Hot Stock Tips Are Not
It’s safe to say that anything that seems to be too good to be true probably isn’t, but that doesn’t stop scam artists from trying out their ploys on unsuspecting cell phone users. Many more people are finding unsolicited text messages on their phones, offering stock tips that will make them rich, but are these messages really designed to help the phone user out?
While email messaging can be filtered with junk mail filters, text messaging isn’t able to do so. Scam artists are finding this mode of communication most effective in getting their scam to someone who might think that it’s well-intentioned. Because the cell phone user believes that their number can only be used by those that they have sanctioned, they initially believe that the information is coming from a truthful source.
The scam is known as the ‘pump and dump’ whereby the scam artist gives the victim misleading information about a stock (this is the pump part). When enough people have taken this information and used it, the demand for the stock then goes up and thus so does the price. The scam artists will then sell the shares that they purchased in this same company, lessening the price and leaving the victims with worthless stocks.
A stock tip scam is easily identified when a person takes the time to use their common sense. If a person should receive a tip about a stock that will rise in price and value significantly, that may be an indication of a scam. The text message may also include a low priced stock (often fifty cents or less) that can be more easily targeted. These identifiers along with a pressure filled message and approach are almost definite signs of a scam on stocks.
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