The majority of precious metals scams prey on the uninformed, which is one of the reasons we started this blog. Just a little knowledge about best buying practices when shopping for gold and silver can prevent all sorts of nightmares. However, there are a handful of dealers that have started to find ways of tricking more diligent gold buyers out of their cash.
No matter what you’re shopping for nowadays, the first place a smart buyer turns is usually the internet. A quick Google search can reveal the biggest retailers in any market, as well as a huge variety of review sites with feedback from previous customers. A growing number of gold dealer review sites have emerged in the past year and not all of them are operated by helpful, disinterested third parties. In fact, a little digging reveals many that are run by metals dealers trying to steer more traffic to their own business.
For the casual internet surfer, determining whether a review site is legitimate might be difficult. Here are a few clues that are not definitive, but might help hone your fraud detector:
1. Look carefully at how many reviews there actually are on the site. Often these sites will feature large “5 star” ratings graphics designed to grab your attention. Looking a little more closely should tell you how many actual reviews were averaged together to get a company’s rating. If there were only a handful of reviews, you can bet there have not been enough reviews to give you a reliable average of a company’s performance.
2. Examine the individual reviews closely. On one site we found that there were many different reviews for various companies, but only a handful of names for the reviewers. One user had written reviews for every single company on the site, meaning he had either purchased a staggering amount of gold and silver in the past year, or he was simply writing generic reviews to create content. Our suspicions were that all the reviewers were probably employees of a metals dealer.
3. Check how many companies are reviewed. We found review sites that had less than 10 different metals dealers on their list, including some we had never heard of and none of the big names. It was immediately obvious that these sites were not created for customers by customers, but rather for potential patsies by unscrupulous metals dealers.
4. Note whether or not the review site is trying to “steer” you to a specific company. A non-partial review site will let the reviews do the talking, whereas a scam site might endorse specific companies based on the “results” of the reviews. This is editorializing, because review sites are supposed to be organic, constantly growing resources. While “results” might say one thing today, a company’s average could fluctuate by next week. A site that picks a single company from their whole list as the “recommended gold dealer” should be highly suspect.