Coin Dealer Ethics - Name Your Price?
Monday January 21, 2008
The following scenario was submitted by reader Jim Bucki of jmbucki online auctions. He witnessed a scene in his local coin dealer's store that is probably not uncommon, and that will certainly arouse some divisive opinions! Here is what Jim wrote:
Please note: This is a hypothetical situation based upon an incident similar to what I witnessed.
It’s a Saturday morning and I am in my favorite coin dealer's shop digging through various flip boxes looking for specimens to fill my type set collection. I am also searching through the dealer’s “junk bins” for possible finds that I may want to purchase. As I am doing this I am chatting with the owner, Eddie (not his real name). Eddie tells me that business is slow and he is considering closing the store. He has been in the current location for over 40 years. He is a man of modest means. His little shop is neat and orderly but by no means lavish. Most of his display cases he purchased used from stores that were going out of business.
A well-dressed middle-aged woman walks into the store. Eddie greets her and says “Good morning Mrs. Smith” (not her real name.) She returns the greeting and hands Eddie a new archival quality album of Lincoln cents from 1959 to 2007 (including proof only issues.) She asks Eddie what he would pay for this collection. He offers to sell it on consignment for a percentage of the final sales price. She refuses and says she needs the cash. He offers her $120 for the coins and $15 for the album. She then says “I really need the money. Could you do $175 for the coins and $20 for the album?”
Eddie pauses for a moment and responds, “You want $195?”
She replies, “Yes. “
After another pregnant pause while he peruses the individual pages, Eddie peels off $195 and hands it to the woman. She emphatically responds “Thank you very much. You don’t know how much of this means to me“ and leaves the store.
The owner hands the album to his assistant, John (not his real name) and asks him “What do you think?"
While John is looking at the pages, he comments out loud “It's beautiful. All of them are blazing red. They mostly look MS-65 and I really don’t see anything below MS-63."
A few minutes later I see him reach for his loupe to take a closer look at an individual coin. He calls Eddie over and tells him to look at the 1972 cent. After looking at the coin, Eddie responds “WOW! That is one beautiful ’72 doubled die. I bet it will grade at least MS-66 or maybe even MS-67 when we have it slabbed,“ (i.e. this is a $1,000 to $2,000 coin.)
The assistant asked the owner, “Are you going to give Mrs. Smith anything more for this set?”
The owner replied “I gave her more than I wanted to. In fact, I gave her exactly what she asked for. She was thrilled to get it. Did you notice how she thanked me when she walked out the door?”
“Yeah. I did,“ smiled the assistant.
Both parties could use the money. Mrs. Smith named her price and the coin dealer took her offer. Does Eddie owe Mr. Smith any more money? Why or why not?
Please share your opinion via the "comments" link below, and next week, we'll look at some of your responses.
Update: See the follow-up article about the topic Coin Dealer Ethics - Name Your Price?
Please note: This is a hypothetical situation based upon an incident similar to what I witnessed.
It’s a Saturday morning and I am in my favorite coin dealer's shop digging through various flip boxes looking for specimens to fill my type set collection. I am also searching through the dealer’s “junk bins” for possible finds that I may want to purchase. As I am doing this I am chatting with the owner, Eddie (not his real name). Eddie tells me that business is slow and he is considering closing the store. He has been in the current location for over 40 years. He is a man of modest means. His little shop is neat and orderly but by no means lavish. Most of his display cases he purchased used from stores that were going out of business.
A well-dressed middle-aged woman walks into the store. Eddie greets her and says “Good morning Mrs. Smith” (not her real name.) She returns the greeting and hands Eddie a new archival quality album of Lincoln cents from 1959 to 2007 (including proof only issues.) She asks Eddie what he would pay for this collection. He offers to sell it on consignment for a percentage of the final sales price. She refuses and says she needs the cash. He offers her $120 for the coins and $15 for the album. She then says “I really need the money. Could you do $175 for the coins and $20 for the album?”
Eddie pauses for a moment and responds, “You want $195?”
She replies, “Yes. “
After another pregnant pause while he peruses the individual pages, Eddie peels off $195 and hands it to the woman. She emphatically responds “Thank you very much. You don’t know how much of this means to me“ and leaves the store.
The owner hands the album to his assistant, John (not his real name) and asks him “What do you think?"
While John is looking at the pages, he comments out loud “It's beautiful. All of them are blazing red. They mostly look MS-65 and I really don’t see anything below MS-63."
A few minutes later I see him reach for his loupe to take a closer look at an individual coin. He calls Eddie over and tells him to look at the 1972 cent. After looking at the coin, Eddie responds “WOW! That is one beautiful ’72 doubled die. I bet it will grade at least MS-66 or maybe even MS-67 when we have it slabbed,“ (i.e. this is a $1,000 to $2,000 coin.)
The assistant asked the owner, “Are you going to give Mrs. Smith anything more for this set?”
The owner replied “I gave her more than I wanted to. In fact, I gave her exactly what she asked for. She was thrilled to get it. Did you notice how she thanked me when she walked out the door?”
“Yeah. I did,“ smiled the assistant.
Both parties could use the money. Mrs. Smith named her price and the coin dealer took her offer. Does Eddie owe Mr. Smith any more money? Why or why not?
Please share your opinion via the "comments" link below, and next week, we'll look at some of your responses.
Update: See the follow-up article about the topic Coin Dealer Ethics - Name Your Price?
