The Federal Trade Commission said a federal judge has stopped a Florida-based telemarketing enterprise that allegedly conned older Americans into buying precious metals on credit without disclosing the high risks and high costs to them. The operation, American Precious Metals LLC, collected more than $37 million from gold investors.
According to the FTC:
“Using high-pressure sales tactics, telemarketers led consumers to believe that they were offering low-risk investments that would double or triple in value in a short time. The company’s sales pitches and marketing materials claimed precious metals are low-risk investments because they are tangible, physical assets – bars, bullion and coins – but in fact the defendants did not use consumers’ money to buy precious metals. Instead, after taking fees and commissions that were not clearly disclosed to consumers, they deposited consumers’ money in the account of a clearinghouse that recorded the investments but did not buy or handle metals.”
The FTC charged the company, and its president, Harry R. Tanner Jr., with violating telemarketing sales rules.
At the same time, the FTC said, the Commodity Futures Trading Commission filed a case against Tanner and his company for using the mail in a scheme to defraud investors.
American Precious Metals line is busy this morning. Will update this entry if I’m able to get through.
UPDATE: American Precious Metals in a recorded phone message says a judge put it under receivership on May 11th. The company says it is no longer taking any orders or offering investment advice.
Meanwhile, before you do invest in gold, the FTC advises:
— Choose a reputable dealer.
— Get an independent appraisal
— Consider other costs, such as storage if you are taking possession of the gold.
— If you don’t take possession of the gold, make sure that the gold exists and is insured.
— Beware of high-pressured sales tactics that insist you act immediately.
— Do a background check on the seller by searching online for the company’s name and by checking with your state’s attorney general’s office.
If investors had Googled American Precious Metals, they would have uncovered some legal troubles. Then again, they also would have discovered that the Better Business Bureau gave the company a “B” on a scale of F to A+. The BBB says American Precious Metals raised its grade by responding to complaints.