Knowing what you’re buying, and who you’re buying it from are very important.
Tips to avoid problems
- Research the product before buying to make sure that you’re getting exactly what you’re paying for. There are various levels and grades of coins. Coins of a certain year or metal may not be worth the same value.
- Research the company that you’re buying the product from. Verify that the company is licensed to be buying and selling the product. If you’re purchasing the items from a private individual, ask to have the items examined by a professional to verify that they’re what they’re advertised to be.
- Conduct business with a reputable local company. If you deal with a company in another state, make sure to contact the state agency there that regulates the industry to verify that they’re a legitimate company.
- Don’t be swayed by ads on television and social media and in newspapers and magazines. When placing an order, make sure that the terms of the purchase are what you want. Some companies try to up-sell other products and offers, or may want you to join a monthly club where you’ll receive other items that will need to be paid for or returned within a certain period of time.
- Proceed with caution on trades. Some companies may ask if you would like to trade your items for something of equal value that they have. Always research the company to verify that they’re legitimate.
An example of a silver coin fraud
Federal and state regulators filed a lawsuit Tuesday to stop a company’s fraudulent precious metals scheme that solicited $68 million from more than 450 customers nationwide. Many of the customers were senior investors.
Safeguard Metals charged its customers about $26 million in markups on silver coin purchases, according to the Commodity Futures Trading Commission and 27 states that filed the lawsuit. As part of the fraudulent scheme, the defendants – Safeguard and Jeffrey Santulan, also known as Jeffrey Hill – charged fees that were almost 50 percent higher than the maximum fees that were disclosed to investors who purchased silver coins.
The U.S. Securities and Exchange Commission also announced charges.
“This action to stop a large-scale precious metals scheme is the latest in an ongoing effort by state and federal regulators working cooperatively to protect investors,” said Maryland Securities Commissioner Melanie Senter Lubin. “Unfortunately, this case reflects just one of the many epidemic-level investment scams targeting senior and vulnerable populations.”
Safeguard solicited investors were through television, radio, and social media advertisements and through phone calls that targeted elderly and inexperienced investors, according to the lawsuit. Many of the investors transferred their retirement funds into IRA accounts to facilitate the purchase of the silver coins sold by Safeguard.