Internet verification company VeriSign is getting set to launch a new module for their VIP Fraud Detection Service that will help trading brokerages spot and avoid ‘pump and dump’ activities that could be adversely affecting the economy.  The new module has a self-learning feature built into it that will analyze potential trades and determine based on specific criteria if it is a fraudulent trade or a legal one.  The module is going to help the company and their customers from scammers who release ‘urgent’ looking e-mails to traders in an effort to hype up thinly traded stocks.

The module has shown up at a perfect time as online trading scams are growing by leaps and bounds.  Says Forrester analyst Geoff Turner, “Based on anecdotal accounts in our discussions with online brokerages, both the number of attacks and dollar volume of losses has grown over the past two years.  The reason for that is that most of the controls are retrospective; they’re designed to go in after the attack and find the perpetrators.  Those old investigative methods don’t work anymore; it’s almost impossible to track down the bad guys or hold anyone accountable so it doesn’t defer anything.”

The new module is also designed to monitor the behavior and stock activity of user accounts to ensure that they are not compromised or used to purchase stocks that are part of a pump and dump scheme.  Users who veer radically from the usual trading activity will be asked for additional identification before the trade occurs.