Comments
I don’t think the dealer did anything unethical here. There have been many times in which I’ve gone through dealer junk bins and cherrypicked out rare varieties and paid the “junk” price. Am I supposed to disclose this and pay a higher price? Certainly not! To me, this is the perspiration I’ve put into reading and informing myself about a particular coin type. One cannot be an expert in all coin types (or this is really rare), so you have to specialize. This lady did not know about the 72 in the set and was happy with the money she got. Initially the dealer was ok with the deal and then realized how great it was when the 72 turned out to be a key error. I do not think the dealer is obliged to give anything to the woman. However, if the dealer saw the 72 error before the woman left the store and realized it and didn’t say anything, that would change the scenario and make it more unethical.
This is like the finders keepers losers weepers game.
No body in their right mind would “want” to say anything.
So let me answer this question. With a question.
What if mz Smith has a relative that knew what was in the set. Asked her to do them a favor and sell the set, if the price is decent. Mz Smith not knowing anything about coins takes what she gets, goes back to her relative with the cash and they call the police saying they just got robbed by a coin dealer.
That could create alot of problems for the dealer.
Even a court date. Not to mention his good name, if he has one. So he’s going out of business. There is such a thing called unjust enrichment. I think in most cases if it can be proven. The dealer would lose. And maybe lose a lttle more than what he gained in the first place.
There are always going to be those temptations that make us do things we may later regrete, and there are also laws to protect the innocent from people like this.
My opinion. The dealer is wrong!!
I think the owner owes her, He was hesatent when he though he was getting the worst end and everything chaged once he found he had the better of the two. At least he should be honest with the lady, After seeing that in person, I would not buy from that dealer again, He is honest when he has the upper hand, to take advantage of someone, I don’t like that.
My View,
Joe
There is nothing wrong with this transaction. Mrs. Smith should have looked into the value of the coins if she needed the money that badly. If she was working on behalf of someone else as described by another poster, the owner should have given her a minimum price to accept. Both parties ended up happy. But Mrs. Smith should have done her research. And by the way, even though the dealer addressed her as Mrs. Smith it doesn’t mean he knows how to contact her even if he wanted to tell her about the value of the coins.
I don’t think that the dealer did anything wrong here, except make an offer before he had a real idea what he was buying. That may, in part, explain why he is close to going out of business: he may just not be a particularly savvy businessman. If he had instead discovered that a key date coin had been lightly circulated, cleaned or otherwise damaged and was thus worth significantly less than he had paid he would have no claim on a rebate. His discovery was unexpected and made after he offered, in good faith, a fair price. The customer left happy. In this case, for once, I am on the dealer’s side.
Scenarios like this happen in many businesses. The ethics comes down to the point of purposely cheating or not. I do not see this situation as cheating the customer. Buying used books, a dealer offers the customer $1.00 to $1.50 for a book which he might be able to sell for $8.00. Later when flipping through the book finds a $100 bill between the pages, probably placed in the book for safekeeping. Should the dealer caller the original owner to let them know of their find or should the dealer keep it as founders keepers. What if he didn’t find it, but the new customer instead who bought the book for $8.00 and found the $100 bill, should that person return the bill back to the book seller? Change the scenario now to the book buyer who when flipping through the book finds the bill and buys the book from the dealer for $8.00 not disclosing the find. How ethical is this? Ethical treatment is defind by how we were raised.
If she had paid for an appraisal she would have known what she had. She walked in off the streets and wanted the money right away. The dealer could have just as easily found the cents were not that great a deal and would she have returned the money? Unless the seller has paid for an appraisal there is no obligation by the dealer to give a free one to his detriment.
Where is Mrs. Smith supposed to get advice on a FAIR price for the coins if not from the dealer? eBay? Is there an independent appraiser in her town at a reasonable cost? This was a quick transaction on suppposedly common coins. The Dealer just flipped through and didn’t give much time for a FAIR evaluation. Uninformed or uneducated as she was, she took his offer too quick as well. The Dealer should have taken more time not just to protect his own interests but to demonstrate to Mrs. Smith that he cares about her business. Maybe she has a couple of Full Boxes home. It is a matter of Trust both ways. Trust is a fading in our downward spiraling, “gimme now”, dollar oriented society, “caveat emptor”. I’m into ancients anyhow. Talk about Cherry Picking! Thanks Susan, great page.
No, the dealer doesn’t owe the customer anything per se. But would I ever want to do business with him after seeing how he acts? No way.
It only took a quick look for the other dealer to realize how nice the coins were; the first dealer just wanted to play hardball, damn anyone else.
Sure, this customer was on uninformed mark, in effect. But the dealer didn’t have to pay the huckster carny operator and take advantage. Here’s a thought: spend a few minutes explaining your price offer and why you might feel it’s justified.
So, was the customer owed anything? No. Is this dealer ethical? Barely.
Oops, sorry for the misspelled words above…
I agree: Great page and thought provoking!
Why not get a little more information as to why she needed cash right now? This could have given him valuable insight on how to deal with the customer.
Also, since she needed cash now, why not offer her $135 and put it on consignment then take his portion (minus the $135) once the collection was sold? It didn’t take him long after the customer left to find a possible $1,000 – $2,000 coin.
I would think this would keep his good name in tact as well as bring in more business which could help keep him from going out of business. He said he was “he is considering closing the store”, nothing definitive there.
But his tell tell heart showed it’s true colors when his assistant brought morality to his attention and he brushed it off with “Did you notice how she thanked me when she walked out the door?”
This goes to show you that if you want to bad enough you can justify just about anything.
HI !
I am from Midland Canada and am retired and when I sell my coins and need the money I will be happy to get at least close to what I ask for. I think the woman got a fair deal because she got close to what she asked for.
GREAT COLUMN.
MIKE
Eddie is a COIN DEALER who has been in that business for all those years. He is supposed to be an expert! Under those circumstances, yes he is wrong. He should make every attempt at contacting Mrs. Smith and offer her more money for that album. She was acting in good faith and he should too.
