Digital Gold Scams: How To Identify Genuine Sellers Before Investing

Gold's exponential surge in recent months has caught the attention of investors, with several investors putting their money in digital gold. This growing popularity means that digital gold buyers could be more vulnerable targets of scammers, who exploit unsuspecting investors through fraudulent online platforms and deceptive schemes.

• Theft: Hackers exploit vulnerabilities in digital platforms to access and steal customers' digital gold holdings. In June this year, a hacker sold Aditya Birla Capital Digital Ltd.’s 436 customers’ digital gold, reportedly causing the company a loss of Rs 1.95 crore. The hacker transferred the proceeds to their own bank accounts, highlighting the growing risks of investing in digital gold. The company, however, took swift remedial measures and claims to have fully restored the affected digital gold balances.

• Fake online gold coin sales: Fraudulent websites or sellers offer gold coins at a discount price, but the victims pay and receive nothing. A family from Ahmedabad recently fell prey to an online gold coin scam and lost Rs 12.6 lakh. They placed an order for coins from a company named 'VJ Jewellers,' but never received anything.

• Bogus investment platforms and Ponzi schemes: Scammers create fake gold investment platforms promising high returns. The use of new investors' money to pay earlier investors eventually collapses when cash flow stops.

• Misleading gold loan offers: Scammers offer gold loans with inflated valuations or hidden charges, leading to borrowers losing their gold. Unscrupulous lenders may claim your gold is of lower purity than it actually is, offering loans based on undervalued assessments.

• Too-good-to-be-true returns: Promises of high or guaranteed returns with little to no risk.

• Lack of certification: No BIS (Bureau of Indian Standards) hallmark or other authenticating marks.

• Unregistered platforms: Platforms not registered with regulatory authorities like SEBI or RBI.

• Pressure tactics: Urgent sales or “limited-time” offers to prompt investors to take hasty decisions.

• Vague contact information: No address or contact information that can be verified.

• Check sellers: Verify BIS certification and regulatory registrations.

• Research sites: Look for reviews and ratings from trusted sources.

• Avoid pressure selling: Spend time doing research before making investments.

• Secure transactions: Pay securely and do not pass on sensitive information.

It’s advisable to remain alert and verify the authenticity of online platforms before investing in digital gold and purchasing jewellery online. A few simple steps and awareness about online scams can help to protect your money.