Share trading has been the tool of scammers with ‘pump and dump' stock manipulation schemes becoming more and more common.
However scammers are set to be tackled by protection from VeriSign who has introduced the VeriSign Identity Protection (VIP) Fraud Detection Service Stock Trading Module, which protects traders at the transaction level, tracking behaviour specific to stock trading scams.
It is able to spot pump and dump activity by tracking and weighing multiple factors including stock risk, user behaviours, how trading compares to typical fraudulent trades, and the network effect that occurs when many users are making similar trades.
The schemes work by scammers manipulating the market, commonly by sending an email which aims to trick small investors to cash in stock which allows the conmen to sell the stock they own at a profit. This ensures that investors and brokerages lose money when the scammer collects the gains for themselves.
Chris Christiansen, program vice president, Security Products and Services at IDC, said: “New stock frauds are far more sophisticated than the ‘traditional pump and dump' scams. The attacks enable criminals to fraudulently pump up an unknown stock's price via unauthorised purchases from co-opted accounts.”
As VeriSign can detect the fraud while it's taking place, traders and brokerages are protected from potentially huge losses. Until now, brokerages had to rely on counter measures including restrictive stock trading or solutions that only alert brokerages after trading has taken place and the money is already gone.
Fran Rosch, vice president of Identity and Authentication Services at VeriSign: “Fraud isn't just a cost of doing business, it also undermines consumer confidence. With the new Stock Trading Module, we extended the existing functionality of our VIP Fraud Detection Service to proactively identify fraud before damage can be done.”