He took advantage of her. Period. Maybe deals like this are the reason he is thinking about closing his store[I think that was a part of the intro duction]??
I’m a big believer in what goes
arounds – comes around . You
know ” Do unto others what you
would have them do unto you ”
or
just believe in some kind of karma
if you treat someone in an honest
& ethical way – if you do the
right thing, you will feel good
about yourself . What could be
more important in life .
You will also build trust &
confidence with the people in your
community & the people you deal with .
Very important . Whose to say
this “friend” who found the
coin wouldn’t brag to
others about the dealers “find ” Or
that the
lady would find out later how she
was jiped . In any case – I doubt
if those who found out about it
would be going to that dealer with
coins anytime soon .
And the reverse – if the story
got out about his good deed – people
would naturally be inclined to applaud
him and bring him their business.
It doesn’t surprise me that this
dealer is thinking of
packing it in. Sounds like he
has milked all the joy out of it .
Small businesses like that are
about relationships, aren’t they ?
Adam Smith, in the Wealth of Nations, pointed out that any transaction benefits both the seller and buyer by necessity. If either party is not happy with a transaction it will not occur.
Transactions, then, do not have losers, just winners. To argue over if transactions should only have winners who share the equality of the transaction is to argue against free trade.
Without large wins, owners would not be able to offset the daily loses. It is these “wins” that keep a business running. Just as the US Mint.
On one level, there is nothing wrong with the transaction. Both parties dealt honestly with each other and agreed upon a price.
On another level, the woman should have done her homework. An extra few minutes in a local bookstore or on the internet would have have informed her of the potential value of her collection. Should the dealer suffer for her lack of preparation?
On still another level, I think the dealer could have done better. Obviously the woman didn’t know what she had, and the dealer could have taken this opportunity to educate her a bit. Another possible explanation for her behavior is that we’re dealing with a stolen collection, which makes things much more complicated.
No I don’t think there was anything unethical about this transaction at all. The seller set the price and the dealer paid it. The buyer does not have a responseability to the seller to point out the value of a collection he or she is buying.
My advice to anyone selling their coins who is unsure of the value, is get them appraised by a qualified third party before going to the dealer to sell.
I’m surprised and dismayed at the lack of morals and ethics out there. Kudos to those of you who answered that he owes her. Was it legal? Yes. Was it ethical? Questionable. She was a REGULAR CUSTOMER! Hey, he knew her by name? He turns around immediately upon her leaving and asks his assistant to look at the coins and he discovers in a matter of moments the value is far beyond what she asked for. Call her up, offer to split the difference and see how she feels then. See how you feel! Finally, is the coin dealer morally bound? I think we all know the answer. And, I am a conservative! I love Adam Smith! No wonder he’s going out of business!
Comment #2 by Coinycom talks about “unjust enrichment”. This comment greatly concerned me. After talking with my lawyer friend, she said the law suit would fall apart because there was “consideration” given. One of the factors in determining “unjust enrichment” is asking if there was a “total failure of consideration.” Since they did negotiate and come to an agreement, she felt that unjust enrichment would not apply here.
She also commented that there was no demonstration of duress, undue influence, or miss representation of the facts or goods. The coins were presented “as is” (her words). Overall she felt that a lawsuit under these circumstances would have little chance (i.e. snowball’s chance in you-know-where) of even making it to trial.
I’m a newbie in the coin collecting game. I think I have found a reputable dealer and trust in what he says. After reading this, maybe I shouldn’t. Is that what you dealers want. Do you want every person who enters your establishment to question if not disbelieve everything you say. How cheaply did this coin dealer sell his honor. It was bought for 1,000 dollars. I guess It wasn’t worth that much anyway.
There’s a little blame for everyone here. The woman should have had her coins appraised before attempting to sell them. The dealer might should have offered more money. But honestly, the woman came in and named a price. It’s not the dealer’s fault that she was woefully uninformed about the value of her coins.
There is nothing immoral about profit taking. That is the basis of a very high standard of living. To try and attach moral feelings to basis of our economy is to deny that fact that profit taking pays for most of our salaries – often in even more gross forms then the one represented here.
Caveat Emptor to the seller as well. This is a lesson for all of us not to act in haste. If she had taken the offer to have the coins consigned as originally suggested she would have ended up with more money and the dealer would not have people thinking he did something wrong.
I see this as a “legal vs. moral” issue. Legally he did just what he had to do, but morally he owes the lady a (newly determined) fair price. The “do unto others” rule does indeed apply here. (FYI, I do some e-baying, and usually set a flat $15 for shipping a heavy telegraph key. When I get to the post office, and know the actual postage, I stick any excess in the package)
As someone who is new to coin collecting, and a paralegal, unfortunately, the transaction was completely legal.When I get coins, I thoroughly use any resources I can to find their values(usually internet).If using dealers, I get at least 2 opinions (even if only conversational)to determine if there’s a find. If I just handed them off to someone and got what I asked for (being far below the real value), then shame on me. Those great “finds” are what keep dealers in business. Hopefully the dealer would have been honest had Mrs. Smith asked for an estimate first. The dealer needs to earn a living so he can eat, but hopefully he can also sleep at night. Only he knows.
In my business, I have been in exactly the same situation.Legally, where I live, a verbal contract is as binding as a written. However, in each case (3), I contacted the other party and gave at least half of the windfall to them.
The result was a boom in business that persisted till I retired. As someone said “do unto others” etc. The extra business and the extra profits (not to mention the trust of most people) paid me back thousands of times over. I have no regrets whatsoever!
