New Pump-And-Dump Scheme Fuels 30% Hike In Spam

Spammers are pushing a company so hard in a new pump-and-dump scam that it's elevated worldwide spam levels by 30% in the past 24 hours, according to researchers.

The spam messages, which are being sent to Internet users globally, have an attached PDF file urging them to buy shares in a company called Prime Time Group Inc., according to anti-spam software company Sophos. The company being pushed in the campaign sells wireless products and services aimed at the youth market.

Pump-and-dump refers to potentially fraudulent spam that hypes small company stocks. The spammers invest in these generally low-cost stocks before the spam campaign begins. Once people are duped into buying the stocks, the share prices go up and the spammers sell off and cash in. The sell-offs, though, usually drive the stock prices down, and the other investors lose their shirts.

"The scale of this stock pump-and-dump spam campaign is like nothing we've seen before, and it looks like it is working for the cybercriminals behind it," said Graham Cluley, senior technology consultant for Sophos, in a written statement. "The share price in this company has rocketed as a result of bogus news being blasted to Internet users worldwide. In an attempt to get past anti-spam products, criminals are now regularly using PDF files to carry their slick enticements for potential investors."

Sophos researchers reported that they saw the first massive spike in spam in Germany on Wednesday, but it soon spread to the company's other monitoring stations around the world. The e-mails are being sent from a botnet.

Sophos also reported that pump-and-dump stock campaigns account for about 25% of all spam, up from 0.8% in January 2005.

In March, the Securities and Exchange Commission suspended trading on 35 companies that were being touted in spam campaigns. The trading suspensions -- the most ever aimed at spammed companies -- were ordered because of questions regarding the adequacy and accuracy of information about the companies, according to an advisory put out by the SEC.

The SEC estimated that 100 million pump-and-dump spam messages are sent every week, triggering dramatic spikes and then drops in share prices and trading volume. A report was released earlier this year predicting that 90% of all e-mail will be spam by the end of the year, and that increase will be greatly fueled by the increase in pump-and-dump spam.