Microsoft has quietly filed lawsuits against at least three alleged perpetrators who the software giant says used its MSN Hotmail networks to promote stocks. Hotmail has "received large volumes of unsolicited commercial e-mail messages" promoting stocks for such companies as Distributed Power, TGC Ventures, China Biolife Enterprises, and Irwin Resources, according to court documents filed during April and May in King County Superior Court in Seattle. Microsoft charges the defendants with violating the federal CAN-SPAM act as well as Washington state consumer protection laws and is seeking unspecified damages.
Pump-and-dump e-mail scams are a form of fraud where the criminals purchase stock in a company and then promote the equity in millions of unsolicited email messages. Pump-and-dump spam has not only taken up resources and threatened the smooth functioning of Hotmail, but it "continues to result in significant costs to Microsoft," the court filings state. Because Microsoft does not know the name of the spammers behind the unsolicited e-mails, it has filed the lawsuits as "John Doe" cases, giving it the power to subpoena information in the case and ultimately name the parties responsible when they are uncovered.
Researchers at Purdue and Oxford Universities recently examined the dynamics of pump-and-dump and found that spammers could realize 5% returns in a single day. "The pump-and-dump schemes are basically driving spam research and development," said Adam O"Donnell, a senior research scientist at Cloudmark. Primarily, this research has centered around the creation of templates that can be used by infected PCs to create spam messages and on a form of e-mail known as image spam, said O"Donnell. Image spam is also particularly well-suited to pump-and-dump because the fraudsters don"t need victims to click on a link for the scam to work.