The DC Department of Insurance, Securities and Banking (DISB) is warning residents to be on guard against precious metal scams.
What Is a Precious Metal Scam?
The scam is perpetrated by unprofessional dealers who use exaggerated fears to convince customers that investing in gold and silver will protect them from the failing economy. Victims, usually senior citizens, are persuaded to move money from their retirement savings to purchase coins with high markups and low liquidity. Scammers guarantee that the value of the metals will increase, and often promise that the investments will double in value.
Investment Fraud in the District
Many victims believe precious metals are safer to own than stocks or other investment types. In 2022, the Federal Bureau of Investigation reported that District of Columbia victims lost $6,902,545 to investment fraud; this fraud included precious metal scams.
How Precious Metal Scams Work
Scammers who perpetrate precious metal scams:
- Create a false sense of urgency by claiming that metals are in limited supply;
- Often will not use your money to purchase the metal;
- Do not offer the investor the option of possessing what they bought;
- Fail to store the metals in an independent bank but charge you storage fees;
- Advise investors to liquidate their pre-existing retirement investments to purchase the precious metals; and
- Advise you to invest in precious metals through Self-Directed Individual Retirement Accounts.
What to Know Before you Buy
Contact the Commodity Futures Trading Commission (CFTC) or the National Futures Association to check the company’s registration status, business background, and disciplinary history. Ask how the financial professional is qualified to provide you with the service. Ask how the product meets your financial needs. Ask how the financial professional is paid for their services.
Report Precious Metal Fraud
If you suspect an investment opportunity could be precious metal fraud, or believe you have been defrauded, contact the DISB Enforcement and Consumer Protection Division at (202) 727- 8000. You may also contact the CFTC at (866) 366-2382.
Our mission is three-fold: (1) cultivate a regulatory environment that protects consumers and attracts and retains financial services firms to the District; (2) empower and educate residents and (3) support the development and expansion of business.