Scam artists are putting a new twist on an old scam. They’re selling coins and precious metals as low-risk, high-yield investments to hedge against the economic downturn and fears of a declining U.S. dollar.
Over the past three decades, the Federal Trade Commission has brought 17 cases against companies that sold overpriced and/or misgraded historic coins for investment purposes. While the companies allegedly falsely marketed their coins as good, safe investments, in reality, these dealers sold them with significant mark-ups, often as high as three-times the prevailing market price.
The FTC has identified three types of recent complaints on the sale of coins and precious metals. They include:
- Deceptive sales pitches for investments in historic coins.
- Reports of unscrupulous marketers pitching highly leveraged precious metal purchases with the promise that the investments are “safe” or “low-risk.”
- “Cash for gold” offers where marketers fail to provide consumers with a quote of the value of their precious metal and jewelry before melting it down.
The FTC website has three new brochures to help provide consumers with the information they need before investing in coins or other precious metals. Topics are:
“Investing in Gold? What’s the Rush”
“Investing in Bullion and Bullion Coins”
“Investing in Collectible Coins”
The FTC supports the goals of the Coin and Precious Metal Disclosure Act, currently being considered by Congress. The act would require:
Coin and precious metals dealers to fully disclose not only the purchase price, but also all other fees associated with the sale of coins and precious metals, as well as the melt value and reasonable resale value of coins and precious metals.
Dealers to make these disclosures clearly and conspicuously before a sale is completed.
If you want to buy gold coins or precious metals, research, research, research before you spend a cent.
