Precious Metals “Courier Fraud” Becoming More Common
A growing form of fraud is putting precious metals dealers and their customers on alert as scammers persuade victims to buy gold for nonexistent investigations.
Two years ago, I wrote a column on various ways that crooks prey on numismatic and precious metals dealers and customers. In this column, I passed along information on a developing crime called “courier fraud.”
As I described it at the time, “This crime involves crooks impersonating law enforcement, government, or bank officials, contacting a victim claiming their financial accounts have been compromised. Then, the victim is persuaded to use their funds to purchase coins or precious metals to assist in an alleged investigation and entrapment of criminals. After the purchase is made, the scammers arrange to take delivery of the goods, supposedly needed as “evidence” or for safekeeping. Instead, the thieves disappear along with the valuables.”
The victims are also explicitly told not to discuss these actions with family or any other party who might be able to disrupt the completion of the crime.
Since then, courier fraud has become a much larger form of crime. About a month ago, over 40 people were indicted in a Dallas, Texas, area crime ring that targeted elderly victims of an estimated $250 million worldwide. Among those indicted were owners of three jewelry stores in that area that allegedly took the gold bars to melt down and turn into jewelry sold in the U.S. or exported to other countries.
There is apparently at least one pending lawsuit where a victim of such a fraud is suing the coin dealer to recover their loss because “the dealer should have known that the victim’s gold purchase was part of a scam.”
The financial institutions are also becoming more cautious about customers who want to make sizeable gold purchases. The reason I’m writing on this issue this week is that the company where I work had a customer confirm a six-figure gold purchase today. When this customer went to his bank to obtain a cashier’s check, the bank would not issue one payable to our company, out of concern that this might be an instance of courier fraud. A copy of the invoice and the fact that our company has been in business for 55 years didn’t matter.
The bank was willing to issue this cashier’s check if it was payable to the customer. However, that created another problem where our banks do not allow us to deposit such third-party payments endorsed over to us (again because of the risk of fraud). Our customer may have to write a personal check to pay for the transaction, then press his bank to clear that payment.
Red Flags for Dealers
Some indications that a coin dealer might notice if a potential customer comes in to make a sizeable gold purchase as part of a courier fraud scam are that:
- This would be their first such purchase.
- The potential buyer may appear more nervous than is typical with a first-time buyer.
- They almost always are looking to purchase one-ounce gold bars.
- They are suggesting the merchandise might be picked up by another party.
- And the buyer doesn’t want any other family members to know of the transaction.
If a dealer has such a potential customer, it may warrant asking some questions to ascertain if this might be a courier fraud attempt.
Coin dealers may need to consult with their legal counsel on how they can minimize risk of being liable for potential victims’ losses.
What Potential Victims Should Know
As for potential victims, understand that law enforcement, government agencies, or bank investigators will never contact someone to ask them to buy gold, withdraw cash, or purchase cryptocurrency. Anyone receiving such a call should hang up immediately, then call your bank, credit union, or local police at phone numbers you obtain from an independent trusted source.
Last column’s numismatic trivia question
Last time I asked, What was the most recent national currency to officially collapse and be abandoned? The repeat offender government of Zimbabwe’s hyperinflated dollar was demonetized in April 2024. It was replaced by a gold-backed currency called the ZiG. A previous Zimbabwe dollar collapsed from hyperinflation in January 2009, when the highest denomination then in circulation, a $100 Trillion Dollar note, could only pay for a bus fare. Other current currencies that are almost worthless but have not officially failed include those from Iran, Lebanon, and Venezuela.
This column’s trivia question
Here is this column’s question. How long have gold and silver been used for a medium of exchange? Come back next week for the answer.
Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, the 2017 Exemplary Service Award, the 2012 Harry Forman National Dealer of the Year Award, and the 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild, Professional Numismatists Guild, National Coin & Bullion Association, and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Michigan, and writes “Liberty’s Outlook,” a quarterly newsletter on rare coins and precious metals subjects. He now volunteers with the National Coin & Bullion Association as its Industry Issues Advisor. Past newsletter issues can be viewed at www.libertycoinservice.com. Some of his radio commentaries, "Things You ‘Know’ That Just Aren’t So,” and “Important News You Need To Know,” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio archives posted at www.1320wils.com).
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