Are Gold Dealers Regulated?
Physical bullion transactions do not fall under federal financial regulations, yet that hasn’t stopped an upsurge of gold scams. According to Dama Brown, staff attorney at the Federal Trade Commission, many dealers employ high-pressure sales tactics in order to attract unsuspecting investors.
These dealers purchase bullion bars and coins from refiners and stock them to sell to coin retailers or investment companies, who then add their own markups.
They are regulated by the Commodity Futures Trading Commission (CFTC)
OLIA at the CFTC oversees legislative strategy and congressional testimonies as well as providing technical legislative advice to other divisions within the agency. Furthermore, OLIA supports employee affinity groups such as CFTC Pride and Women at Work.
Precious metal dealers who advertise via television or radio ads or make telephone cold calls may be engaged in fraudulent practices. Such dealers often advertise “low risk” investments with promises to double or triple customers’ initial investments within months – as well as charging fake interest and storage fees.
Reputable gold dealers do not typically charge fees or interest, yet they still may take advantage of consumers in other ways. For instance, they might not disclose the true price and quality of metals being offered for sale to customers; or use testimonials and endorsements in their marketing campaigns – something typically forbidden for registered financial advisory firms under SEC rules; making unsubstantiated claims about their business practices and performance.
They are regulated by the Securities and Exchange Commission (SEC)
The Securities and Exchange Commission (SEC) regulates public gold mining and related companies in the US. However, its purview does not extend to physical gold sales which fall under state regulators and CFTC jurisdiction. Before purchasing coin or bars from dealers in this way it’s essential that investors review their backgrounds first.
CFTC has an established record of taking action against boiler rooms that sell coins or bars in return for large cash investments, often done fraudulently and making false claims of how much profit these purchases could yield.
Consumers should avoid any seller that promises they can “triple your money” in 30 days; such claims are usually scams and it is best to steer clear. Furthermore, it’s essential to thoroughly research each dealer through search engines in addition to inspecting their background and background person.
They are regulated by the Financial Industry Regulatory Authority (FINRA)
Precious metal dealers can compete with registered investment advisors for clientele, yet are not subject to the same stringent financial regulations. Instead, their activities tend to be dictated by state laws. Furthermore, they may advertise prices far beyond their collector value for gold and silver coins that could lead to fraud. These tactics should be treated with extreme caution. Recently, the Securities and Exchange Commission brought fraud charges against Los Angeles-based precious metals dealer Safeguard Metals and one of its managers for defrauding elderly customers of more than $67 million using high-pressure telemarketing to promote itself, while finding leads through conservative political radio shows hosted by Sean Hannity and Mark Levin; additionally they used former Fox News anchor Tomi Lahren from President Donald Trump’s administration for promotional videos.
FINRA was established in 2007 as an independent nongovernmental organization to establish and enforce rules regarding ethical activities of brokers and broker-dealer firms operating within the U.S. Additionally, FINRA provides members with tools that help them stay compliant with its regulations in order to safeguard investors and preserve market integrity. Its primary mission is protecting investors and maintaining market integrity.
They are regulated by the Federal Trade Commission (FTC)
Dealers must abide by both state merchandising and advertising laws as well as federal telemarketing and consumer protection rules when selling gold to protect consumers from false and misleading claims made by dealers, such as making false assurances that products come from reliable companies or will be stored safely in their facilities, making statements like precious metals would make a good investment or offering free samples or incentives as potential sales tactics.
Given that there is no global authority responsible for overseeing the gold industry, states-and even cities-have taken responsibility for regulation themselves. Santa Monica took legal action against Goldline International after allegations were levelled against it of defrauding customers through false advertising; specific allegations included sponsoring conservative radio host Glenn Beck and falsely representing that he personally purchased their products. They eventually settled out of court while agreeing to change their business practices.