Sunday, March 20, 2016

Coin Collectors Beware!

Coin scams abound through online sales -
and even "reputable" coin, silver, and gold dealers aren't above over-pricing.

E-bay
I would buy coins on E-bay, but I don't. The online auction site is easily the largest coin marketplace on the planet; it spans the entire globe. There are thousands of perfectly honest coin dealers on E-bay. They are fast to ship, quick to respond, and easy to work with should a problem arise.

However, E-bay is an ocean that refuses no river, and anyone can set up shop as a coin dealer.


Imagine this:

|You purchase a slightly dull-looking Morgan silver dollar for the bargain price of $10. You're flying high for a few days as the item ships, you've gotten one heck of a deal. The coin arrives in a pre-paid postage box, the kind you can pick up at any post office, and you tear it open, giddy to see your latest acquisition.

You tip the box up, the coin slips from beneath the packing paper, and hits your hand with a muffled thud. It isn't the prettiest example in your collection, but it is in decent shape, probably a low-end AU, and a steal at $10. You tuck it away in your collection and move on to the next acquisition.

A couple months later you hear from a collecting blog that sometimes scammers pass off "silver" coins, that are actually made of steel, at discount rates. Feeling silly, but wanting to be a conscientious consumer, you do as the blog instructs and pluck a magnet from the front of the fridge to test your collection.

"My coins aren't steel," you tell yourself. "They won't stick to the magnet. I only buy from a handful of E-bay dealers and they all have 99% satisfaction ratings or higher!"

You sit down at a table with your collection to begin the test. The first Morgan doesn't stick, it is silver. But, you can tell from the writing on the 2x2 cardboard flip that it is one you purchased at the local coin show when you first started collecting. The next coin also passes the test and it is one you clearly remember buying online.

"No sweat," you think. "This will be over in a couple minutes and I will feel foolish for worrying."

You smile slightly at your paranoia and pat yourself on the back for being a responsible collector. It isn't until your hear the click of the next Morgan pulling the magnet to it, that your grin fades. You hold the coin facedown by your fingertips and look in disbelief as the little refrigerator magnet hangs firmly in place.| 

This is the kind of thing that can happen when you buy a coin sight unseen (without being able to examine it in person). Truthfully, this kind of thing can happen even if you are physically present to examine a coin if you don't bother to check.

It is the fear of finding one of my coins worthless that keeps me from buying through an online medium where anyone can set up shop. Well, that and the claim that every single coin available for purchase is rare. Sometimes I wonder if I am missing great deals. I saw a lot of about $700 in silver coins get sold on Facebook for $550 this week. Were they actually silver? Hopefully!

Facebook
I hadn't realized Facebook auctions were a thing. People are taking to the most widely used social media platform the world has ever known to purchase coins for prices that range up into the thousands. Perhaps there are great deals to be had. But again, as my with my fears of E-bay shopping, the "what ifs" in my mind won't quiet themselves. What if the silver lot I mentioned above was fake? Or even a mix of fake and genuine?

Let's assume all coins in the lot were fake and someone lost $550 to a scammer. What happens next? They send a chat to the seller, but the seller doesn't respond. So, they go to post on the seller's Facebook page, but find only friends can post there. They go to comment on the auction post, but it has been deleted. They post in the auction group itself, and see little response beyond, "That sucks," and "You should call the cops."

Fed up they contact Facebook customer service to find a resolution. Customer service tells them there is no account that matches the one who sold them the coins. It has been deleted. (Probably as soon as the seller saw the chat.) Our frustrated buyer contacts the local PD. They ask if the buyer kept the box the coins were shipped in. No. Who keeps old postal boxes? There is not much the police can do, but they will contact Facebook in writing and wait for the company's response.

You get the idea. Even if our scammed buyer could find a resolution, they will not get their money back. Facebook isn't responsible for what is sold on their site.

A Piece of Advice
Be smart when buying coins. Use a reputable dealer. If you absolutely have to buy coins in an online auction, consider a site like Great Collections.

However, even one of the largest coin dealers in the U.S., if not the largest, isn't above taking advantage of unwary consumers.

Littleton Coin Company
I've blogged about them before. I began collecting because my mother signed up for one of their coins-by-mail programs. LCC ships you a selection of coins (you can specify what your interests are), you examine them and choose which you will keep and pay for (if any), and ship the rest back to LCC. Not a bad system, right?

Well, sort of. Let's say you have decided to collect Buffalo Nickels. In your first shipment you receive an assortment of dates. You're not looking for anything fancy in your collection, just average circulated coins, and that is what LCC has sent you. You choose to purchase two of the nickels sent to you, a 1937-P and a 1935-P. Any seasoned collector will tell you, these coins should cost between $0.75-$1.00 each. When you buy from Littleton, they will cost you $5.25 each.

That's the only problem I have with LCC. They charge a hefty premium on average coins and unwary buyers end up paying far more than they need to. For instance, as the Buffalo Nickel collector, you could have purchased an entire roll of buffalos from MintProducts.com for $27.99.

Parting Words
Shop around and use your head. When in doubt, ask. My contact info is available on the bar near the top of this screen. Tweet me, find my page on Facebook, shoot me an email, send a carrier pigeon (though I don't know how it would find me), or comment below. Or, I am a big fan of the Coin Collecting Help group on Facebook. It has knowledgeable members who like to help out all collectors, whether beginners or numismatic veterans.

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