Cherrypicking Proof Sets - Follow-up Comments
Wednesday September 26, 2007
Last week's Coin Dealer Ethics scenario was about the nasty dealer practice of cherrypicking proof sets. I presented a scenario sent in by reader Rick B., who suspects his coin dealer of swapping out the highest grade coins from the Proof sets he gets from the U.S. Mint, and then selling the rejects to his unsuspecting customers. Rick even found a fingerprint on one of the coins, which is impossible unless the coins have been tampered with, as Proof coins are supposed to have "never been touched by human hands" (according to U.S. Mint advertising.) Rick wanted some advice about what he should do - grab the coin dealer by the throat and demand the dealer's own personal Proof set, or what? Rick also wanted to know if the dealer was guilty of more than just poor ethics. Could this dealer be prosecuted for fraud? (If you'd like, you can read the entire scenario about cherrypicking Proof sets.)
As I pointed out last week, the practice of dealers removing the best coins from Proof sets is widespread. It even goes beyond simply removing the best coins! Some dealers pull out the PF-69's and 70's and replace the poorer coins and then send the rejected sets back to the Mint for an exchange! It has long been an open secret that many of the dealers who advertise in the major numismatic magazines and newspapers are selling material of secondary quality. Unfortunately, when the customers don't even know they're being fleeced, they're not likely to complain. And they get a curious double whammy, too! The coin dealers in these ads usually charge more than the U.S. Mint does for the same Proof set. So not only are these buyers paying more than they have to for stuff that's on sale right now at usmint.gov, but they're sure to get only the leftover coins that aren't worth sending to the grading services!
When Rick B. sent in his question, asking what he should do about this coin dealer that he has done business with in the past without any problems, but who now seems to have sold him a Proof set full of rejected coins, he seemed pretty angry. Most people who feel they've been taken advantage of respond with anger, so it's hard to blame the guy. But it seems that throttling his coin dealer isn't the best option, according to most of the readers who responded this week:
Rick's best bet is to either return the Proof set for a refund, or perhaps exchange the set if he can find one that is to his liking, and then not do any more business with this particular dealer. If the dealer refuses a refund or exchange, file a complaint with the local Better Business Bureau, Chamber of Commerce, and the American Numismatic Association if the dealer is a member. This might seem like harsh action against a dealer who might have unknowingly sold a tampered-with Proof set, but my issue with him isn't the tampering as much as it is the customer service when a dealer refuses a refund or exchange to a customer he's done business with several times before.
As I pointed out last week, the practice of dealers removing the best coins from Proof sets is widespread. It even goes beyond simply removing the best coins! Some dealers pull out the PF-69's and 70's and replace the poorer coins and then send the rejected sets back to the Mint for an exchange! It has long been an open secret that many of the dealers who advertise in the major numismatic magazines and newspapers are selling material of secondary quality. Unfortunately, when the customers don't even know they're being fleeced, they're not likely to complain. And they get a curious double whammy, too! The coin dealers in these ads usually charge more than the U.S. Mint does for the same Proof set. So not only are these buyers paying more than they have to for stuff that's on sale right now at usmint.gov, but they're sure to get only the leftover coins that aren't worth sending to the grading services!
When Rick B. sent in his question, asking what he should do about this coin dealer that he has done business with in the past without any problems, but who now seems to have sold him a Proof set full of rejected coins, he seemed pretty angry. Most people who feel they've been taken advantage of respond with anger, so it's hard to blame the guy. But it seems that throttling his coin dealer isn't the best option, according to most of the readers who responded this week:
Have you discussed this with him first and let him know if he doesn’t correct the situation … “you will contact the newspaper?" If he doesn’t, then call in the news, help protect others' wallets! --metro
I’d give him the benefit of the doubt: he may have purchased the set that way. I would return the set to the dealer and ask for my money back, explaining the reason. If he refuses, I would find another coin dealer. --gdnp
I would ask for my money back and then find another dealer. Best of all get a subscription from the mint for all your mint purchases. A fingerprint means they were opened! --LloydAnother reader who thought Rick should give the dealer a chance to make it right by providing a refund or exchange also had some advice for next time:
Does Rick know for certain that the coin dealer actually switched coins or perhaps bought the sets [that way] over the counter? He should have checked the coins before purchasing, though I can see where he would have trust in his dealer to provide him with a nice set, and not bother. Since he was going to inspect them anyway, why not then and there? --CarlNot everyone was in favor of asking the coin dealer for an explanation and refund or exchange:
Why not contact the mint, see what they say? You could always put a brick through his window, without the finger print, like [the one] that was on your coin. --scooterAs for the question of whether Rick would have some legal recourse, such a filing a fraud complaint against the dealer, I think that Rick probably doesn't have much of a leg to stand on. First of all, it's going to be very hard to get any kind of law enforcement interest over a $30 to $40 purchase. (Rick said it's a 14-coin Proof set; 2007 is the first year such a set was offered, so the value would almost certainly be in this price range or lower, especially if any PF-70's were already removed from the set!) Even if the police were inclined to pursue this petty money complaint, Rick would have to offer some kind of proof that the coin dealer knowingly swapped out the coins, since it is a feasible defense that the dealer might have purchased them this way. The bottom line is that I don't think Rick has even a small chance of getting recourse via law enforcement channels.