If the coin owner looked at the coins, seen the DD penny, and diverted her away from the value of the penny, I would say he took advantage of her. BUT, He gave her more than he wanted to, when he thought there was nothing significant in the set. He owes her nothing more.
I have been collecting coins, mostly small cents, for most of my 42 years. The majority of my experiences with dealers have not been very enjoyable. Since I do not deal much in the high MS-grades, it seems I do not get any respect from them. I almost feel more like a nuisance than anything. I am currently filling in the last handfull of holes in my collection from 1856 to present and buy the majority of my coins on the internet.
Now to relate this to the story. It does not mention how ms. Smith came about this collection, but if I were to go to a dealer in search of selling my coins, I would NOT go without a sound idea of what they were worth! I find it hard to believe that anyone who would take the time, effort and expense to collect coins would not go to the effort to find out what they were worth. How do you put together a high end collection like ms. Smith’s without knowing what you have?
Ms. Smith walked into Eddie’s shop with a preconceived idea of what she expected to receive for her collection. Eddie did the right thing by offering to sell it for her which would give him the time to come up with a fair asking price. She declined. Eddie then offered her what he “thought” was a fair price (WITHOUT LOOKING AT THEM), she refused it and made a counter offer which he agreed to and paid her. Both parties happy right? That sounds like the requirements of a good deal.
Now for the ethicial part of this. Just how much time is Eddie suppose to spend examining the collection before making an offer? You can’t expect him to look at and grade each and every coin that comes walking into his shop so he “knows” what they are worth. The coin dealer profession just doesn’t work that way. After 40 years in the business, I am sure Eddie had a very good idea of what the collection was worth and made his decision accordingly. As far as he was concerned he made a fair transaction and satisfied the customer. The problem is when he discovered the 1972 DD. In my opinion, especially since she was a known customer, the next time she came into the shop, he should inform her that he discovered a coin in her collection that was above and beyond expectations and compensate her. That amount could be anybody’s guess, but acknowledging the fact that he profited more from their transaction than expected would be appreciated and the possible word of mouth from there could help keep him in buiness.
I’m inserting myself again here, but it does seem worthwhile to acknowledge that the original story has some implausibilities to it. What strikes me as perhaps a useful insight might be to change the premise: instead of coins, how about an old car? “Gee lady, that Duesenberg is, like old! You’d be happy to just take this much.” Should we all condone this action if the lady just accepted the offer? And yes, she sure as hell should have done her homework beforehand.
Everyone says the woman set the price but that’s not the way I read it. She asked the dealer what he would pay and by responding he set the initial price. From that she just tried to negotiate more. And since they obviously knew each other in at least a business evironment, she was probably relying on his expertise to get a fair and reasonable price offer. I think the dealer was wrong for not takng a better look at the album before giving an initial price. Even though not illegal, I think it is un-ethical if he doesn’t contact her to make it right. Let the buyer beware (or in this case – seller) doesn’t apply here in my opinion.
Eddie made a good deal. Thats business.
woman was happy.
I don’t think Eddie the coin dealer did anything wrong. The man is in business to make money. In this day and age you can find all the information about any subject on the intenet you want, and it was Mrs. Smiths responsibility to do the research before she or anybody blindly sells something they know nothing or little about. Like I always say read the book !! All ways do more than one search on the internet for answers. Never take the advise of the first information you find. If I buy a coin and pay to much for it that is my fault, for not doing my homework. I say more power to Eddie, after all sounds like he paid more than he wanted to and didn’t even take that close of a look. I find a lot of my answers on about.com .
Had the dealer known of the bonanza prior to his offer and did not inform the lady realizing the fortune to be gained–it was unethical. However, a windfall is just that…remuneration realized as a result of good fortune, not prior knowledge.
The coin dealer basically is a crook…he knew that the coin was worth more and that in my mind is cheating a woman who in fact knew NOTHING on how much it was. That like going up to an elderly and saying I will give you x amount for that cheap table, when he knows it is worth thousands and she thinks it is junk…think about it!!! Would you just enjoy that happening to your mother???????????????? GROW UP!!AND GET HONEST….TROUBLE WITH THE WORLD TODAY!!!!! (Same as stealing from a store, or robbing a bank!!)
Dealers know what they are doing…I had one CHEAT me out of thousands when I was 19 and had a baby to support while my husband was in Viet Nam, and God knows I could have used it back then!!!!!!!!!!
On the surface I’d say, no, the dealer didn’t do anything wrong. I certainly wouldn’t trust this dealer myself if I were there to hear this transaction. The next time Mrs. Smith came into the shop, if I were the owner, I’d let her know she gave me a great deal and here’s a gift ($) as a thank you. I agree with one of the other comments, what goes around comes around!
If Eddie knew that the ‘72 penny was worth something before he paid Ms. Smith, then I think he should have at least given her $300. He probably shouldn’t have cheated her like that. It would be a totally dofferent story if he saw it after the purchase. A dealer has to make some kind of money one way or another.
In response to # 20. Hi Jim!
Studying the federal codes of regulations for commerce.
One of the conditions i believe have been met.
Deciet. I’m not an attorney, so i wouldn’t argue with one. But i did stay at a Holiday inn last nite!
I don’t think the dealer morally owes the lady anything. She got her asking price, and he, in ignorance, gave it to her. So far so good. But, if I were the dealer, I’d never be able to look at the woman again (apparently someone he knows well) after that without having guilt pangs. So here’s my optimum solution as the dealer. I sell the coins getting the maximium price, deduct taxes and watever I would have to pay, and the next time she comes in, I give her her half minus the $195. – When the difference is $50, no big deal. When the difference is potentially a couple of thousand dollars, it’s a big deal. The scenario indicates the woman really needed the money as did the dealer. I’d just hope that the word of mouth would send more business my way. I just know she’ll tell everyone she knows what I did. And I still get to pocket half, still getting a great deal out of it.
