Just how bad is the diamond scam business?

[dmaillet]

I was reading the posts regarding GIA sealed packages and saw several comments on the scams that were predominate in the late 70''s and 80''s. As a newbie trying to educate herself on her new investment, just curious how clever the scammers are in the diamond business.

 

[Richard Sherwood]

The late 70's and early 80's were boom times for diamond scammers. These scammers were not typical members of the trade, but "boiler room" salespeople who would drift from one scam to another. Whatever would produce money. Diamonds were a perfect scam commodity for that period of time because of the double digit inflation, gas crisis, etc., and the fact that diamonds had become supposedly "commoditized" by GIA certification.

It's the same today. The scammers are usually not members of the trade, but outside white collar criminals who use the allure of diamonds to suck in unsuspecting consumers. It's not so much that the scammers are so clever, but that their "marks" are so dumb.

The consistent tactic scammers use is to play on greed. They always make it seem like you've got the opportunity to get the deal of the century for one reason or another. They never attempt this scam on diamond tradespeople, because they know the tradespeople will see through it immediately. They always target naive consumers.

I talked to a fellow once who fell for one of the early Nigerian diamond scams. He went to Africa with a bunch of cash to buy diamonds that were incredibly priced below market value. Once he got there, he was met and driven out in the middle of nowhere, and held up by armed gunmen.

The thing about it that really got him, he said, was that the gunmen were laughing about how accomodating he was to travel all the way from America to be robbed. They thought he was a fool, which of course, he was.

That's an extreme robbery though. Most is much more commonplace white collar type crime with the internet used as a common venue. It's amazing to me how many people fall for this stuff. As an appraiser, I see it all the time. They bring the "unbelievable bargains" to me for verification.