Melanie Devoe, Fraud, District of Columbia 2024
Washington, D.C. – Federal regulators are sounding the alarm about a surge in gold and silver investment scams targeting retirees and those nearing retirement. The Commodity Futures Trading Commission (CFTC), Financial Industry Regulatory Authority (FINRA), and North American Securities Administrators Association (NASAA) have jointly issued warnings about deceptive practices involving overpriced precious metals marketed as “safe investments.”
According to authorities, fraudulent dealers are charging exorbitant markups, commissions, and fees, effectively eliminating any potential for profit for investors. These scams often center around retirement plan rollovers, capitalizing on the larger sums of money typically held by older individuals. Melanie Devoe, Director of the CFTC’s Office of Customer Education and Outreach, emphasized the devastating impact these frauds can have on those who may be unable to recoup their losses through continued employment.
The schemes frequently employ affinity fraud techniques, targeting individuals based on shared political or religious beliefs. Scammers infiltrate social media groups and use targeted advertising, spam emails, and high-pressure telemarketing tactics. They have even been known to falsely associate themselves with respected figures by using stolen images of religious leaders, political commentators, and celebrities to create fake endorsements.
Self-directed Individual Retirement Accounts (IRAs) are a particular area of concern. Regulators warn that the limited oversight provided by custodians of these accounts can make them vulnerable to exploitation. Fraudsters may use fake custodians or misrepresent the role of legitimate custodians to deceive investors into believing their investments are secure. The penalties for early withdrawal from IRAs can also contribute to the problem, as investors may be less actively monitoring their accounts, allowing the fraud to continue undetected for longer periods.
The CFTC and FINRA have released resources for investors, including “10 Things to Ask Before Buying Physical Gold, Silver, or Other Metals” and “Lies Versus Facts: The Truth Behind Gold and Silver IRA Scams,” to help individuals identify and avoid these fraudulent schemes. Authorities note they have successfully shut down a number of these operations in recent years, but vigilance remains crucial to protect vulnerable investors. The warnings were issued on March 20, 2024.
Source: CFTC.gov
Source: https://www.cftc.gov/PressRoom/PressReleases/8881-24