If any of you were in a coin shop and saw a coin mis-priced; off by say $200 – would you tell the dealer or buy the coin at a steal? Exactly.
Response to #39.
Hi Coinycom! Great comments.
I did not see any obvious decit in the transaction. What I did see was a relatively quick deal. In fact he offer to sell it on consignment, but she refused.
“Eddie” did not inspect the coins with a magnifying glass or loupe. His eyes are not the greatest and he uses one quite frequently. Therefore, I don’t think he would have noticed the ‘72 DDO with just his glasses.
Hi, If she really needed the money, how was she to pay for an appraisial? Also I have many friends who do not have access to the internet. His partner seemed to notice right away what nice coins they where, without even using a loop, he comments “It’s beautiful. All of them are blazing red. They mostly look MS-65 and I really don’t see anything below MS-63.” What? the first guy is that blind? I think he knew full well what he was doing, after all he did give her $60 more than what he first offered. Thats a nice jump in the price. Why’d he do it? Because he knew they where nice coins, isn’t that enough to warrent a closer look? If I was the dealer I would let the lady know and give her some consignment. I wouldn’t be able to live with myself otherwise. I’m one of those honest people who when I get more change back then I’m suppose to, I give it back. This usually freaks the cashier out and they thank me, People have turned and stared at me, some look at me like I’m a fool. But I don’t mind because I’m proud of being honest. I’m proud my parents loved me enough to raise me that way. I’m happy to think that this dealer is going out of business, he dosen’t deserve it!
P.s. It’s different if you get a deal cherry picking from a dealer, he’s suppose to know what he has. I deal in Anitiques and if a dealer is dumb enough to give me a deal, I take it.
# 42 Response to Jim. Hi again Jim.
I have re-read the sceanario about 3 or 4 times now.
Yes it was offerd to be taken on consignment.
Mz Smith said she needed the money, she couldn’t wait for the coins to sell. She had to have the money now.
I don’t know if she would have done better at a pawn shop. But i don’t think she would have done as bad, providing the pan shop knows their stuff.
That’s debatable.
When Mz Smith left the store she said to Eddie, you don’t know what this means to me. Meaning Mz Smith was despret for a quick sale. I think when Eddie sensed Mz Smith’s urgencey, he knew he had a live one on his hook. All he had to do was play the disinterested dealer. And wait. Mz Smith played into Eddies hands out of desperation. Eddie took full advantage. If he didn’t know what was in there, why did he offer to consign them. It would have either givin him more time to peruse them further, but he perused them before his final offer. When his assistant pinted out the finds. Eddie already seemed to know what was there, except for maybe the 72 DDO. On top of it all, his sarcassim at the end gives him away. He’s a so so dealer with a couldn’t care less about Mz Smith, or what troubles she was going through. To me that whole transaction was decietfull.
I sure would like to hear how Judge Judy would respond. Probably against Mz Smith. For carelessness.
coiny
As a lawyer, I’d say the key is Eddie’s first offer of $120 plus $15. Eddie is a dealer. Ms. Smith walked in and asked Eddie, a dealer in his coin store, in his role of dealer, what he would pay for the penny collection. EVERYONE KNOWS she was really asking him what her collection was worth (”what would you pay for this collection?”) – as well as whether he’d buy it from her. Eddie never answered the question about the collection value. Eddie completely changed the topic and offered a consignment contract to Ms. Smith without answering her question about the collection’s value. She refused the consignment contract and that side issue is gone.
Next, Eddie offered the $140, knowing Ms. Smith would misunderstand and think that was Eddie’s professional appraised value – because he never clarified what that amount represented, or told her that she might get more somewhere else. Eddie was a scumbag – he made no good faith attempt to answer Ms. Smith’s question about what the collection was worth, even though he is a dealer doing business in his own shop. He just made a very unethically low offer. He was again avoiding the answer about what the collection was actually worth, and skipped right to how little he would pay her. Eddie never told her he’d have to really look at the collection to determine what it was actually worth, so Ms. Smith reasonably assumed the $195 was his instant professional market appraisal.
Eddie had the expertise and responsibility to answer the question about the collection value and he never did so. He deceived Ms. Smith for his own benefit and there was no way she could know it. He should be disciplined at the very least. His modest means are irrelevant to his unethical behavior when acting as a dealer. If he really made an initial appraisal mistake, he should give Ms. Smith more money as a matter of “good faith and fair dealing” which is a legal requirement in most states. Otherwise, Eddie could be liable for fraud by breaking this implied good faith clause.
In the US, business cheating is illegal. It’s illegal when a dealer uses professional knowledge and knows the other person doesn’t have that knowledge. That’s cheating because the other person relies on your status as a professional coin dealer. You can deal but you can’t cheat.
Realistically, can you get him legally? Probably not. You should certainly file a complaint about him to every business and professional group you can find.
I think a more interesting question is whether the observer has any ethical responsibility to do anything.
to #20 – you lawyer’s opinion is wrong. Suggest she look at the professional responsibility and legal considerations I put out in #46. Legally, Eddie could pay triple punitive damages and have a fraud conviction. It’s for his deception as a professional dealer – tell the lawyer this is a tort action not a contract action. (I’m a CA lawyer)
I don’t see an issue with what the dealer did. If Ms. Smith is attempting to sell something she should know the basic value and have an idea of what she wants to get. Why should he owe her more money, when she got what she asked for?
