On Friday, federal officials joined forces to warn senior citizens about possible scams involving precious metals.
The Commodity Futures Trading Commission’s (CFTC) Office of Customer Education and Outreach (OCEO), the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA) joined forces to educate people in or near retirement about gold and silver investment scams. The scams tout precious metals and coins as “safe investments” officials said, but instead charge exorbitant markups, commissions and fees. In some cases, officials said, the costs and ongoing fees make it impossible for those who buy the products to ever make a profit.
“These frauds can be particularly damaging to individuals near retirement and retirees who could lose much of their retirement savings and find themselves unable to return to work to support themselves,” OCEO Director Melanie Devoe said. “We hope this effort helps raise awareness about these frauds, the lies the fraudulent metals dealers tell, and the real risks and costs involved in relying on physical precious metals as a long-term retirement plan.”
Officials warned that the precious metals dealers often push rolling over retirement accounts because that’s where most people have the bulk of their investment dollars. Scammers target older people, officials said, because they can more easily access their retirement funds and typically have more money saved. Additionally, the scammers purposefully target people with specific political and religious beliefs and may steal images of popular religious leaders, pundits and celebrities to create fake endorsements. Scammers may also infiltrate social media groups, or target their advertising to access subscribers or follower lists, then use spam email or cold calls employing high-pressure and deceitful telemarketing techniques.
The CFTC and FINRA jointly warned that self-directed IRAs may be more likely to be exploited, and may use a fake self-directed custodian to attempt to steal investors’ money, or may misrepresent the duties of self-directed IRA custodians to deceive investors into believing their investments are legitimate or protected against losses.
The CFTC and state authorities have jointly worked together to shutter these frauds in recent years, officials said, and in September 2020 filed a civil enforcement action against two precious metals dealers and their companies for a $185 million allegedly fraudulent scheme targeting elderly people across the country.