Coin Dealer Ethics - Cherrypicking
Saturday July 21, 2007
I had an interesting debate with a coin dealer about ethics at a coin show I attended recently. The dealer had some 5,000-coin bags of wheat cents for sale at a wholesale price, and I wanted to buy one but these bags are really heavy. Certainly way too heavy for me to manage by myself. Fortunately, a good friend and local dealer had a booth nearby, and agreed to take custody of the bag of pennies for me so I could make arrangements to get them to my home. When I went back to the penny-selling dealer to pay for the bag of wheat cents, and then told him what arrangements I'd made, he said a really startling thing to me. I will recount this conversation, but I'm going to change the names in the interest of privacy. Then I'd like to know your thoughts about the ethics involved.
Joe Blow (the penny-selling dealer): He's going to hold the coins for you? (He nods his head toward my friend.) You should know that he used to steal from me.
Me: Yes, he's a good friend, and very ethical. I can't believe he would steal from anybody! What happened?
Joe: He's one of those sharpies that goes around preying on other people's mistakes.
Me: What do you mean?
Joe: He used to come to my table and look for mistakes I made, and buy the coins I had underpriced without telling me about the mistakes.
Me: Hmmm...Well, that sure doesn't sound like the John I know, but thanks for the warning. (I really wanted those pennies, and didn't see the value of getting into a spitting contest with this guy. I know without any doubt at all that my friend is honest and ethical and also extremely knowledgeable about U.S. variety coins in particular, so I just wanted to brush off Joe's claims without an argument and close my penny deal.)
Joe: I won't sell to him anymore. I told him to stay away from my table.
(I pulled out my cash and did the penny transaction, and made ready to drag the canvas sack of 5,000 pennies across the bourse floor when Joe unexpectedly came around his table and said)
Joe: I'll give you a hand with that. (He lugged the pennies over to my friend's booth and set them down behind the table, not saying a word to anybody. I thanked him generously because those darn things were heavy!)
John Doe (my dealer friend; Joe has gone back to his table now and is out of earshot.): That's who you bought the pennies from?
Me: Yeah. He accused you of stealing from him! What's up with that?
John: (Laughing) Oh really? I've cherrypicked some sweet deals from him. Is that what he means by stealing?
Me: Probably. I really didn't get into it with him. Want me to go over and get the details? I don't like him impugning your good name, John. (Now that I safely have my pennies, I don't mind a bit of a "discussion" about this now.)
John: Nah, I don't care. I know I've never stolen from him. But some dealers don't like cherrypickers.
Me: I can't imagine they would! But I've never heard it called stealing before! Do a lot of dealers feel this way?
John: Some do, I guess. But that's their problem. They got the price they asked for, they made their fair profit, so why should they care if someone else comes along and makes a profit themselves?
Me: Exactly.
(A little while later, I happened to stroll past Joe's booth again, and since he wasn't busy, I decided to chat a little more about this "stealing" stuff.)
Me: Thanks again for the help hauling those pennies!
Joe: No problem. Glad I can still do it at my age.
Me: You mentioned that you'd caught John stealing from you before. Do you mind telling me what happened?
Joe: Well, he'd find coins that I had misidentified or underpriced, and he bought them without telling me.
Me: So, basically he was cherrypicking?
Joe: Yeah, I guess that's what they call it when they justify this kind of stealing. But I think that if you find someone made a mistake, or overlooked something, the right thing to do is inform them of the mistake, not take advantage of them instead.
Me: But John paid you the full price you asked for, or maybe haggled a little like anybody does, but basically he paid you what you wanted for the coins, right? He didn't really just steal them?
Joe: Sure he paid for the coins, but he didn't pay a fair price based on what he knew they were really worth. And that's a form of stealing.
Me: So, basically, what you're telling me is that if someone takes the time and effort to study and become an expert in certain coins, they are obligated to share that higher knowledge with anybody they do business with? They're not allowed to benefit from that superior knowledge themselves by finding bargains here and there?
Joe: Right. The coin is what it is, and just because I didn't realize that doesn't make it right for someone else to take advantage of my lack of knowledge when they know better.
The conversation went on for a bit in a similar vein, but the essence of the argument has been set forth. (In the coin collecting hobby, "cherrypicking" is defined as using one's superior knowledge of coin varieties, grading expertise, or other learned skill in judging coin values, to buy selected coins from a coin dealer knowing that the coin is worth more than the asking price because the dealer missed the element that raises its value.)
