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Pump and dump fraudsters targeting hotels and Internet cafes, says FBI

04 May 2007  |  9069 views  |  0 biometric  eye

Cyber crooks are installing key-logging malware on public computers located in hotels and Internet cafes in order to steal log-in details that are used to hack into and hijack online brokerage accounts to conduct pump and dump scams.

The US Federal Bureau of Investigation (FBI) has found that online fraudsters are targeting unsuspecting hotel guests and users of Internet cafes.

When investors use the public computers to check portfolios or make a trade, fraudsters are able to capture usernames and passwords. Funds are then looted from the brokerage accounts and used to drive up the prices of stocks the frudsters had bought earlier. The stock is then sold at a profit.

In an interview with Bloomberg reporters, Shawn Henry, deputy assistant director of the FBI's cyber division, said people wouldn't think twice about using a computer in an Internet cafe or business centre in a hotel, but he warns investors not to use computers they don't know are secure.

Last year E*Trade said online brokerage hacking cost it $18 million in losses in the third quarter alone. TD Ameritrade accounts have also been hit by the schemes.

US authorities have stepped up the fight against the hackers and in March prosecutors filed federal charges against three Indian nationals who allegedly hijacked online brokerage accounts in the US in order to conduct pump and dump scams.

Earlier the Securities and Exchange Commission (SEC) obtained emergency court orders freezing funds contained in accounts held by a Latvia-based bank and an Estonian-based corporation that had allegedly been involved in market manipulation schemes.

The regulator also suspended trading in 35 over-the-counter penny stocks that have been the subject of repeated spam e-mail campaigns.

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