I’ve been interested in stock scam emails for awhile, and I’ve even written a few blog posts about them. Now, people with more resources than I are taking a look at them, and the findings are very interesting.
First up is an MSNBC story. It contains some scary statistics: 62 billion spam emails are sent each day! That’s ten for every person on the Earth, though most people on the Earth don’t even have email addresses. That’s double the spam since the same time last year. The story also says that a full one-half of all spam emails are now stock spams. This is a vast, vast increase over the number of stock spams from last year. Also, one-half of all spam is now image spam, which is what I’ve been seeing a lot of lately. All of the spammy details are inside the image, and then the email contains a word salad designed to pass spam filters. A bad side effect of this is a large increase in the amount of bandwidth used by spam, because it takes a lot more bytes to send images than just text.
The sad thing is, the stock spams are working, at least somewhat. Analyses of the touted stock companies show that the spammers earn an average of 5.79% for each stock that they tout. The normal investor stands to lose an average of 5.5% if they get in on the action, so a good general rule is “Never buy anything that’s being touted in spam emails.” Investigations have revealed that spammers will buy a large number of shares in stocks, wait a little bit, and then begin touting, selling off all of their shares once it reaches its peak.
A little cottage industry has even grown to track stock spams. All of this begs the question: why are stock spams so seemingly effective, and why are they rapidly taking over the spam market? The answer is simple: the stock market is an independent, external network that operates separately from the web. In traditional spams, the spammer is trying to sell something or scam money, but it needs a way to contact the spammer (which is most often a web link). Of course, any web link that is sent out in millions of spams will easily be tracked, and will oftentimes be quickly taken down by an ISP, hosting company, or even government agencies. Stock spams work because the action the spammer is soliciting to make money off of cannot be stopped through the web at all. They simply need people to read the email and then buy stock based on the “advice”, not transmit information in any way. The spammer can buy stocks mostly anonymously, and can be traced far less easily than if he was making his money by a website touted in emails, or trying to get people to contact him to pull a Nigerian scam on them.
See my coverage of other stock scams.