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Pump and dump junk mail

October 19, 2006 › Sandy McMurray | comment

No, not this kind of spam... If you have an email account, you have probably noticed a spike in junk mail (aka "spam") in your Inbox.

Unlike the usual spam messages, which promote discount drugs, grey market software, and impotence cures, this campaign is pushing a penny stock.

Why send hundreds of thousands of messages to promote a specific stock? The answer is pretty obvious when you think about it. The goal is to convince as many people as possible to buy some stock, to drive the price up.

But the campaign is not orchestrated by the company. It's a common fraud strategy called pump and dump.

As noted here, this type of campaign is not new. What is new is the sheer volume of spam messages that were sent to promote the stock.

Suppose that the spammer invested $100,000 in Texhoma immediately prior to sending out his millions of spam messages. The 20% gain induced by this spam run would have earned the spammer a cool $20,000 profit in a single day! Not bad for an average chunk of capital and a substantial lack of morals. However, it appears that the spammer may have greater profits in mind - and may have realized them already, with only the future to determine his ultimate take.

Unsolicited electronic mail is a modern plague. The principle is the same as postal junk mail, but the cost of an email campaign is a fraction of the cost of a mass mailing.

Unfortunately, as long as the spammers make enough money to cover their costs, this type of thing will continue. Direct mail marketing makes money; spamming likely makes more money, because the costs are lower.

For now, all we can do is adopt the best spam filters we can find, and hope that things get better.

October 19, 2006 › Sandy McMurray | comment on this item