Do you think cherrypicking is pretty much the same as stealing? Or should people be allowed to benefit from their superior knowledge as long as they pay the dealer the price he wants for the coin? Share your thoughts via the "Comments" link below. (You can also find my opinion there.)
Do you have an ethical quandary that you'd like to see discussed here? Send it to me at coins.guide@about.com. You don't need to write a whole conversation like this (unless you want to.) You can just briefly state the situation and I'll do the rest.
Joe Blow (the penny-selling dealer): He's going to hold the coins for you? (He nods his head toward my friend.) You should know that he used to steal from me.
Me: Yes, he's a good friend, and very ethical. I can't believe he would steal from anybody! What happened?
Joe: He's one of those sharpies that goes around preying on other people's mistakes.
Me: What do you mean?
Joe: He used to come to my table and look for mistakes I made, and buy the coins I had underpriced without telling me about the mistakes.
Me: Hmmm...Well, that sure doesn't sound like the John I know, but thanks for the warning. (I really wanted those pennies, and didn't see the value of getting into a spitting contest with this guy. I know without any doubt at all that my friend is honest and ethical and also extremely knowledgeable about U.S. variety coins in particular, so I just wanted to brush off Joe's claims without an argument and close my penny deal.)
Joe: I won't sell to him anymore. I told him to stay away from my table.
(I pulled out my cash and did the penny transaction, and made ready to drag the canvas sack of 5,000 pennies across the bourse floor when Joe unexpectedly came around his table and said)
Joe: I'll give you a hand with that. (He lugged the pennies over to my friend's booth and set them down behind the table, not saying a word to anybody. I thanked him generously because those darn things were heavy!)
John Doe (my dealer friend; Joe has gone back to his table now and is out of earshot.): That's who you bought the pennies from?
Me: Yeah. He accused you of stealing from him! What's up with that?
John: (Laughing) Oh really? I've cherrypicked some sweet deals from him. Is that what he means by stealing?
Me: Probably. I really didn't get into it with him. Want me to go over and get the details? I don't like him impugning your good name, John. (Now that I safely have my pennies, I don't mind a bit of a "discussion" about this now.)
John: Nah, I don't care. I know I've never stolen from him. But some dealers don't like cherrypickers.
Me: I can't imagine they would! But I've never heard it called stealing before! Do a lot of dealers feel this way?
John: Some do, I guess. But that's their problem. They got the price they asked for, they made their fair profit, so why should they care if someone else comes along and makes a profit themselves?
Me: Exactly.
(A little while later, I happened to stroll past Joe's booth again, and since he wasn't busy, I decided to chat a little more about this "stealing" stuff.)
Me: Thanks again for the help hauling those pennies!
Joe: No problem. Glad I can still do it at my age.
Me: You mentioned that you'd caught John stealing from you before. Do you mind telling me what happened?
Joe: Well, he'd find coins that I had misidentified or underpriced, and he bought them without telling me.
Me: So, basically he was cherrypicking?
Joe: Yeah, I guess that's what they call it when they justify this kind of stealing. But I think that if you find someone made a mistake, or overlooked something, the right thing to do is inform them of the mistake, not take advantage of them instead.
Me: But John paid you the full price you asked for, or maybe haggled a little like anybody does, but basically he paid you what you wanted for the coins, right? He didn't really just steal them?
Joe: Sure he paid for the coins, but he didn't pay a fair price based on what he knew they were really worth. And that's a form of stealing.
Me: So, basically, what you're telling me is that if someone takes the time and effort to study and become an expert in certain coins, they are obligated to share that higher knowledge with anybody they do business with? They're not allowed to benefit from that superior knowledge themselves by finding bargains here and there?
Joe: Right. The coin is what it is, and just because I didn't realize that doesn't make it right for someone else to take advantage of my lack of knowledge when they know better.
The conversation went on for a bit in a similar vein, but the essence of the argument has been set forth. (In the coin collecting hobby, "cherrypicking" is defined as using one's superior knowledge of coin varieties, grading expertise, or other learned skill in judging coin values, to buy selected coins from a coin dealer knowing that the coin is worth more than the asking price because the dealer missed the element that raises its value.)
