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The Global Business of Fraud

Created: 06 Mar 2008 • Updated: 08 Aug 2012
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Hi there! My name is Vicente Silveira and I'm responsible for the VIP Fraud Detection Service , or as we call it, VIP FDS, product at VeriSign.

Our team develops products that help businesses and individuals transact securely on the internet. Needless to say we have a lot of work to do.

I just spent some time in Europe talking to financial institutions and comparing notes on fraud trends here and there. One of the quick conclusions is that online criminals are sharing tools and methods on a global basis and on a scale that we haven't seen before.

One example is a modern variation of an old stock touting technique known as "Pump and Dump" , where fraudsters use e-mail spam to falsely promote a thinly traded instrument (such as a penny stock) hoping that enough people will buy it and drive the price up. The way they make money is by buying the penny stock before sending the spam and selling when the stock goes up (and before it crashes down).

Now if one feels like following investment tips from an e-mail with an anonymous robotic voice that is one thing. A different thing altogether is when criminals take "Pump & Dump" to the next level and steal your username and password, hijack your online brokerage account, sell all your blue chip stocks and use the proceeds to buy the penny stock, leaving you with some worthless equity in a tiny and obscure company. Play the video below for a CNBC report on Pump & Dump aired last year.

Over the last two years, the SEC has filed charges against several individuals in the US and abroad that used this enhanced technique to defraud online brokerage users. Since 2007 the same technique started to show up in Europe and China, as fraudsters realize they can repeat the scam throughout the globe.

While the authorities are arresting some of the suspects, the sustainable solution is for brokerages to continue monitoring suspicious trading behavior and investing in better authentication credentials.

Vicente Silveira

Hacker Pump and Dump Stock Scam www.IDTheftSecurity.com