If you walk through a garage sale and see a stack of 1952 baseball cards with a Mickey Mantle rookie in them for $10 would you tell the owner “hey you could make a lot more money on those cards, didn’t you know that one is worth $xxx.xx” No, you buy the cards. Both people win out, you get a great deal and the person sells the item for what they were asking.
Why do people always have to whine “this person is dishonest”, no he made an informed business transaction that benefited the store. I did not read anything about deceit where the dealer was attempting to devalue Ms. Smith’s coins by saying somthing like, “well, I don’t realy need anymore of these since they have been kind of hard to sell” and then offering a very low price to get her to think there is no value. He offered a fair price and then raised his price to meet her request. An offer is only that an offer, there was nothing stated that this was the current value of the coins. If you don’t like the offer don’t take it.
to #49 – the legal point you are missing is that this happened in the dealer’s store. People come to him because he is a dealer and he has a professional responsibility under the business code.
There are LAWS!!!!!!!!!!!!!!!
This is in reference to #46 Connie comments.
I did not read anything about how she asked him what the collection was worth. She asked what he would pay. There is a big difference there between retail, wholesale, greysheet and even dealer to dealer prices etc. So when I see “how much will you pay” I assume the question is how much will you give me for this item, not how much will you sell this for in your store or what can I get for this online etc. The way the article was written there was no intended malice when buying the collection, he was attempting to get a good deal and make a profit for his store. There is nothing that says Ms. Smith has to sell once an offer is made. She could have just as well taken her coins down to a pawn shop and probably gotten less than she did at the coin shop. People need to take some responsibilities for their actions and make an informed decision or live with the possible consequences.
to #50 – that is too formalistic of an analysis. The Courts impose a “reasonable person standard” of interpretation. Ms. Smith’s comments would be interpreted in the light most favorable to her, in a reasonable common parlance interpretation – not formal sentence structure – and the law protects the uninformed against the informed. The dealer is held to the standard of the professional – that’s why he has a license for business from the state.
Eddie better hope that the observer doesn’t follow up.
I suppose that means the requirement for unjust enrichment has been met?
In response to # 48. Two regular people making deals in buying and selling items is a private transaction. We could say they are on equal footing or even ground. What happens there is different than what happens when a professional deals with a regular person. There is an unequal footing with the advantage going to the pro. Like a pro basketball player taking on the kids in the school yard. Theres no contest.
Of course not!
Of course not! Two adult parties involved; both happy.
to #52: Your analysis is completely right, but the requirement for “unjust enrichment” wasn’t met. Legal analysis is like going into a big library – there are lots of approaches to a single topic. “Unjust enrichment” requires specific things, but it’s just one little topic for dealing with unfair commercial transactions including informal oral buying and selling contracts. You correctly point out that the issue here is all about the fairness of the coin dealer having more knowledge and taking advantage of a regular person. But there are lots of ways the law will stop this – not just the specific set of elements for something called “unjust enrichment.” There are a lot of legal tests that won’t stop Eddie – see #2 which is good but didn’t consider other ways to get to the right result. Follow your gut instincts about what is right and you’ll find the legal principle.
The thing here is that Eddie is a dealer; Ms. Smith comes to his store because he is a dealer to ask him about selling her penny collection. It’s not a garage sale – she went to a dealer who gets a business license from the government. He’s special – he’s a professional coin dealer. It’s all about who he is and where he is (in his store acting as a dealer). Ms. Smith went to a dealer and he took advantage of her lack of knowledge. He was sneaky with words. That’s not OK.
This isn’t about the words of the contract or conversation, and it’s not about who needs money. You don’t need duress, undue influence or anything else. It’s all about the fact that Eddie was a dealer, acting like a dealer with somebody who came to him because he was a dealer. Eddie failed to be a fair dealer (pun intended). That’s why he could get caught and be in deep trouble.
Some people wrote that Ms. Smith should have found out how much her collection was worth before going to Eddie. No – she did go to a dealer to find out what it was worth – Eddie. He just never told her, so he could take advantage of her. Legal liability attaches because he did not stand up to the ethics of the profession when a customer came to him as a dealer. She asked Eddie about the value clearly enough – it doesn’t have to be a perfectly worded question – and Eddie hedged enough to violate legal principles. The legal liability is based on Eddie’s “breach of implied good faith and fair dealing” very specifically BECAUSE Eddie was a professional coin dealer acting in the capacity of a coin dealer and violating the ethics of the licensed business / profession of coin dealership. Eddie knew he was taking advantage of a customer who didn’t know any better.
The law is meant to protect fairness. It is not meant to be rigid and manipulated by people who think they understand how to get around the law technically with what words they do or don’t say. There are ways to legally stop unethical behavior – you just have to catch the guy and be willing to take legal action, even in a small claims court. And to file complaints!!!!
If Ms. Smith walked in and said, “I’ll sell this to you for $195″ then fine, that’s really what she meant to do. Or if she had a garage sale and priced it $195, then fine. That’s not what happened and nobody should pretend it did. Eddie let Ms. Smith think his professional estimate of the value of the collection was in the $100 – $200 range, and it wasn’t.
Legal analysis is very fact-driven and specific to a particular situation. I’m only addressing the facts in this hypothetical situation – not a garage sale or anything else.
Response to Connie (#46, 47, 49, 51, etc.)
Thank you for taking the time to provide your legal expertise for free (WOW!!)
I truly do not think “Eddie” saw the ’72 DDO until after the deal was closed when the assistant spotted it later. You can buy a collection of pennies in a similar state of condition for about $300 to $400. I do not think the offers of $135 to $195 were unreasonable.
The issue in my mind is that the “Big Money” coin was not discovered until after the deal was closed and after “Ms. Smith” left the store.
