A “Pump and Dump” is the name given to a email scam where spammers will send out spam email about a company, with the aim of inflating interest and price of a companies stock or shares.
The idea is that the scammer will first buy a large number of shares in a low-valued company. The company will often be a failing company with no chance of making a good return for the share price.
Once the scammer has a large holding in the company they will send out millions of spam emails with a hot tip about the company – to show that the share price is going to shoot through the roof in the next couple of weeks and we should all rush out and buy the shares now whilst the price is so low.
Once the interest in the shares has been raised but before the scam is realised, the scammer will sell the shares he has pre-purchased for a massive profit, leaving the people who have been duped with worthless shares when the price crashes.
These scams often operate without any knowledge of the company who the shares are being targeted… that is until they realise their share price is soaring!
So next time you receive an odd email message from someone you don’t know, offering you a tip on a share, you know what it is!
This is a relatively new type of spam email, and one that is quite difficult to trace back to the scammer. Because there is no direct product for sale, the spammer does not need to leave a website address or phone number. The emails are often sent out from a army of zombie PC’s – computers that have been hijacked by the spammers, leaving no trace back to the original sender.