Rare Coin Scams To Watch Out For

Rare coin frauds tend to work because of human nature. People end up being victims because they willingly put themselves into bad situations due to their desire and greed. Con artists and fraud planners know this is a common trait in some collectors and take advantage of it. The con artists that then make the news are the ones who pull off a scam that defies common sense. However, it’s clear in many cases that none of the victims are forced into the situation; they all willingly cooperate. To avoid such scams, sometimes the best prevention in rare coin collecting is to learn from the example and mistakes of others.

The Helpful Dealer

In one case a New York mother and daughter duo were both duped into a coin theft scam. A rare coin dealer convinced the two of them that investing in rare gold coins was worth their time. With continuous encouragement, not to mention helping them make the purchases, the dealer convinced the pair to liquidate all their savings and convert the money to more rare gold coins. At the same time, because the dealer was such a close acquaintance of the two, she also ended up gaining entry to their home where the coins where kept. Then, with the two gone one day, the dealer helped herself to the rare coins and started selling them herself. It was only when robbed and realizing the true situation that the mother and daughter finally involved the police. Unfortunately, while a handful of the coins where recovered, most had already been sold and disappeared.

Lesson Learned – Never mix friendships with business. Keep your rare coin contacts separate from your personal life and don’t trust anyone with your collection.

The Phone Deal

An age-old scam involves high-pressure sales via phone calls. Customers are lured into a phone number conversation either through commercials, advertisements or fliers. These usually get broadcasted or distributed during times when rare coins are all the rage.

Unfortunately, when the consumer calls the phone number, that’s when the trouble begins. First off, the scammer will go through a series of scripts pushing a hard-pressure sale. This will include everything and anything that can be said to make the consumer agree to buy the coin advertised. It often includes lying and fabricating all sorts of statements to make a coin more desirable. If successful, the scammer will unload a coin that isn’t worth half what was said over the phone. Worse, the consumer will be given a name and a business contact address that is entirely fake. When he finds out the truth, the scammer will be long gone with the hard cash via a credit card billing.

Lesson Learned – Buy rare coins in person and avoid phone or TV sales altogether. Good coins will be professionally graded so the value and rarity will be established by a certified third party, avoiding any confusion about what is being bought.

Buying Through Online Auctions

Many would think that rare coins bought online would seem obvious with the risks involved. However, people still get themselves into scams all the time. A fraud typically involves advertising a coin that has a well-known demand. Creating the online auction ad is simple; a photograph can be stolen from multiple sites on the Internet. As long as the owner of the photograph isn’t aware, it can be used for months on end before being discovered as a copyright infringement. Further, the image owner has to proactively chase the issue legally. Authorities won’t regulate the misuse of someone else’s copyright on their own.

With the ad created, all sorts of information will be provided about how the coin is the only one, it’s hard to find, and it’s fully certified as authentic. To make the ad even more interesting, the coin will often be listed for a price noticeably less than what the true rare coin would be worth on the open market. That often gets the attention of even experienced collectors hoping to grab a deal.

Once the auction is won and the coin is paid for, the scam is complete. Whether a coin is sent or not, the scammer already has the cash paid and has moved onto the next scam victim. If a victim does receive a coin, it’s often a similar looking fake that becomes very obvious when actually examined in person.

Lesson Learned – If a buyer absolutely must buy online from an auction, only do so through a system with clear ratings and feedback records of sellers. Further, every purchase should be made with a credit card and not a bank account. This allows the buyer to at least nullify a sale if it turns out to be scam, stopping the scammer from actually getting away with the money spent.

Watch Out for Coin-Related Investment Tools

In 2005 traditional investors who favored mutual funds and public stocks found themselves ensnared in a fund that supposedly invested client monies into rare coins. Like a mutual fund, the fund manager would purchase rare coins via his expertise using the fund deposits. As the coins where bought and sold, the clients would benefit from their fund shares rising in value based on the portfolio. This followed the same principles as a regular market mutual fund, so all seemed on the up and up.

Unfortunately, the rare coin fund scam started to unwind when two coins went missing. That in turn led to questions and then investigations. When the lid finally blew off the scam up to $12 million of investors’ money had gone missing. The fund manager, fortunately, was caught and convicted, but the investors never saw their lost money come back.

Lesson Learned – Avoid any kind of leveraged or proxy type coin buying when it comes to rare coins. If a rare coin isn’t actually produced, steer away from the investment opportunity.

In Summary

Rare coin scams will continue to be invented as long as there is a demand for these collectibles. The attraction of separating people from their money is an age-old problem, and modern rare coin collecting is no exception to this crime. However, collectors can easily inform themselves to how these potential problems appear and how to avoid them. With Rare Coins, collectors can educate themselves on all aspects of rare coin collecting, including the darker side of the hobby. Much of the information provided is free and made available to help people collect rare coins safely. The more collectors who are able to enjoy numismatic collecting, the more the investment and hobby will grow. That benefits everyone involved. That said, collectors need to protect themselves, which means getting educated as much as possible to minimize risk.

Rare Coin Scams To Watch Out For
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