I don’t see much spam any more telling me that I’ve won the lottery, though I do still get a few that want me to secretly help move a few million from Nigeria into my bank account here. At least those involve a benefit, which is more than I can say for most of the spam.
One variety of spam has taken a clear lead in my “Junk” email folder during the past year, the pump & dump stock schemes which tout obscure penny stocks. I often get several identical pump & dump emails from different senders at virtually the same time. I must really look like a sucker to someone.
I know I’m not alone, either. Very recent data is hard to come by, but some estimates say that spam now accounts for 91% of email, and that the volume of spam has doubled over the past twelve months.
And the pump & dump spam is a growing part of those growing numbers, apparently for two reasons. First is that these emails show up as “image spam,” meaning that you actually see a picture of the words, which tricks the spam filters that rely on text recognition. Second, the spam doesn’t use a link that you click on. The words tell the stock name and symbol and claim that it’s “hot,” and the spammers know that people will fall for it…
Or enough people, at least, so that the block of penny shares the spammer purchased beforehand will be driven up by new buyers after the emails arrive. Trading volume on penny shares is very small, so relatively few buyers can move share prices high enough for the spammers to sell at a worthwhile profit.
A cute twist on this scam is the email that looks like it was misdirected among friends and contains a few sentences of innocuous talk, and then mentions something like “and remember the XYZ stock I told you about last week? It’s gone up almost 40% already just like I told you it would. I’m going to buy some more.” The unsuspecting recipient may think they have just received an inside tip, not realizing that 100,000 others just got the same email.
Yes, this scheme is ugly, evil and illegal. But it works. It works because too many people fall for “the next hot thing,” and the spammers know it.
At the risk of blaming the victim, it’s dumb to buy a stock you’ve never heard of based on email from someone you’ll never know. Psychology is every investor’s greatest weakness, except for the few who make it their greatest strength.
Quips
