December 7, 2006

Penny Stock Spam: Who falls for this?

Posted by Arcane Gazebo at December 7, 2006 4:43 PM

The New York Times had an article yesterday about the recent surge in spam volume (which I'd definitely noticed, although Gmail and Thunderbird catch almost all of it). The article reports that the most profitable form of spam is penny stock advertisements:

Many of the messages in the latest spam wave promote penny stocks — part of a scheme that antispam researchers call the “pump and dump.” Spammers buy the inexpensive stock of an obscure company and send out messages hyping it. They sell their shares when the gullible masses respond and snap up the stock. No links to Web sites are needed in the messages.

Though the scam sounds obvious, a joint study by researchers at Purdue University and Oxford University this summer found that spam stock cons work. Enough recipients buy the stock that spammers can make a 5 percent to 6 percent return in two days, the study concluded.

I get lots of these messages myself, so this must be correct. But still: I know there's a lot of stupidity in the world, but who are these people dumb enough to actually buy stocks based on e-mail recommendations from strangers? And how are they able to tie their own shoes? Could anything be more obviously a scam?

Tags: Internet

Related question: how do these people manage to buy stocks at all, if they're so stupid as to fall for this? I don't think stock buying has become easier than shoelace tying quite yet.

I'd regard most scams as being about equally obvious. Stocks, phishing, Nigeria, recreational pharmaceuticals - very obvious. Phishing at least could be arguably non-obvious a few years ago, I guess. If one takes a particularly cynical outlook, one could argue that these spams are not an unmitigated evil - it is effectively a tax on some combination of stupidity and gullibility. If only the money went to a worthy cause, and the means of assessing the tax didn't inconvenience the rest of us, it might be a tolerably decent idea... :-)

Regarding spam, I've finally pulled the plug on my email address from Santa Cruz. 200 spam/day average, with zero useful emails since I've been using my current spam filter. I saw another spam report a few days ago saying that 91% of all email is now spam, and thought that sounded a bit low...

Posted by: Justin | December 7, 2006 6:09 PM

Yeah, it's especially astonishing that the Nigerian scams work on anybody, and yet there are always stories of people losing vast amounts of money to them. It makes me wonder how people so easily conned ever got all that money to begin with.

Back in 2000 I set up a Hotmail address for use in contexts where I worried about attracting spam. Ironically, this account now gets less spam than my other two active addresses.

Posted by: Arcane Gazebo | December 7, 2006 6:20 PM

My spam filters haved worked reasonably well on one side: only a minimal amount of spam gets through them. The problem is that there have been a couple of critical failures (false positives), so now I try to zip through the last N (I "read" the most recent one so it's not marked as a new message and I know when to stop) about once a day.

One critical failure that comes to mind was a message my collaborator sent to someone else (regarding an article that guy was going to write for USA Today about our football ranking project), but it ended up as spam, he didn't notice for a week, and by that point he decided the 15 minutes was almost up and he didn't bother.

The other critical failures (about which I know) have been false positives I've seen in my spam folder. (I was really amused, however, that for a week or so, every message from my brother automatically showed up as spam. For a while, I ended up having to flag his e-mail address for his messages to show up in a separate folder. This is the only time I've had a mail from some address consistently get marked as a false-positive spam.)

Also, there was a really amusing article a few years back (in WIRED?) about how somebody pranked the spamsters of one of those Nigeria spams.

Posted by: Mason | December 7, 2006 8:04 PM

Actually, I can think of at least one reasonable hypothesis for why it works. First, realize two things:
* Most people are greedy.
* Most people think they're clever.
Now, imagine the following thoughts someone might have:

"Oh look, another pump and dump scam. Hrm, I keep getting them, so they must work. I wonder... I other people are going to fall for this, and I hurry up, I can maybe get a piece of the pie for myself before it tanks... Mwahaha!"

Really, I doubt this happens much, but I bet dollars to donuts it's happened.

(AG - I tend to think the same thing when I see those emails, but I just thought of this and thought it might be worth a laugh)

Posted by: Lemming | December 7, 2006 8:38 PM

Oh, there's a very important thing I forgot to mention in my earlier comment: I am unable to tie my own shoes. That's why I wear shoes with velcro or slip-on shoes. I just could never ties shoelaces properly no matter how hard I tried. I ultimately decided that I had had enough and went a different route.

Posted by: Mason | December 7, 2006 10:34 PM

Mason: Oops. Apologies for the poorly chosen phrase. I guess I always thought you went with velcro for the convenience.

Posted by: Arcane Gazebo | December 7, 2006 10:57 PM

Well, that's part of it. Among other things, it's extremely convenient to be able to put my shoes on!

I wasn't offended, by the way. I was just remarking that that's something I'm unable to do. Back in the day, I was mocked mercilessly by my classmates for this (although it's not like they needed any more ammunition, so it served to increase the variety of subjects they used to mock me rather than the severity of the amount of time they spent doing it). Back then, my parents also used this particular ineptitude as one example of how I was a failure (because how can somebody of age N not be able to tie shoes) and to point out repeatedly that I was different from the other kids in the neighborhood (which they viewed as a bad thing).

Posted by: Mason | December 7, 2006 11:30 PM

severity _or_ the amount of time

Posted by: Mason | December 7, 2006 11:31 PM

Wait... WHAT are these hot stocks on the rise? Quick, tell me, before they peak!

Posted by: Josh | December 8, 2006 12:37 AM

Most of the ones I get in my inbox seem to be about penis enlargement. I wonder if gmail is trying to tell me something? Then again, in last week's junkmail, I got a holiday catalog from Major League Baseball and Curtis got one from William Sonoma.

Posted by: Jenny | December 8, 2006 9:56 AM

As PT Barnum said: "Sucker born every minute"

AG: I also ironicly get the least amount of spam to my throw away hotmail account i create to give to anything i expected to generate spam.

Posted by: shellock | December 8, 2006 10:48 AM
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