US stock fraudsters turn to SMS spam

US stock fraudsters turn to SMS spam

By Andy Gent

Fascinating new visuals show a two-month snapshot of text messaging spam being sent across the United States. At $199, database lists of 50,000 mobile subscribers, including personal information, are cheap and easy to get hold of, and have been a major factor in the recent increase in SMS spam across the country. In Washington D.C. one in three subscribers can expect to receive spam SMS.

Based on a mobile phone’s geographical location, as well as a comprehensive map of the sources and targets of mobile spam, most of the spam can be seen to be generated from Los Angeles and South Florida. The spam primarily targeted handsets in South Florida, Dallas and Chicago with a ‘pump-and-dump’ scam more typically associated with the Internet.

‘Pump-and-dump’ scams usually appear as messages posted on social media, such as Facebook and Twitter, and in chat rooms, but are now using SMS spam to snare victims. The spam SMS urge readers to quickly buy or sell stock before the price goes down. Often the promoters will claim to have ‘inside’ information about an impending development which is used to tout the stock of smaller companies.

The reality is that these statements are false and deliberately misleading. They are issued either by company insiders or paid promoters who stand to gain by selling their shares after the stock price is ‘pumped’ up by the buying frenzy they create. Once these fraudsters ‘dump’ their shares and stop hyping the stock, the price typically falls, and investors lose their money.

You can learn more about this US cyber fraud from the U.S. Securities and Exchange Commission.