Connie, my question is “Assuming Eddie did not know at the time of the conversation he had with Ms. Smith, that the set contained a $1,000 to $2,000 coin (i.e. Eddie’s professional opinion was that it was a normal set of Gem BU and proof Lincolns), does he legally owe her any more money?” In my opinion, she really did not want to wait for Eddie to do a closer inspection of the coins.
Your thoughts?
to #56
Hi Jim! OK, Ms. Smith comes into the store. Eddie knows her personally because he says good morning by name. We assume Eddie saw the blazing red collection of MS63-67, and he didn’t look for anything special in the collection, and he didn’t notice anything – then he didn’t deceive or try to get by with anything. It was “arms length dealing” and each person agreed to the exchange and walked away happy. Then we’re with #54 – freedom to contract. As long as Eddie had a good intention and didn’t try to take advantage, then there is no problem. Eddie doesn’t have to be perfect – just not deceptive. “Assuming Eddie did not know . . .” then no problem, and certainly no kind of legal obligation. It becomes purely a matter of choice for Eddie in deciding if he wants to do anything.
The law wouldn’t want to punish Eddie if he didn’t do anything unethical.
Perhaps the interesting thing is how this all works – the differences in truth and perception v. legal proof, and personal ethical choices. However – the law doesn’t tell you how to make your ethical choices as long as you’re not trying to deceive anybody and you’re not doing anything illegal at the time the contract is negotiated and executed – from the time Ms. Smith walked into the store until she walked out.
Under the #56 hypothetical, there is no legal problem then for Eddie, and certainly no legal obligation to give more money to Ms. Smith.
Only Eddie will ever know –
Wrong use of legal terminology. As i tried to put this hypo into perspective. I was thinking law suit. The incorrect useage of the term unjust enrichment, would be a term i would think would be usd in small claims court.
On the other hand, not knowing all the legal ramifications Eddie could face. I didn’t even give thought to a possible fraud conviction. As i didn’t think it would go that far. Just a claim for his enrichment. Like if Mz Smith left her pocket book in Eddies store. Is he only moraly obligated to return it if he discovers 2,000 dollars in it, when he is looking for indentification to see who owns it? Then see’s the 2 grand and decides not to return the money, or the pocket book so there is no proof tying him to it. He might get away with that. But if there is proof of him doing that what then would the penalties be? The same a not telling Mz Smith her coins are worth just as much. I don’t mean to confuse anyone. To me anyway. Both scenarios seem simaler. And illegal. From my laymans point of view.
This can get more complicated by the minute!
To Connie:
Thank you for the clarification. This make much more sense.
I don’t think it is the same as someone accidentally leaving their wallet in the store.
Hi Jim!
Probably not. The point i was trying to make is all about honesty and fair play.
To Connie!
Thank you very much for your intereptations of this and making it more clear, and understandable.
I hope in the future. There is less of this.
The whole thread was “very” interesting.
I enjoyed it very much.
Ethically, the coin dealer is obligated to call Mrs. Smith and tell her the truth: one of the coins is rare, and he owes her more money. He has the knowledge, she does not, and to do otherwise is to take advantage of her. Legally, of course, he is under no such obligation. It’s all about what kind of a person he is, how he wants to be thought of or remembered by those who know him, and whether he has a conscience.
Well. Let’s really look at the facts (as outlined). A woman walks into a store and tells the dealer how much she wants for her item. When that price comes in a bit low she counters by asking more. She gets the higher price as well. The dealer was NOT asked to appraise this item nor did he refuse her offers even though they went up. In my opinion she dictated, right from the start, the outcome of this transaction. Perhaps she did have the items appraised (by another dealer) and is how she came about her selling price. If this is the case than the ethical question should fall on the previous dealer that may have been low balling her to acquire the set knowing it’s true value.
In short… nothing wrong here.
~Cliff~
I’m just amazed at how many people are troubled by… capitalism itself. Consider a Wall Street firms that sells “short” a small company stock, driving the price down to the point were it can be bought out by a larger company that the firm already owns; the so-called “dream killers.” Is this ethical? Or just the workings of the market?
As to the coin dealer, he employees at least himself and one other worker. He is on hard times, he might be going out of business. A possible “ethical” answer is that deals such as the one described keep him in business, and at least 2 people employed. Would it have been “ethical” not to take the deal? I point this out to say, “ethics” are a slippery slope with no clear answers.
And finally, the dealer offered her more than she probably would have gotten for the collection on eBay. So from a legal perspective, I see no issues. In order to have a lawsuit, there has to not only be cause, but damages. There is no evidence, to me, that she has any damages.
This is what I would do, simply because this is me. I found out I purchased a collection worth perhaps 10 to 15+ times what I paid this lady. I had nothing in monetary gain related to her collection prior to her walking in and stating her situation. It’s apparent she is experiencing a financial hardship, however so am I. What is important to me long term is being able to keep my business afloat. Public perception of me as an honest and ethical business person commands a price far beyond the mere $195 I gave her. I know nothing about this lady and more importantly I know nothing about who she might know throughout the community. I would call her and ask her to come back to the store and would explain to her that upon further examination I came across coins that would command a much higher value than what I paid her. Since there is a reasonable chance of that one coin, if graded real high, would bring well over $1000 and perhaps $2000. I would explain to her that honesty has always been the hallmark of my business and would offer her $1000 for her collection. She would probable be ecstatic, leave the store and tell everybody she met in the future about that honest coin dealer. I have just purchased word of mouth advertising with a future value that could very well far exceed what we finally settled for. When the coin grades out plus the others in the set I will have recouped my cost of the deal. But folks, the PROFIT from that one simple transaction could be immeasurable. Sometimes “Value” isn’t always related to “Price”
When the lady walked into the coin store and was greeted by Eddie, it appears that she was obliviously a known customer and therefore it is safe to assume that she must have had sime idea as to the value of her coins and she had a price in mind when she made Eddie A counter offer and he took it—no harm was done here…both were happy with the deal.
