there's a couple ways these work. one is a pure pump n dump. person(s) buy shares, has a stock spam list, sends it out to the list, and dumps it into any buying. another is company hires a promoter. promoter gets some combination of cash, stocks, and warrants/options on the stock. promoter spams the stock, and as it goes up, he's rewarded (his stock goes up if he hasn't dumped it, and/or the warrants). the 'better' OTC companies which hire a promoter actually ask said promoter to sort of act as an MM for the stock, similar to the old days (think _reminiscences_). stock goes up, sell...stock goes down, buy. the whole point is to get enough volume so that it seems completely legit, so the company / promoter can eventually get rid of a significant number of shares at much higher prices. me? i never play these long, and am still looking for a broker where i can get size on real cheap stocks (under 25c) that have gone up, say, from 1/2 c -> 20c in a week or so. i can sometimes short OTCs but can't get size, and they're not the super cheapies. (EDIT: this isn't unique to OTC companies. it's done on other exchanges, but not as frequent on the others)
I never pay attention to spamming scammers only because i haven't been spammed yet. What i'd like to keep an eye on are otcbb companies that capitalize on current events and do it well . Back in summer of 03 or so there was a global bird flu scare going on of pandemic proportions. A company called Viragen Inc put out news that it was going to use it's technology to find a vaccine for the flu. I don't know how i got so lucky but it was on my watch screen and i spotted the initial spike $.08 to $0.15 and i jumped on it and made a good chunk. I wish i had more capital to work with then (it was only the first year of me trading and a non-margin account) because i would have really raked it in. At the end of the day it topped out at $0.66 on a volume of +200 mil. and for a month aftwerwards it trended on a lot of volume pretty well. THis little adventure led me on a destructive path as you might guess. Near ruin speculating on anything biotech for me almost did me in for good.
Why not just do the opposite then?.. if you know the stock is just going to crash as soon as you buy it, then just short the thing instead.
Forget the scam penny markets and just laugh at the people who tell you that make a fortune at it. Just remember its the internet and most people are not what they project themselves to be. They project themselves on the internet as what they wish they were in real life. Just delete the emails and skip over the phony braggarts who tell yaa they make a killing doing it.