There are several warning signs of a scam in the commodity markets. The first is the use of offshore retail brokers that are not regulated by the NFA or CFTC. Once victims contact them, the broker will disappear with the money and then claim that they are a legitimate broker. While there have been instances of US-based companies violating these laws, most of these have been perpetrated by unregistered brokers.
Phony metal brokers and rare coins merchants usually introduce themselves online through a discussion group. The victim is introduced to the phony broker through a member of the group. The broker may advertise an affiliate plan to boost the victims’ profits. The group post is usually accompanied by a link to a messaging app. If the user opens the app and contacts the broker, they are in danger of losing money and are scammed.
Another warning sign of a commodity scam is that the victim is exposed to a phony broker online. In the case of discussion groups, the victim will be introduced to the phony broker through recommendations made by members. They are then sold affiliate plans with the intent of boosting the victim’s profits. The message is often accompanied by a link to a messaging app. The phony broker then asks for money to buy and sell commodities, but in reality, the fictitious company will just disappear after taking the investor’s money.