Do you think cherrypicking is pretty much the same as stealing? Or should people be allowed to benefit from their superior knowledge as long as they pay the dealer the price he wants for the coin? Share your thoughts via the "Comments" link below. (You can also find my opinion there.)
Do you have an ethical quandary that you'd like to see discussed here? Send it to me at coins.guide@about.com. You don't need to write a whole conversation like this (unless you want to.) You can just briefly state the situation and I'll do the rest.
Comments
I think cherrypicking is just fine, and it’s certainly not stealing! How can someone be accused of stealing when they paid the dealer the price he wanted for the coin? The dealer priced the coin to make a profit that was satisfactory to himself; to deny the next guy a further profit is just sour grapes.
I do not believe that anybody should be required to share the fruits of their labors spent studying coins, varieties, grading, etc. As long as the dealer gets the price he wants, there is nothing unethical about selecting the coins you want to buy based on any particular criteria, including the criteria commonly associated with “cherrypicking.”
Do you agree with me, or not?
Susan Headley
About.com Guide to Coins
I completely agree with you. Would someone go to a garage sale and tell someone they aren’t charging enough for something? Would they go to Walmart and tell them they are charging less than what Jim’s Specialty Store is charging, and therefore have it mispriced? I think not! (I’m very glad I happened upon your site. I also began collecting wheat cents in the 60’s but never graduated beyond that.)
John
Does this mean I need to send money to all the sellers that I bought silver from when it was at $4.25? Item’s are usually priced ” as is ” and if you pay the asking price, DONE DEAL! Any potential profit is now the buyers risk. Thanks, BKH
It is like you said in the past, Get the book read about what you have, If you ask a price for anything in life and you get that price that is on you not anyone else. Cherrypicking is ok in my book.
I agree with Susan, “Snooze ya Loose”. Perhaps “Joe” should do a little bit more homework before putting his items out to the public! And though not stated in Susans’ story I have no doubt that “Joes” collection was probably amassed in a similar way. That’s business – Buy Cheap, Sell High!
Wow ! Maybe “John” should become “Joe’s” consultant everytime he missprices a coin and Joe could pay John a consulting fee ??
Maybe Joe should hire John to sell his coins for him since he does not know the true value of the coin himself ??
Joe is obviously envious of John’s superior coin skills and is smearing him to get even !!
What if it’s a dealer buying coins from a collector and he realizes that the collector is not quite up to speed on the latest prices or that the coin is a unique error that has not been cataloged. In otherwords can dealers cherrypick?
There is nothing wrong with cherrypicking. I believe if the situation was reversed, Joe would buy from John and not say a word. John did not do anything wrong, he is just a smart shopper, able to find a bargain, just like the rest of us want to.
There is nothing wrong with cherrypicking. In this case couldn’t Joe be acused of steeling from whom ever he got the coin from, because he would not have paid them the same price he sold the coin for! So in his mind he should go back and give them more money for the coin since it was his mistake to under sell the coin.
Cherrypicking is fine. It’s just one person who knows more than the other. Nothing bad about it. Although….when you go to a dealer and you are expecting him to purchase your collected coins, you should be able to expect that he will be honest and give you the fair and proper value of your coins. Even if you yourself do not know the value. That would be why you are going to him in the first place, right?
It’s called trust.
Is cherry-picking, cherry-picking or are there different sets of rules – one for the buying “picker”, another for the selling “picker” and still another for the professional grader?
Is it acceptable for the buyer to use knowledge and experience to purchase a coin at the asking price without divulging any specialized talent? If the buyer happens to be a dealer, that specialized knowledge seems to be ethically “expected” to be offered (for free) to the inexperienced seller. A grading company (PCGS for example) is only required to recognize a coin’s special characteristics if it is paid to do so. Where is the line of morality and ethics drawn? Perhaps somewhere in a drifting sand dune.
Isn’t a buyer, either collector or dealer, ultimately and equally a consumer? Why then are the two obliged to follow different rules? Does a grocery shopper have the right to cherry-pick the most desirable produce? If they plan to make strawberry preserve for re-sale, are they then obligated to tell the store manager that this side of the strawberry bin yields larger, fresher ones than the rest and should therefor be priced at a premium?
As you may have noticed, this provocative issue has yielded this collector/seller more questions than answers.
I commend Susan Headley for opening this topic for discussion and think it’s a subject sorely in need of continued debate.
