WhatsApp users get played in "pump and dump" scheme

The "pump and dump" is a classic stock scam always in search of a new players and new venues. This time it was the user base of popular messaging app WhatsApp that got targeted and apparently enough played to make the scheme a success.

The idea of such schemes is to spread information that artificially inflates a stock. It is not usual to see spam emails purporting to offer some sort of inside knowledge that a stock is going to spike, whether it's due to a supposed pending acquisition or approval by the Food and Drug Administration of a drug application.

While the scam can play mainstream stocks, it more typically plays out among near worthless penny stocks, which draw less attention, have less information to be scrutinized and whose value can be more quickly manipulated.

In this case Avra, a digital currency company, was in play. WhatsApp users got what appeared to be a group text sent by an insider at a Wall Street firm ("Tom at JP Morgan" and "Jack from Morgan Stanley," for example) letting folks know the stock was ready to make a big move.

As much as most investors would dodge such a scheme, enough people bit that the stock shot up on Friday from 11 cents to $1.26 before noon. That's when one would assume the architects of the scam cashed out, as the stock then tumbled down to the 20-cent range. It closed Monday at 24 cents, more than double where it was before being thrust before WhatsApp users.

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    Mitch Lipka is an award-winning consumer columnist. He was in charge of consumer news for AOL's personal finance site and was a senior editor at Consumer Reports. He was also a reporter for The Philadelphia Inquirer and the South Florida Sun-Sentinel, among other publications.