Red Flags in Oil, Gold, PPE and Crypto Deals: How to Protect Yourself

Large commodity and digital asset transactions attract fraud because the sums are large and the parties often have never met. The same warning signs come up repeatedly.

Warning signs

• Prices far below market. Gold, oil or equipment offered at a large discount is the most common lure.
• Upfront fees. Requests for payment of a "release fee", "insurance", "customs" or "verification" before anything is delivered.
• Documents no one will confirm. Refinery, bank or vault documents that the issuer will not confirm directly.
• Pressure and secrecy. Demands to act today, to keep the deal secret, or not to involve your lawyer.
• Changing payment details. Bank details that change by email, especially at the last minute.
• Refusal to identify. A party that will not provide identification or company records.
• Crypto "guaranteed returns". Promises of fixed or guaranteed profit from digital asset trading or mining.

Steps that protect you

• Verify every party's identity and company registration independently.
• Confirm documents directly with the issuing bank, refinery or vault, using contact details you find yourself.
• Never pay an upfront fee to someone you cannot verify.
• Confirm all wire instructions by telephone at a number you already know. See wire fraud.
• Have your own attorney review the agreement before you sign.

What a paymaster can and cannot do

An attorney paymaster verifies identities, screens parties against sanctions lists and pays only as the signed agreement provides. A paymaster cannot confirm that goods exist or that a counterparty will perform, and does not guarantee any transaction. The firm will decline an engagement if the facts suggest fraud.

If you believe you have been targeted, you can report it to the FBI's Internet Crime Complaint Center at ic3.gov and to the Federal Trade Commission at reportfraud.ftc.gov.