:30

IT Industry - Development

Fake stock market tips were up by 700% in April, showing a rising trend toward using spamming techniques to hype up the price of volatile penny stocks.

According to the latest monthly Spam Index from email security specialist Clearswift, over a quarter of all unsolicited email in April 2005 was made up of bogus stock tips.  Known as 'pump and dump' spammers try to spark speculation in penny shares by promising huge financial rewards for private investors who move quickly.  The spammers imply recipients are privy to insider information, such as major new contract wins, massive projected earnings or an impending acquisition.

In theory, a rush of investors will push up the share price, at which point the spammers sell up and bail out.  These penny shares are highly volatile stocks and only those hyping them stand to make any profit.  Pump and dump scams are as old as the stock markets and email has given organised crime a new way to trick investors and make easy money. 

'This kind of spam obviously worked last year.  Spammers are coming back for more,' said Peter Croft, managing director Clearswift Asia Pacific.

'Even if the 'insider tip' is rubbish the surge in interest means an increase in value and it becomes a self-fulfilling prophecy.

'You wouldn't invest your hard-earned cash on the advice of a man in the street and the same should apply to emails from people you've never heard of.  Our advice about spam stands - just delete them.'

According to Clearswift simple email filters will not always block financial spam.  Many filters are programmed to search for words such as 'sex' or 'Viagra', but stock market emails can easily fool less sophisticated software .

The increase in stock tips spam comes at the expense of pornographic spam, which halved in April to account for 5.62% of the total.  The perennial favourite, libido-enhancing tablets, drooped slightly to 33% to make way for the dramatic stock upsurge.

The strangest spam of the month award went to an evangelical email. One spammer obviously believes George W. Bush is in need of divine intervention.  The email encourages recipients to pray along with Bush on the eve of an important meeting regarding Iraq.  Adorned with images of the Stars and Stripes and other leading Senators to pray for, it features a long prayer and an 'inspirational reference' from the Bible.