If that penny stock is shooting higher at the same time, it’s definitely a pump-and-dump scheme. It’s a bit weird in the first place to get an email (forget multiple emails), phone call or social media blast telling you how awesome a particular penny stock is. But say you then decide to see how the stock’s doing, and it’s up 50 percent in the last three days.

But how and why do scammers do this

“For example, any two fraudsters can orchestrate a real trade at an unreal price so the actual trade price becomes a print on record,” says K.C. Ma, professor of finance at Stetson University. “And of course, we all love to trade on tips by buying in as the price is shooting up.”

Promise of guaranteed returns – goes for pretty much anything. Markets with little regulation is where manipulation is most prone to happening, and where absurd guarantees are most likely to be found. The same schemes play out again and again, from the world of penny stocks to the Markets with little regulation is where manipulation is most prone to happening, and where absurd guarantees are most likely to be found. The same schemes play out again and again, from the world of penny stocks to the cryptocurrency market.

One theme is often present consistently across schemes and scams.

“Hints or promises of high returns, with little or no risk, are classic warning signs of fraud,” says the Financial Industry Regulatory Authority (FINRA) on its website. It’s one of three penny stock warning signs FINRA lists on its website.

If there’s a broker or brokerage firm selling penny stocks that isn’t registered. Oftentimes, there isn’t anyone even close to resembling a broker trying to get you in on the penny stock in question. But sometimes there is, and that can be part of the allure that makes the opportunity seem legitimate.

“If the firm or individual is not registered, or if a registered firm or individual is trying to sell you an unregistered penny stock, contact FINRA,” the agency says.