If i buy a coin dealer and he hasn’t done his home work,but you have,that’s his problem,god knows ive been raked over the hot coals by eBays power sellers,and a few unscrupuly’s dealers,its all about making a coin deal,iset here on my computer every night and learn what’s what,so i think so called cherrypicking is fare Game.
I wonder if a person like myself just begining to collect coins made a deal to sell him (the first dealer) a coin and he knew I had under priced the coin if he would have told me my mistake and given me the entire fair price for the coint.
I believe in the situation you stated what your friend did was in no way out of line nor was it stealing. It is assumed that a coin dealer is knowledgable in regard to the product he is selling (and presumably making a living on). However, it would be unethical for a dealer to KNOWINGLY underpay or mislead a novice entering his/her store to sell a coin or collection. As the seller, he is obligated to mark the price he is willing to accept and deal with the consequences of that transaction. Great article and site. Thanks Susan.
People are bringing up some very interesting points regarding the “other side” of cherrypicking – when the novice goes to a dealer to sell his or her collection.
In the example I gave in the article, both participants were professional coin dealers. However, it is apparent that many folks believe there is a sort of “double stadard” (for lack of a better term) that applies when the dealer is buying coins offered to him by a non-dealer. I think this is an important area to explore, so I’ll make this the subject of our next Ethics analysis article. I’ll call it something like “The Other Side of Cherrypicking” (or perhaps someone can suggest a better title?)
I sincerely appreciate everyone’s participation in this thought-provoking discussion! I am enjoying reading everyone’s views a lot!
Susan Headley
Abount.com Guide to Coins
In the situation described, I don’t think cherrypicking between fellow coin dealers is “stealing.”
It is the responsibility of every coin dealer to educate himself on the coins he is selling. If he is too lazy to educate himself about what he is selling, he has no one but himself to blame for losing potential profits.
It should be considered stealing if a coin dealer knowingly takes advantage of novice customers.
I have been in the coin business buying and selling for about 40 years or so.
I have been on both ends of the cherrypicker spectrum and found that there can be no hard feelings when buying or selling coins. A deal is a deal.
Just because you happen to know the person that capitalized on your misfortune is not a reason to lose him as a friend.
You should be happy it was him rather than a stranger. If your looking for a reason to be mad be mad at yourself for not doing your homework.
I do not see any thing morally wrong in cherry picking with a person who considers himself a dealer of coins, mainly because as a dealer and not just a collector he should be aware of the value of his product. On the other hand if a novice collector brings his collection to a knowledgeable dealer and has extremely valuable coins in his collection I feel that the dealer should not take unfair advantage of the situation to rip him off but negotiate a reasonalble fee or percentage to market the coins for him. IE recognize that the collector has a coin that could bring $10,000 and offer him $500.
Cherrypicking is not stealing. Yet, many coin dealers steal from people every day. They pay bottom dollar for collections to widows and the non-numismatically inclined, then gloat over the great deals they made. They sell dipped and polished coins from multipage ads in the coin magazines as “premium BU.” They sell problem coins they can’t certify on eBay as “gems.” For a coin dealer to complain about cherrypicking is, in my opinion, the height of hypocrisy.
I had a similar, but different type of, experience with a coin dealer with whom I dealt with on E-Bay (my first mistake). I have had some experience in grading coins (since the mid-1970s), and, although I am a novice collector, I knew that the coin I was being sold was over-graded. The ad on E-Bay stated “$20 gold piece, MS64-Almost Uncirculated” (my second mistake.) When I received the coin (in the usual plastic film-and-cardboard mount), I looked at it with my critical eye, and judged the coin to be approximately a MS-58 or less. I wrote in the comments page on E-Bay as to the discrepancy in our judgments. The dealer replied that “Obviously [he] does not know how to grade coins”, and gave me an unsatisfactory buyer rating on E-Bay. In return, I offered to have the coin sent to an independent appraiser (e.g. PCGS) for their judgment, with the person (myself or the dealer) who was furtherest from their (PCGS’s) appraisal to pay the costs of said appraisal. Needless to say, he never replied. [I think I may have come out the better on the deal (unless the coin is counterfeit), as I only paid $375 for the coin.] (I think that shows what his level of competence is.) However, I still have the negative report as a buyer on E-Bay, as I cannot remove it from the site, and he is certainly not going to.
