December 10, 2013
In the November-December 2013 issue of an investment publication I received last week, there was an insert by a coin marketing company. In reading the flyer, I was struck that the promotional data used to prompt buyers to purchase were pushing the limits of deception.
The offering was for a U.S. coin that was certified by one of the top two grading services. I have no problem over the product offered. What troubled me most was that the marketer offering the coins compared them to rare issues in the same coin series. In effect, by the seller not disclosing that this coin was much more common (with certified populations more than 400 times those of the comparison coins), potential buyers might consider that the coins offered were somehow rare and a reasonable bargain opportunity.
To protect the company from legal repercussions, the seller included two disclaimers in small print at the bottom. The first mentioned that, “Past performance is not an indicator of future performance. Prices subject to change without notice.” The second emphasized that the company was not affiliated with the U.S. government and that the cited data were considered accurate as of six months before the flyer was released.
Out of curiosity, I checked current populations and the auction prices realized for the coin being offered for sale and for the comparison coins listed in the ad. I found a number of eBay sales that closed on Dec. 8 for the offered coin. All but one sold for delivered prices that were 33-45 percent lower than the bulk quantity “discounted” price quoted in the flyer. The recent auction sales of the comparison coins generally went for about one-third less than listed in the ad. The updated population figures were much higher on three of the comparison coins and less than half of the fourth piece.
Understand that I am not complaining that the price charged by this company for the coins was too high. In general, if a dealer does not make deceptive statements to potential customers, he or she should be free to set any price they want.
Instead, this sales flyer sparked me to write how potential buyers of an offered product can protect themselves from purchasing merchandise that is not numismatically as attractive as they appear to be or are offered at prices that may not be competitive. Here are some steps you can take to protect yourself.
1. Check with other dealers or in internet auctions or go to coin shows to see if the exact merchandise is available for a better price. Be sure to factor in postage and other charges, if applicable. If you do find the same product elsewhere, try to examine it or at least a photo of it to confirm that the quality matches or exceeds the piece in the original offer. When you comparison shop, you are also likely to find out just how common or rare a coin really is. (But, be aware that other dealers always have an incentive to knock the quality of what competitors are offering.)
2. Check data used by the seller. If you do not have access to catalogs, auction histories, or certified coin population reports, develop a relationship with a coin dealer that can help you obtain such information. Having a reliable source for such information is one of the tremendous values you gain when cultivating a relationship with a dealer.
3. If a seller is only quoting populations from one major grading service, consider whether the population of another grading service might skew the apparent rarity of an item. If a seller quotes the grading service populations on the comparison coins but not on the issued being offered for sale, you need to do some research first.
4. Use common sense. If something sounds too good to be true, it probably is. Re-read the offer to try to figure out what the “catch” is. If you cannot figure it out, have someone else who is not the seller read it to see if they can figure out what gives.
5. Check the seller’s credentials such as possible memberships in the American Numismatic Association, Professional Numismatists Guild, or Industry Council for Tangible Assets. Memberships are not automatic references, but they are better than if sellers do not have such memberships.
6. Check the Better Business Bureau for any history of complaints. If a dealer has been in business for several years and has a clean complaint record, that is better than if there are complaints.
I would appreciate hearing of any other suggestions of how collectors can protect themselves from being taken. Please send me your ideas at email@example.com.
Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects.
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