BBB Warns Austin-Based Coin Firms Ads May Be Peddling ‘Fool’s Gold’
Consumers nationwide should be on the alert for advertisements from two Texas-based companies that are using newspapers to sell gold bullion coins “completely free of dealer mark-up,” Better Business Bureau (BBB) warns. The companies appear to be using the ads to entice consumers to buy more expensive “collector coins” at prices significantly higher than they could be bought elsewhere.
The companies are United States Rare Coin & Bullion Reserve and United States Coin and Gold Reserve, both with addresses in the same office building in Austin, Texas. Colt Verret is a former sales manager for United States Rare Coin & Bullion Reserve and is the current president of United States Coin and Gold Reserve, which also uses the name United States Gold Coin Exchange, LP.
United States Rare Coin & Bullion Reserve took out a full-page ad in the St. Louis Post-Dispatch in January and The Cincinnati Enquirer in February. United States Coin and Gold Reserve recently took out full-page ads in several additional newspapers, including the Post-Dispatch, the Belleville, Ill., News-Democrat and The Boston Globe. All of the ads have striking similarities including sections where the ad copy is identical.
Carrie A. Hurt, BBB president and CEO, says the advertisements invite consumers to call toll-free phone numbers to speak with company salesmen, called “gold advisors.”
“These seem to be typical bait-and-switch ads where the salespeople use the initial offer to convince callers to buy higher grade, so-called collector coins, at highly inflated prices,” Hurt explains. “There also is concern that these salesmen may be targeting senior citizens, some with little or no knowledge of the gold market.”
BBB is also concerned with the content of the companies’ advertising, which pictures the U.S. Capitol building and which could lead consumers to believe the companies have an affiliation with the U.S. government.
An investigator with BBB called the toll-free number listed on the Belleville advertisement and spoke with a salesman who identified himself as a senior investment advisor and senior gold advisor with United States Coin and Gold Reserve. He said that people are “fed up” with low interest rates offered by banks, and retirees are “looking for a better way to save money.” He said he works largely with retirees.
While the salesmen said he could sell some of the advertised coins, he recommended that between 85 and 90 percent of a gold investment portfolio be in what he called “congressional proof, extremely high-grade, collectible coins that tend to appreciate far better than bullion does.” He said the coins contain ¼ ounce of gold and could be purchased at a cost of $639 each, or $12,780 for a tray of 20 coins.
The price he quoted for the coins is markedly higher than the price they could be bought elsewhere, according to research conducted by an investigator with BBB. A longtime Texas-based coin dealer, Danny Hall, said his business would sell the same high-grade coins for approximately $398 each, or around $7,860 for a tray of 20 coins. A check of prices on the online site eBay shows the coins selling for between $335 and $420 each. Hall called the price being charged by the Austin coin company “inflated” at $639. He further emphasized these coins are not considered to be particularly collectible, but simply a purchase of gold.
BBB is currently working with United States Rare Coin & Bullion Reserve to confirm substantiation of the claims in their advertisements.
Consumer complaints received by BBB allege that they purchased coins from United States Rare Coin & Bullion Reserve, but the purchase amount was far more than the amount the coins were later appraised. The company generally responds by offering consumers the option to return the coins for a refund. Consumers have filed more than 40 complaints against United States Rare Coin & Bullion Reserve in the past 36 months.
BBB offers the following tips to consumers looking to buy coins as investments:
· Research Gold-Buying Businesses in Advance.
Before buying anything, make sure you know the name of the company, its address and, preferably, the company’s top officials. Check out the company’s BBB Business Review at www.bbb.org for additional insight.
· Do Not Make An Immediate Decision.
Some sales representatives may push you to buy during their initial presentation, but do not buy anything until you have had an opportunity to compare their prices with prices offered by reputable coin dealers in your area, or through Internet auctions.
· Compare Prices Carefully.
When you compare prices, make sure you are comparing identical items. A vintage $5 gold coin, for instance, is usually worth more than a newer $5 gold coin. The value of coins minted the same year likely will vary depending on the condition.
About Better Business Bureau:
BBB’s mission is to be the leader in advancing marketplace trust. BBB accomplishes this mission by creating a community of trustworthy businesses, setting standards for marketplace trust, encouraging and supporting best practices, celebrating marketplace role models and denouncing substandard marketplace behavior.
Businesses that earn BBB Accreditation contractually agree and adhere to the organization’s high standards of ethical business behavior. BBB is the preeminent resource to turn to for objective, unbiased information on businesses and charities.
Contact BBB serving Central, Coastal and Southwest Texas at (512) 445-4748.