14 DAY TRIAL // Microsoft has debuted legal action against a group of pump-and-dump stock scammers that have been abusing the company's email services. Pump-and-dump stock scams are based on the ingenuity of the victims. Scammers spam large volumes of unsolicited email messages containing references to various companies. In Microsoft's case, the spam promoted Distributed Power, TGC Ventures, China Biolife Enterprises, and Irwin Resources.
The spammed email messages heavily promote the stock of publicly traded companies for the benefit of the attackers. The spammers generally own stock or are acting on the behalf of a third-party which is involved with the company, or which also owns shares. By promoting the equity, the attacker manages to convince users to also buy stock, thus driving both demand and prices up.
Following the spamming, and the value growth, the scammers will then dump the stock and walk away with the profits while their victims will be left with worthless shares. Pump-and-dump stock scams are a form of Internet fraud that has exploded in the wake of the increasingly complex spamming techniques. But in the end, pump and dump scams are a form of social engineering. The scams play on the users greed promising healthy profits. But as it is the case with any other form of fraud, all legitimate investments are lost.
Although it has not managed to identify the pump-and-dump stock scammers, Microsoft has filed lawsuits against three unknown parties in King County Superior Court in Seattle in April and May 2007. The Redmond Company has not specified from the get go the amount of financial damages it is looking for, but most likely, Microsoft just wants to send a message to scammers targeting Windows Live Hotmail users. The company has failed to officially comment on the lawsuits.