In testimony before Congress today, the Federal Trade Commission described its efforts to stop precious metals investment scams and inform consumers how to avoid them.
Testifying on behalf of the Commission before the Senate Special Committee on Aging, Dama Brown, Director of the FTC’s Southwest Region, said the agency is committed to protecting consumers from investment schemes that swindle money from people and often prey on older Americans’ concerns about the security of their retirement savings, particularly during periods of economic uncertainty.
Following the economic downturn in 2008, the testimony states, the FTC observed a proliferation of schemes that targeted financially-distressed consumers, including telemarketers offering precious metals as purported high-profit, low-risk investments. FTC cases have alleged that, to lure consumers into purchasing these investments, telemarketers claimed that the precious metals investments were certain to rise in price and the investments were safe because they were backed by physical metal.
According to the Commission, in reality, the telemarketers offered a highly leveraged, high-risk investment. Telemarketers allegedly failed to disclose that consumers were financing most of the investments’ purchase price and they were required to pay hefty fees. The terms of the investments rendered them highly risky and largely unprofitable.
The Commission recently filed three law enforcement actions involving precious metals investment schemes, the testimony states. In addition to stopping the alleged scams, the Commission expects to return approximately $5 million to consumer victims. The testimony describes the schemes, the agency’s law enforcement actions, and its consumer education efforts, including providing information about how to avoid scams, what to know before investing in precious metals, coins, or other investments, and practical investment advice.
The Commission vote approving the testimony and its inclusion in the formal record was 4-0.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.