Pump and dump – scams where you’re urged to buy low-value shares

This is how it works: It starts with fraudsters luring people into buying shares at a low price. Once enough people have invested and the share price has risen, the fraudsters sell their holdings at a higher price. Those left behind lose the capital they invested. 

“This is nothing new, but like many other scams, it comes in waves. Through social media and new technology, well-known public figures and celebrities are exploited. Fraudsters may use the name and image of a well-known investor in an ad, encouraging people to buy – when in fact it’s part of a pump and dump scheme which the person featured has nothing to do with,” says Amalia Krantz, Nordea’s fraud expert. 

Fraudsters reach a wide audience through social media ads claiming that successful investors are offering investment advice. Then the person is invited to join a group where a specific share or investment is recommended. Once enough people have taken the bait, the share price goes up (pump) and the fraudsters carry out a pump and dump – selling everything (dump) and walking away with the profit. 

“As with many other scams, fraudsters use social engineering and strong feelings – who hasn’t dreamed of becoming a millionaire overnight? But you should ask yourself: Who is actually offering me this fantastic investment opportunity and why. If something seems too good to be true, it often is,” says Amalia Krantz.