Rick's best bet is to either return the Proof set for a refund, or perhaps exchange the set if he can find one that is to his liking, and then not do any more business with this particular dealer. If the dealer refuses a refund or exchange, file a complaint with the local Better Business Bureau, Chamber of Commerce, and the American Numismatic Association if the dealer is a member. This might seem like harsh action against a dealer who might have unknowingly sold a tampered-with Proof set, but my issue with him isn't the tampering as much as it is the customer service when a dealer refuses a refund or exchange to a customer he's done business with several times before.
Comments
If there is enough evidence to show that there was actual “fraud” involved in the transaction, a civil suit can be used to rectify the situation.
There are just a few simple tests for “fraud”. These are: 1) the dealer knowingly misrepresented the facts, 2) the customer relied on the misrepresentation, 3) and suffered damage (financial) as a result of the misrepresentation.
In some states the courts will award 2 kinds of compensation: compensatory and punitive. The compensatory would just be for the direct financial loss perhaps including legal fees. But the punitive damages can be many times the actual damages, since it is to “punish” the dealer. Sometimes the punitive damages are determined by “how much would it take to inflict pain” for the dealer.
I still think that something needs to happen to see that the dealer cannot continue to do the same things to other unsuspecting customers.
I think you are making some incorrect assumptions.
#1 If there is a finger print on a proof coin, there had to have been someone outside the mint who done it. The mint does release coins with mint employees fingerprints on them occasionally. I have seen plenty of examples among the proof sets glued and sealed from the years 1968 throught 1972. It does happen.
#2 It is profitable to swap out PR69 coins with the pr67 coins in modern proof sets. NOT! Most of the coins now being produced for proof sets are of extreme high quality with most coins in the pr67 to pr69 range. The top three grading companies will not assign a pr70 to most coins for market reasons. Dealers engaged in a practice of swapping out PR68 or 69 coins and placing pr67 coins in thier spots does nothing for the dealer. A dealer must move inventory and that takes time. Dealers that are full time dealers aren’t going to swap out coins in proof sets just to send the better ones out to grading services. There just isn’t any money in slabbing modern coins-there are too many of them that grade high, they are not scarce enough to drive up the value in to a range where it would be profitable to do so. There are , however, speculators that might try it but most soon realize that there are easier ways to make money in coins that require less effort. Most buyers of proof and mint sets are folks who are not numimatists in any form or fashion. They are buying sets for gifts or to put away under usually incorrect assumptions: That they will come out ahead sometime down the road monetarily. They see pretty coins in the sets and that is all. If a person wants to have nicer coins than his nieghbor, he has to look at many sets to find the nicest combination of high grade coins. Most can’t or will not even grade thier own coins. They will not take the time. Dealers know that is where most people are that buy proof sets. It is a customers job, if he wants it, to look at as many as it takes to find what they want. It also the customers job to communicate with thier dealer to let them know what the buyer is looking for. If your dealer doesn’t want to take the time to show you mutiple choices for proof set options, then move on to a dealer who does. We are out here! The idea here is- open the channel of communication with your dealer. If someone is going to go to a dealer and buy a proof set and expect the highest quality, then they must look at the proof set before they leave and my advice is for them to examine multiple proof sets before deciding on the purchase. If you don’t take the time to do this in the coin shop then you don’t have time to complain later when you decide the coins in the set arent nice enough. The person in the eample should just go back and explain that he didn’t know he should be looking at several sets to decide wich one he wants. Most dealers will ablige. It is in thier interest to do so. They will want you to come back next time.
May I interject that I have known
many coin dealers in 44 years of collecting and vest pocket dealing. I
have never encountered a dealer that
does not scrutinize a proof set (or any
other coin) before buying frothe public.
To much credit is being given to the dealer in question. The fact that
prior purchases have been satisfactory
speaks volumes. He could never have made a living for an appearant considerable amount of time with such
sloppy buying skills.
I am fairly new to coin collecting and have seen a problem with what is happening with US mint and proof sets.
1. The selling of empty US mint & proof packaging on the internet. The only purpose this could promote is non US Mint set with non original coins. IE Fraud.
2. I sent an e-mail to E-bay concerning this as potential to propogate fraud. I also sent an e-mail to the US mint site with a recommendation that the holders be sealed in such a manner that removal of the coins to be sent for grading or other purposes would be unusable or provide indication that the holder had been tampered with.
3. Naturally I received no response from either entity.
Check the Better Business Bureau’s website to see if this dealer has had problems with other individuals before. With a market like coin-collecting, reputation is everything. The BBB’s website can be a valuable tool to weeding out unscrupulous local dealers as they continue to receive complaints. If they satisfactorily rectify the situation, that will also reflect on the BBB’s website. And given that many local coin dealers have established a long presence in the area, they know a bad rep. will hurt them in the long haul if they plan to be around for a while.
If this dealer doesn’t budge in making it right for the customer, post it to the BBB website.
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