“He has been in the current location for over 40 years.” OK, most people don’t open a shop until they are in their mid-20’s at the earliest, so Eddie is probably 65+ years old… How many men that age are able to see minor variations and close-up details without a loop or aids (other than glasses). The article never says anything about him looking at them with any device until she had accepted the offer, finalized the sale (and thanking him), left the store, only inspecting it closely after his assistant “looped” the coins. If this sentiment some of you are expressing should be made law, then every pawn shop in the world should be subject to lawsuits for every transactionthey make! Pawnshops pay a low percentage of the value of an item, and show an asking price at or above the “true” value.
I feel that Eddie is justified in the deal. How many of us laugh at the un-knowing (ignorant, in its true usage) at, perhaps, a garage sale, asking $125 for their grandfathers worn (VG) 1921 Morgan? But, if that was a nice AU 1881-CC Morgan and they were asking $125, how many of you would scoop it right up?!? Is there one of you who has NOT “taken advantage of” the unknowing and gotten a helacious deal, whether in person or on-line (ebay, for example)? Did you give THAT person extra money? I doubt it….
Scenarios like this is why coin dealers get reputations, and that they are slowly going out of business. I have been a part of a dealer “trying” this to me. Needless to say, I just walked out, but many may not have. That is why E-bay, and many e-sellers and buyers are putting the dealers out of business.
We need a way / method to control this!!!!!
If the owner and the assistant would have gone behind “closed doors” to inspect this collection, I would have never known about the extraordinary find. I would have left the store thinking “Wow! What a great guy to help that woman out.” I wonder how often scenarios like this play out behind closed doors in “really trustworthy dealers?”
After reading all the comments, the best advice that I would give to collectors is to “read the book”, do your research and determine the value yourself before you sell. By doing this, you will learn a lot about the coins you are collecting. If you are not an avid coin collector, my advice is this: Avoid selling in a hurry. Pay for an appraisal or two before you decide to sell the coins. Tell the dealer/appraiser that it is for insurance purposes (so they don’t lowball you if they “smell” a sale).
I really enjoyed the discussion and comments from this submission. I hope somebody else will come up with a good dealer ethics topic so we can do this again.
Thank you.
Jim Bucki
The bottom line for me would be – If I were Jim Bucki, I would not be
selling my stuff to that particular coin dealer depending upon
whether or not he called the lady back and offered her more money or
offered to return the set so she could get the appropriate amount of
money at some other coin shop. She stated she needed the money.
Apparently she has been in and out of his store enough that he knew
her by name. She was not a complete stranger. If that coin dealer
knew me by name and still did not disclose what he discovered about
my sale, what good does it do to establish a relationship with an
expert. Best case scenario would be that he called her back; she was
willing to take less than the newly discovered value and they both
win a little.
-Linda
It’s Poco Zocko.
from The Error Coine Shop.
http://www.footmousetouchpad.com/error_coin_shop.html
Ok I go to a Dealer and ask for some cheep rolls of Cents. He brings out a Role of 1059 D Lincoln Cent. I look at the first 5 and 3 Are error Coins
Do I need to point this out to him after he gave me the $1.50 Price?
I believe that if a Seller Or Buyer is doing business. Both Party’s Need to know what they are doing. If some one dos not have the common sense to ask to see a price book. ?
What would Jesus Do?
He would Ask to see the Book Right. Ya! I won’t Rip anyone off. Now I offer 50% of catalog at first Always even to the Dealers to barge . I need to resale the item ( or Save) and buying at Book would not allow me to turn the item.
Poco Zocko
I am not a Hater I am A Lover
I think it was unethical, he used his knowledge and ripped her off.
Before he even saw the double die mark, it sounded by the convo, they knew the coins would be worth a lot more then he paid her.
Would it be ethical if a blind man paid for something with a $50, the cashier thought it was $50 right off but gave the man change for a $5 on purpose. Then noticed it was really $100?
There are reasons they say knowledge is power. I agree if the dealer saw the obvious value then low-balled the offer that was teetering on fraud. But if we are supposed to stay in business then we need to make a profit. How many times did this guy in 40 years pay book value to help another or actually lost when the MS-65 beauty in the 2×2 turns out to be cleaned. A fortunate buy once is not the same as if he was selling 1893 plain and O morgans, for thousands to unknowing customers with the saying all 1893 Morgans are the same age.
This story is typical of coin dealers and people who don’t know their collection very well. However, It is the “professional” who is supposed to be ethical and offer the lady more money. The story only confirms coin dealers ethical behavior.
#73, Kerry, you’re definitive and to the point! I agree… the deal was legal, done by a lazy unprofessional and unethical person!
No more comments…HAPPY ENDING.. The Lady well satisfied of the Money She asked for..The buyer got Lucky to Find One for The big Bucks.. 1972 Double Die.. Knowledge is the name of a Game…Hobby of a King…Read the Book before you buy or sell…..United States Coin Guide ….red/blue book.
The dealer wasnt in the wrong He payed what the lady wanted with out closely examining the album
Wow!! . . . . I always enjoy reading Susan’s “coin dealer ethics” columns, but this one in particular was really great!
Many good points were made above, with some very interesting observations, too.
All in all, though, IMHO this was a good deal for BOTH parties. The woman should have done her homework, but she was happy to get the amount of money she wanted. The dealer needed to make money to stay in business, but he should have spent a bit more time in a closer examination of her coins.
All best,
Joe