Scamming is common in any business despite having regulations and relevant authorities to prevent fraud. Whereas there are many scams, especially in mineral dealings, gold has been poised to be the target mineral for scammers. You have probably come across articles where a foreign couple were robbed over KES 13.5 million in a fake gold scam, or where a mastermind of a KES 12 billion gold scam syndicate was arrested in Nairobi, or eight Kenyans and two foreigners arraigned over KES 19.8 million fake gold scam and many more. This article will delve into some common traits of gold scams in Kenya.

Most foreigners are unfamiliar with the local customs, laws, and market prices for gold in Kenya. This lack of knowledge can make them more vulnerable to scams. These foreigners might strongly desire to purchase gold as souvenirs or an investment opportunity in Kenya. This eagerness sometimes blinds their eyes to potential red flags or scam warning signs. Furthermore, foreigners might trust sellers based on recommendations without conducting thorough research, assuming goodwill that might not exist.

Scammers present counterfeit documents, such as mineral dealers' licences, export permits, KRA clearance certificates, and shipping documents, among others. Fake lab reports showing the quality of gold are sent to victims through multiple avenues to convince them to get involved in the business. Some scammers use untraceable contacts and do not provide detailed personal information, complicating issues for victims to verify the deal's legitimacy.

Scammers promise large quantities of gold that cannot be found in Kenya. For instance, a victim is being promised one tonne of gold at once at favourable prices. Kenya exports less than 500 kg of gold every year. So, this begs the question, where does the seller get one tonne of Gold? Victims are promised high quality of gold of about 24 carats, with high and quick returns on investments without much struggle or negligible risk. If a deal seems to be too good, it probably is.

When the seller does buy in the idea of unrealistic gold quantities, fraudsters always claim gold is coming from another country, such as Congo, and is in transit in Kenya. While this is a legal way of doing business, gold scammers will let the buyer know that the gold has departed from the country of origin but has been held up by customs officials in Kenya. At this point, the fraudster asks for money to help 'clear' the gold. They use high-pressure tactics to push victims to pay for such payments without proper due diligence. Scammers always claim that such opportunities are limited or that instant or immediate action is needed. Victims end up losing their money without seeing any gold.

Scammers may ask victims to pay upfront fees for numerous reasons, such as payouts for KRA officials, security guarantees, shipping, insurance, or administrative costs. Typically, legitimate transactions do not require such upfront payments. Some scammers often propose complex financial or payment arrangements that confuse victims, and they end up paying advance fees to scammers. By the end of the day, the scammers are just interested in the upfront payments.

Scammers may collude with compromised customs officials and other multiagency officials tasked with inspecting, verifying, and authorizing gold dealings. The collusion also involves high-profile people in the political scene to hasten and sweeten the fake deals. This collusion can be linked to fake documents since scammers are guaranteed surety of protection and are attractive to victims.

Gold is a precious commodity, and its prices depend on its quality. So, before gold is sold, its quantity and quality must be known through testing by the State Department for Mining or reputable firms. Unfortunately, scammers may alter the lab testing report to fake the quality of gold to entice victims to get involved. Where the buyer is not aware of lab reports, the scammers do not bring up the need for lab report

Scammers, especially non-Kenyan citizens, prefer to operate remotely to avoid detection by the authorities. They are reluctant to meet their victims in person. In most cases, they may refuse all site inspections by providing various and justifiable excuses for why on-site inspections cannot be done. Investors should be suspicious when sellers or brokers are unwilling to meet in person. Ordinarily, legitimate sellers allow potential buyers to inspect gold in person to ascertain quantity and quality.

Fraudsters use all tricks to get money. They claim that the gold offered is "off-market" and probably cheaper. They convince victims that such gold is not part of the regular market routes and cannot be sanctioned or impounded by security agencies. Victims fall to this trick due to nice deals with better returns.

Individuals or companies involved in mineral dealings in Kenya are unaware of the standard procedures approved by the State Department for Mining and other government agencies. Most fall victims because of shortcuts shown to them by scammers. Buyers and sellers, unfortunately, do not want to follow standard procedures in dealing with gold and end up suffering at the hands of ruthless scammers.

Scammers are not only sellers but also buyers, not leaving behind brokers in the industry. Fake buyers disappear with gold without paying the dealers without a trace, while fake sellers sell phony gold or disappear with their client's money.

Conducting thorough due diligence, seeking professional advice on mineral dealings, and being sceptical of deals that seem too good to be true are essential. Consulting with field experts, inspectors of mines, and recognized mining consultants, verifying information through strategic government agencies and using reputable and approved channels for transactions to reduce the risk of falling victim to gold scams.

In our next article, we will discuss how you can protect yourself from these scams and consequently avoid losing your hard-earned money.