Investor alert! beware of companies offering
quick
riches selling precious metals and other commodities
The Better Business Bureau (BBB) urges consumers to
use caution when approached by businesses that sell investments in precious
metals and other commodities. Some unscrupulous companies advertise on
radio, television or Internet web sites, or make telephone "cold calls" to
promote the purchase of precious metals such as gold, silver and platinum.
Their claim is that customers can double or triple their initial investment
in just two or three months, with little risk.
According to the U.S. Commodity Futures Trading
Commission (CFTC), these fraudulent companies offer to purchase metal for
the customer through a financing agreement. The customer is asked to pay a
small percentage of the total purchase price. The company often charges
customers a commission for the purchase transaction, a loan origination fee,
an interest charge on the remaining balance (which accrues over time), and
fees relating to storage and shipping of the metal the company pretends to
purchase.
Be skeptical if the commodity sales pitch:
- Claims their ability to predict prices or the
direction of the metals markets;
- Minimizes the degree of investment risk involved in
metals investments;
- Fraudulently fails to disclose how much the price
of metal must go up for the customer to break even (let alone profit),
since hefty finance and storage fees and commissions are deducted from the
customer's account before any profit accrues;
- Falsely claims to purchase and store metal, when
the company does not actually do so.
- Charges phony "storage" and "interest" fees.
If you are solicited by a company to purchase
commodities, the BBB and the CFTC, suggest you:
- Avoid any company that predicts or guarantees large
profits with little or no financial risk.
- Be wary of high-pressure tactics to convince you to
deliver cash immediately to the firm, via overnight delivery companies,
the Internet, or otherwise.
- Be skeptical about unsolicited phone calls about
investments from offshore salespersons or companies with which you are
unfamiliar.
Prior to purchasing, be sure to check out the company.
Contact the BBB (www.bbb.org), CFTC (www.cftc.gov)
or other authorities, including your state's securities commissioner (www.nasaa.org),
Attorney General's consumer protection bureau (www.naag.org)
and the National Futures Association (www.nfa.futures.org).
The age-old message to "Investigate Before You Invest"
remains as relevant as ever. Better Business Bureaus report a steady
increase in telemarketing and online investment fraud because of the ease of
establishing fraudulent operations.
Fraudulent investment promoters are smooth talkers and
claim to be resourceful when it comes to investment matters. They may tell
you that they have high level financial connections; that they're privy to
inside information; that they'll guarantee the investment; or that they'll
buy back the investment after a certain time. To close a deal, they may
create phony statistics, misrepresent the significance of a current event,
or stress the unique quality of their offering to deter you from verifying
their story.
Fraud is always a possibility, even with secured,
regulated investments. Before investing the Better Business Bureau suggests
that consumers take the following precautions when approached by anyone
selling an investment opportunity:
- Take your time before investing your money. Don't
be pressured into buying. Be wary if you are urged to "buy now or forever
lose your opportunity to profit."
- Research the investment opportunity. It's unlikely
you will make money in a business deal you can't understand or verify.
- Find out about the company's reputation. Invest
only in offers you know something about.
- Obtain all the information you can about the
company and verify the data with impartial, outside sources. Contact the
Better Business Bureau to get a reliability report on the company.
- Be extremely skeptical and cautious about any
unsolicited phone calls you may receive about investments.
- Also, don't believe everything you read - or assume
that all slick promotional materials and web sites offering investment
deals are legitimate.
- Don't send money by overnight delivery or wire
transfer, or authorize a credit card, payment or automatic debit to your
bank account to anyone you don't know.
- If in doubt, do not part with your money. Seek
professional advice.
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