I think cherry-pickomg is just as legal as anything else. It behooves the DEALER/SELLER to know what he has in hand, and tho have it priced accordingly. It is the same situation if a dealer knows a coin has been “messed with”, but doesn’t say anything too the prospective buyer. Is that “stealing”? I think not! It is up to the buyer, to know what he is buying, just as it is up to the dealer/seller, to know hwat they are selling.
Hmmm this is a more moral delema than stealing. To me i would assume no one is giving any thing wawy for nothing. You buy a bag of coins, you have to think the seller has been through the bag and cherrypicked the best coins for him/her self # 1. # 2. is any one obligated to tell joe blow that he dropped his wallet? That contains many thousands of dollars. Or should he put his foot over joes wallet untill joes turns his head, then he can snatch joes wallet. The rub here is, to improve the hobby honesty goes a long way. I don’t say that the coin has to be returned. But trying to help a lessor knowledgable person is a decent moral thing to do. Spreading good karma comes back in spades. What i think i would have done wit my superior knowledge was educate joe by giving him a finders fee for the gem he sold to me. If i knew he did it unwitingly. After all knowledge is power, as well as an informed customer is a good customer. So jim burned his bridges and cut him self off from any good deals in the future. Instead of winning hearst and minds. Jim created an enemy. And gives another black eye to the hobby. We have nothing more to go on than trust in any dealings. The more people get burned, the worse it goes in this hobby.
Cherry-picking is not stealing. John paid Joe what he was asking for the coin. A deal is a deal. One of the mantras in coin collecting is the phrase “Buy the book before you buy the coin”. If you are going to be in the coin dealing business professionally, you must keep your skills up to date. Education is a life long learning process and Joe has not been keeping up with the education side of numismatics.
On-the-other-hand: How we treat each other as people is more important. One should not brag out their cherry-picking adventures to the point that one dealer feels as though he has been victimized (or, at least caused the other dealer to feel embarrassment). I don’t know if this applies specifically to this situation, but I have a hunch that it does. In Scott Travers’ The Coin Collector’s Survival Manual® he has a section on cherry-picking etiquette. If you are going to cherry-pick I suggest that you heed his advice. After all, in my book, relationships are more important than coins.
Secondly, if John would have told Joe that the coin he was selling is a rarity, and greatly under priced, would Joe go back to the person he bought the coin from and give him/her more money? After all, “What’s good for the goose is good for the gander.”
Joe Blow has a personal issue he needs to deal with – it appears he is angry at himself, but falsely accusing a person of stealing is slander (libel if in writing or some other “permanent” form), a form of defamation of character, and is illegal. Joe has made allegations or imputations of criminal activity, which are presumed under law to be defamatory;
John does not even have to prove any damage to his reputation or business to prevail in court. Further, Joe acknowledged that John paid the price asked for, thereby contradicting his own verbal statements and establishing the falsity thereof.
I used to be in the horse business – that’s right, a horse trader! It was always my responsibility to thoroughly evaluate (handle, examine, ride, etc.) a horse I was considering buying for an intended purpose, including having a vet check it out, appropriate x-rays taken and lab tests run, someone else ride it, etc. If a horse had what appeared to be a very low price tag, extra caution was necessary. For me, as a seller, it was my responsibility to fully disclose any issues I might be aware of. If someone bought a horse and discovered it had a talent or attribute I had not detected and was able to develop that and sell the animal for a much higher price than I was paid, I certainly never accused the person of stealing from me!!!
As a novice pottery and coin collector and sometime seller, I am educating myself, and I sometimes am able to educate others. When buying from a DEALER, I make the assumption that the dealer knows what s/he is selling, and is charging what s/he deems an appropriate price. I have a responsibility to myself to do my homework, and not to buy coins I am unsure about. If I see a coin on a dealer’s table I think may be under-valued, I may ask a few more questions than “normal”, and I might have a more knowledgeable friend take a quiet look at it, but I am not going to say outright “I think you are undercharging for that coin.” The dealer must be making what s/he considers an appropriate profit on the sale.
If I have an opportunity to buy coins from someone unconnected with the numismatic world, I give them a fair offer, based on a combination of my examination of the coins, and prices in reference books, on reputable websites and on dealer’s offer sheets.
Joe Blow is wrong, and could find himself in legal trouble.