How to tell if a stock is a pump-and-dump scam?

For investors who joined the stock market at the start of the coronavirus pandemic, they might have seen plenty of pump-and-dump stocks: Alpha Pro Tech, Hertz (at the time), JC Penney, iBio, and so much more.

But pump-and-dump stocks have been around for many years, particularly in the over-the-counter market or pink sheets system. It's just that the short-term hype can be hard to fathom because of the internet.

That said, here are some signs that a stock is being pumped just to do dump on the bag holders:

• There is a sudden volume spike after months or years of stagnant volumes.
• The stock is being marketed in digital advertisements or you have received emails from multiple sources.
• A brokerage firm or broker is selling penny stocks that are not registered.

• A stock with a small capitalization or micro capitalization surges 50% in one week.

Ultimately, if you are being guaranteed incredible returns from a stock that is trading at $0.20, you are being pushed into a pump-and-dump.