We are aware that some investors have recently been targeted by pump and dump scam groups involving shares listed on overseas markets. These scams are often promoted through social media advertisements or unsolicited messaging groups and can result in significant financial losses.
This article explains how these scams work, how scammers typically approach and deceive investors, and what you should do if you believe you may have been targeted.
What is a “pump and dump” scam?
A pump and dump scam is a form of market manipulation where scammers:
Accumulate a large position in an illiquid (thinly traded) stock at a low price
Artificially inflate (“pump”) the price by promoting the stock with misleading or false claims
Sell (“dump”) their shares at the inflated price once enough victims buy in
Leave victims holding the shares that rapidly collapse in value
Because micro-cap stocks often have small market capitalisation and thin liquidity, they are particularly vulnerable to this type of manipulation.
How scammers approach and deceive victims
These scams often follow a predictable pattern:
Step 1: Initial contact
Scammers may:
Use deceptive advertisements on social media platforms (such as Facebook), often promising high investment returns on stocks, or
Invite you into a chat group on messaging apps (such as WhatsApp or Telegram)
These messages are unsolicited and often appear unexpectedly.
Step 2: Impersonation and trust building
To gain credibility, scammers may:
Impersonate or falsely claim association with well-known Australian financial figures or institutions
Use profile photos, names, or writing styles designed to appear legitimate
During the initial stage after establishing the chat group, scammers often:
This “marination” phase is designed to build trust and lower your guard.
Step 3: The “pump” phase
After trust is established, scammers begin to:
In some cases, victims are initially advised to:
This is deliberately designed to:
Step 4: The “dump” phase
Once enough investors have committed larger sums, scammers would sell their accumulated shares into the buying demand; the share price collapses within short periods of time and liquidity disappears, making it difficult or impossible to exit. Victims are left holding shares with significant unrealised losses.
Warning signs to watch out for
Be especially cautious if you encounter any of the following:
Unsolicited invitations to investment chat groups
Pressure to act quickly or “not miss out”
Claims of guaranteed or unusually consistent profits
Promotion of obscure or thinly traded overseas stocks
Individuals claiming to be famous investors or economists without verifiable proof
Requests to keep the opportunity “confidential”
"If it sounds too good to be true, it usually is."
What to do if you suspect a scam
If you believe you may have been targeted or affected by a pump and dump scam:
Stop engaging with the individual or group immediately
Do not invest further funds based on their messages
Retain evidence, including:
Screenshots of messages
Group names and contact details
Links or advertisements used
Report the scam to government authorities
Your local police or AFP's Cybercrime Unit - https://www.cyber.gov.au/report-and-recover/report
ACCC Scamwatch - https://www.scamwatch.gov.au/report-a-scam
If you believe your identity information may have also been compromised - https://www.idcare.org/get_help/help_main
Notify Moomoo
Email: compliance@au.moomoo.com
Include relevant details and screenshots (if available)
Early reporting can help limit further harm to other investors.
Stay informed and stay vigilant
Scammers continually adapt their methods, especially during periods of increased market volatility or retail trading activity. Staying informed and sceptical of unsolicited investment approaches is one of the most effective ways to protect yourself.
We encourage all clients to independently verify information, be cautious of social-media-driven investment hype, and take time to conduct their own research before making investment decisions.
Your awareness helps protect not only yourself, but the broader investing community.
