Coin Auctions, eBay and the Games People Play, Part One.
Rare Coin Market Report by Vic Bozarth – Bozarth Numismatics
In this month’s RCMR I am going to talk about rare coin auctions and the ‘games’ some individuals play to manipulate the system. This is a two part series in which I will discuss auction venues where rare coins can be purchased. In next month’s Rare Coin Market Report I will discuss some of the less obvious and insidious aspects of the coin auction game. This month I also want to discuss critical issues facing the rare coin business including counterfeits and taxation issues.
EBay has been a tremendous marketing success for thousands of products. EBay has also evolved into one of the largest market places for individuals to sell items to other individuals without physical stores. Virtual stores like eBay stores and websites have largely replaced the traditional hardcopy pricelists and coin listings in publications like Coin World and Numismatic News. The traditional coin auction houses, like Heritage, Stacks/Bowers, Goldberg, David Lawrence, and Teletrade still have the majority of the rare ‘power’ coins, but the volume of coins sold on eBay is absolutely incredible. Overall coin auctions allow many coin enthusiasts to purchase great coins at competitive prices from the comfort of their own homes or offices.
The coin business, like all businesses, is always evolving. Some of the most successful coin companies in the U.S. recognized the potential of the internet back in the nineties and have profited from it handsomely. EBay has also allowed many smaller (and larger) coin businesses to flourish because of the incredible amount of customers this huge market represents. As a coin dealer, I will admit, I dragged my feet before deciding to take the leap and try both eBay and a website. Frankly, I like the personal interaction between real people at coin shows. After all, that is why I write the Rare Coin Road Warrior and attend 40 coin shows a year.
The major coin auction houses run very ‘clean’ ships and in my opinion are above reproach, but….EBay isn’t a traditional auction house and answers to NO ONE. In fact, counterfeit and over graded and misrepresented coins are constantly being listed and sold on EBay. Let me give you an illustrative example.
Company X lists hundreds of uncertified and ungraded items on EBay. Why do they list uncertified and non-professionally graded items? The answer is GREED, pure and simple. Greed on the part of the potential customer is most often the major factor that makes this fraud work. Greed on the part of the listing dealer, like dealer X, perpetrates the fraud. The customer believes they are getting a coin at a bargain price because the price for the grade the coin is advertised at is substantially below wholesale levels. THERE ARE NO BARGAINS.
I have always been amazed at the ability of people to con themselves. What is the old saying, ‘you can’t cheat an honest man’? The individual buying these raw coins at an advertised grade REALLY believes they are getting a bargain until…..you guessed it, they get a couple of other opinions. Most often they take their BARGAIN and try to sell it. You know what happens? They are told the coin doesn’t grade as ‘high’ as what they purchased it at, or worse, the coin is counterfeit or doctored. The return privilege that EBay offers and PayPal guarantees has lapsed. Dealer X feigns innocence. Another potential numismatist and coin buyer is soured to coins. Sound familiar?
In the last year, I have personally seen examples of this fraud on numerous occasions. Dealer X is running around coin shows buying coins like a madman, buying both slabs and raw coins. He is breaking the slab coins out of holders and listing them at a higher grade than what they had graded in the PCGS or NGC slab. He is also buying raw coins that are often cleaned or otherwise not eligible for a legitimate grade at PCGS or NGC. Although I have not personally witnessed counterfeit coins being purchased on EBay, I have heard that the Chinese counterfeits being listed on EBay are numerous and some are quite good for the counterfeit/reproductions they are. Counterfeit slabs are also being reported.
The laws are on the books to prosecute the perpetrators of fraud like I have mentioned. Counterfeits especially are the responsibility of the U.S. Secret Service, BUT and this is a huge BUT, they won’t even BOTHER to deal with coins because of the low face value that these coins represent. If you have a counterfeit $100 bill they might take your call. Call about a coin and you won’t get any attention whatsoever. They DO NOT CARE.
The FACT of this lack of concern brings me to my next subject in this month’s RCMR. The PNG and many of the major forces in the rare coin business are attempting to join forces to combat both fraud and unnecessary and possibly crippling taxation for our business. Just this week we heard that recent additional taxation efforts in Maryland have been tabled because of the lobbying efforts of Whitman publishing and others in our industry.
Indeed, not only did we write letters ourselves, but we requested you join us in attempting to block this legislation. The threat of moving the Whitman Baltimore Coin Expo out of Maryland may have forced the Maryland legislature to REEVALUATE their position on the taxation issues proposed for their state. I believe they saw the writing on the wall. The obstacle for the coin industry is getting this ‘Writing on the Wall’ in the first place.
Industry Council for Tangible Assets, PNG, ANA, and many other numismatically concerned groups have long fought to head off additional taxation and legislation detrimental to the coin industry. Not only are we members of most of these major professional organizations, but we support wholeheartedly their efforts both on the financial and fraud concerns to our business. This week in Baltimore U.S.
Congressman Lamar Smith, Chairman of the House Judiciary Committee, is attending a reception being held by the Gold and Silver Political Action Committee at the Baltimore Convention Center Thursday night March 31st. Lamar Smith is a U.S. Congressman from District 21 in Texas. Congressman Smith is a potentially powerful advocate for our business. Not only will we be attending the reception, but we will be contributing to the efforts of the group.
Bozarth Numismatics Inc. is a full service rare coin company. My wife, Sherri and I, travel to 40 shows a year buying scarce and high grade coins for our customers. I also write the Rare Coin Road Warrior each month about our show travels and the action ‘on the bourse floor’ at all major and most regional coin shows. We list our coins for sale on both our website Bozarthcoins.com and in our EBay store. We also offer free no obligation want list services. If you are looking for a particular item or building a meaningful set of U.S. coins, please let us know. Although rare coins ‘don’t grow on trees’ we are often able to locate items other dealers cannot find.