The SEC issued a warning to credit unions today about a fast increase in emails using a spamming technique called “pump and dump.”
Pump and dump scams are meant to inflate stock prices by increasing demand for a stock. They often claim to have inside information about a company or claim to use a surefire way of picking good stocks.
The goal of the scam is to pump up a stock’s price so that the fraudsters can sell the shares they bought for a lower price for a profit. After the fraudsters sell their shares, investors lose their money or are stuck with nearly worthless stock, according to the SEC.
These scams aren’t only popping up in people’s inboxes, they’re also prevalent on Facebook, Twitter, online bulletin boards and chat rooms, according to the SEC.
The SEC advises credit unions to be wary of any unsolicited investment advice and encourages credit unions to delete any emails they suspect are part of a pump and dump scheme.