Messaging Apps Are Latest Platform for Delivering Pump-And-Dump Scams
FINRA is issuing this Alert to warn investors to be wary of stock promotions sent through popular messaging apps such as WhatsApp that allow users to almost instantly exchange messages. The messages could be coming from fraudsters looking to trick unsuspecting investors.
In recent weeks, scammers have been using messaging apps to transmit spam messages that promote penny or "microcap" stocks. Recently, WhatsApp users were flooded with text messages touting Avra, Inc. (OTC: AVRN). The messages appeared to be sent from individuals at well-known brokerage firms. Using only a first name ("Hi it's Will at XYZ firm…"), the text would talk up the stock. One message claimed AVRN was "going to double in the next few days." Another said it "is going up 300% next week."
Same Scam, Different Technology
This is a variation of the pump-and-dump scam, where fraudsters use spam—in this case transmitted through the mass push feature of a messaging app—to tout a stock. The buying that follows will "pump" up the price—until the fraudsters "dump" their shares by selling them at a peak. Once the fraudsters stop hyping the stock, the price typically falls dramatically—and investors lose their money or are left with worthless, or near worthless, stock.
Users of app messaging services should treat these messages with extreme caution. When it comes to pump-and-dump spam, the smartest play is the easiest. Don't respond—just delete.
- FINRA Investor Alert: Stock Spams and Scams
- FINRA and SEC Alert: Inbox Alert—Don't Trade on Pump-And-Dump Stock Emails
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