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The Evolution of Facebook Group Coin Scams

There are many great coin and bullion groups on Facebook and you can find virtually anything you want to buy there. There are no fees, unike ebay, and prices tend to approach wholesale levels due to the competition and low barriers to entry, ie everyone can become a seller.

The group administrators of the best groups very carefully vet new members. They rarely allow entry of new accounts, some requiring FB accounts of at least 1 or even 2 years of age. Some of them ask for ID before allowing sales posts. They recommend asking for references before sending someone money. Some of them require sellers offer payment methods that include buyer protection services, like Paypal or Venmo. Most buyers, however, prefer not to pay fees to pay for transactions, so feeless payments are the norm.

Despite all our best efforts, the occasional scammer slips through. These were often newer sellers with slightly below market prices on bullion or coins, just enough so that the deal appeared good, but not so low that they appear to be scams. They often sold thousands of dollars of bullion before the reports of them never shipping started appearing. Hence the rule no new accounts. However, there are many people with old accounts they no longer use and these can be broken into and taken over by scammers.

As there is no fool-proof method of preventing people with ill will from joining FB groups, we tell buyers to request references. Unknown sellers with no references don't make sales, right? Their solution was to join with multiple accounts, have them reference each other up, scam a bunch of members, then disappear to repeat with other new accounts.

We then said you need to see that the references were also from people that you know or have heard of. Their solution was to join groups, conduct some small purchases, get some legitimate references, then run their big con. We then recommended they demonstrate that they have a track record as a seller, not just a buyer. The obvious problem is that there is no legitimate way for someone to break into selling without some buyer being their first sale. Admins of groups have offered to escrow a seller's early sales, but this really solved nothing as the seller is not actually free to misbehave until the training wheels are removed. Every good seller had his first sale at some point.

We found people stealing pictures from ebay and elsewhere and trying to sell things they do not have. Some had the intention of trying to buy the item once it was sold, others just to not ship. So, the proof pic was developed - a picture of the item with your name and date to show you actually had it. The photoshoppers got to work faking those as well, but those are easy to detect.

As scammers get more sophisticated and invest more energy and time into developing relationships before doing their con, we recommend continued diligence. Buyers should look to sellers that have spent years developing online reputations.

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