Numismatic Consumer Alliance Helps Coin Scam Victims Recover More than $8 Million
The Numismatic Consumer Alliance, Inc. helped recover nearly $1 million during 2013 for consumers who were victims of unscrupulous coin sales, according to John Albanese, founder and president of the not-for-profit watchdog organization.
The Numismatic Consumer Alliance has now recovered a total of more than $8 million since it became operational in 2005 – an average of about a million dollars a year.
During 2013, intervention by the Numismatic Consumer Alliance in 10 cases resulted in settlements totaling $955,000 for unwitting and often unknowledgeable buyers who were induced to purchase grossly overpriced coins, Albanese said.
The New Jersey-based Alliance acts on behalf of such buyers, obtaining legal and other professional assistance when needed, in an attempt to rectify flagrant abuses in coin-related transactions and discourage perpetrators from continuing these practices.
Albanese said the 10 cases settled in 2013 involved amounts ranging from a low of $3,500 to a high of $330,000. In most of these cases, including the largest, he said, the victims were elderly people targeted in telephone scams.
“Telemarketers are the biggest offenders,” he said. “They set out to develop personal relationships with buyers and use these as leverage to inveigle them into spending more money in regular follow-up calls.”
Brochures and other material distributed by telemarketers usually contain no mention of such questionable practices, making it hard to prove them when they occur, Albanese said.
“The brochures could be immaculate,” he said, “but the telephone guy could say, ‘Hey, listen, Tom, you’ve got to buy these now; they’re going to take off.’ They would never put that in writing, but they wouldn’t hesitate to say it on the phone. They’d never say it on TV, where the shows are taped.”
Senior citizens are particularly vulnerable to rip-offs, Albanese said.
“These telemarketers pose as friends,” he said. “They ingratiate themselves by seeming to take great interest in the customer’s personal life – and that’s appealing to elderly people, who often live alone and welcome conversation. They then take advantage of the trust they’ve gained by persuading the victim to buy coins for a lot more than they’re worth.”
In many cases, he said, the abuses come to light only when victims’ children discover that their parents are being fleeced.
“Often,” he said, “the victims’ sons and daughters are the ones who contact us. And by the time they realize what’s been happening, the wild overpayments can total many thousands of dollars.”
American Eagle gold and silver bullion coins are among scammers’ favorite products, Albanese said.
“They get these coins certified as 69 or 70,” he said, “then sell them for exorbitant prices on the grounds that they’re rare in those grades – which, of course, they’re not. And, in any case, condition is irrelevant with bullion coins.“
“There are lots of folks buying these coins and paying $3,000 an ounce for gold and $100 an ounce for silver, when the coins are really worth just a small markup over their bullion value. It’s my belief that when bullion coins are sold as investments, there should be government regulation. There should be a ceiling on markups. That would solve a lot of problems.”
Albanese praised the Professional Numismatists Guild (PNG) for its support of NCA and its independent efforts to curb abuses in the coin market. In turn, PNG President Terry Hanlon lauded NCA’s work in protecting consumers.
“Every reputable dealer and every collector should applaud the diligent efforts of the Numismatic Consumer Alliance to combat fraud in the marketplace and help victims of numismatic-related crimes,” Hanlon said.
“As part of our own consumer protection policies,” he added, “PNG member-dealers must adhere to a Code of Ethics in the buying and selling of numismatic merchandise, and pledge to support our Coin Collectors Bill of Rights. In the unlikely event of a dispute, PNG members must agree to binding arbitration to resolve the issues.“
Scott A. Travers, a prominent consumer advocate who is author of The Coin Collector’s Survival Manual, serves as NCA’s executive mediator.
“NCA is clearly at the forefront,” he said, “in the fight to protect the public from predators in the coin business. It educates consumers on how to avoid costly scams – and when abuses do occur, it vigorously pursues recovery of the funds victims paid for grossly overpriced coins.”
Like Albanese, Travers sees the hyping of bullion coins with lofty certified grades as one of the most serious problems in the current marketplace.
“Gold and silver bullion coins in holders that say 69 and 70 are among the greatest frauds confronting our industry,” he declared. “Rather than meriting the sizable premiums some coin sellers charge for them, they’re really worth no premium at all. It would be in the hobby’s best interest if these coins were simply melted down and sold for their bullion value.”
Travers works closely with judges, attorneys and other professionals chosen for their expertise in mediating and arbitrating disputes, providing them with guidance on numismatic issues as they review cases submitted to them for review.
The Numismatic Consumer Alliance seeks no compensation when it enters a case on behalf of a victimized consumer – even though it frequently incurs substantial legal bills and other expenses in the process. The funds to cover such costs are contributed by coin dealers and others who share its concern about fraud and deception by disreputable coin sellers and the harmful effects these practices can have on the marketplace as a whole.
Cases involving potential abuses are referred to the Numismatic Consumer Alliance by a number of sources, including hobby organizations, numismatic periodicals, law enforcement agencies, reputable coin dealers, and victims’ families and friends.
Upon learning of such cases, Albanese said, NCA contacts the consumers to determine the validity of their claims and asks for copies of all pertinent paperwork. If it concludes that the buyers were scammed, it contacts the sellers and urges them to make restitution in order to avoid legal action.