Just how far does a dealer's implied warranty of authenticity go?
IGWT
Posts: 4,975 ✭
A dealer warrants the authenticity of coins that he sells; and, as far as I know, that warranty covers even counterfeit coins in major TPG slabs. But does the implied warranty extend to the authenticity of slabs in addition to the coins themselves? Shouldn't it? After all, collectors pay a premium for coins in holders, and the authenticity of the slab is part of the deal.
There's generally no recourse against a dealer so long as a slabbed coin is authentic, and a collector has to look to the TPG to rectify a case of overgrading. But what happens, say, if a dealer sells an authentic coin in a counterfeit slab with an MS-66 tag when the coin grades no better than 64? The TPG isn't responsible in this situation. Is the dealer? Or is the collector left holding the bag?
There's generally no recourse against a dealer so long as a slabbed coin is authentic, and a collector has to look to the TPG to rectify a case of overgrading. But what happens, say, if a dealer sells an authentic coin in a counterfeit slab with an MS-66 tag when the coin grades no better than 64? The TPG isn't responsible in this situation. Is the dealer? Or is the collector left holding the bag?
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"I am sorry you are unhappy with the care you recieved, is their anything I can do for you right now, how about some high speed lead therapy?" - A qoute from my wife's nursing forum
"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them." – Thomas Jefferson
<< <i>But what happens, say, if a dealer sells an authentic coin in a counterfeit slab with an MS-66 tag when the coin grades no better than 64? The TPG isn't responsible in this situation. Is the dealer? Or is the collector left holding the bag? >>
I don't know, but for something else to add into the mix (from another thread)...
<< <i> don't think they thought the Chinese were as close as they are. I know they have travelled to China to investigate the problem. But as recently as Jan. they were saying the Chinese are a ways off from getting the textures right, and the hidden security meassures were working. >>
Supposing that there *are* hidden security measures incorporated in the slabs- should a dealer really be held responsible for being able to detect something that, being "hidden", has features unknown to the general collecting community?
First, it's a fact that the consensus among dealers is that no such warranty of authenticity applies to a counterfeit coin that is legitimately slabbed. While I find this fact disturbing, I believe that the ANA's official position agrees with the consensus.
On the other hand, I believe a dealer does have a responsibility to guaranty the authenticity of a slab. That's because, unlike the situation with a fake coin in a slab, nobody else can be held accountable.
Again, I agree that things are awfully twisted if a professional numismatist can be held responsible for a fake piece of plastic but not for a fake coin, but that's the world we live in.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Why? Are all of the big time dealers experts on authenticating slabs?
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I scoff at the dealers' consensus. Edited to add: [scoff][/scoff].
The dealer can go back and find out where they got it from afterwards.
I would be interested in hearing what the "dealers" have to say (if they are not too busy dealing
greg
www.brunkauctions.com
<< <i>just to add another layer of confusion to the discussion, what if said counterfeit slab containing counterfeit coin somehow received a CAC sticker.....now who's liable?
greg >>
It is my opinion that the CAC sticker adds nothing to the issue. The CAC is not guaranteeing authenticity of either.
<< <i>I doubt you'll find a big time dealer with a counterfeit slab in his case... >>
Today that is true. How about in a year? Five years? How about a real coin in a fake slab at a higher grade? This current blanket of security of buying from major dealers may be temporary as fakes get better, and distribution gets better. Nothing I have seen gives me that warm fuzzy of being safe from the tidal wave of fakes that is likely coming. The Chinese have no guilt over doing the deed, no real penalties in their land, and there is potentially big money in the endeavor.
As to the original point, I believe most dealers would want to know and make good. However, most buyers won't ever find out. If the fake is good enough to fool the dealer, what chance does a casual collector have?
Grading by anyone is subjective, so buy the coins you like irregardless of the grade on the slab.
What's the difference between that and an obviously overgraded coin?
Grading by anyone is subjective, so buy the coins you like irregardless of the grade on the slab.
Fine, but how well can you authenticate a high quality counterfeit coin that has been counterfeit slabbed?
TPG's only offer opinions on grading and authenticity. They do not establish a "fundamental law of numismatics." In other words...they ain't Newton and they ain't defining gravity.
The basic question to answer is with respect to what the consumer is buying. Is it the coin? Is it the slab? Sure, some collectors will pay a premium for the comfort of an "expert" opinion (i.e. slabbing) or perhaps even an expert opinion of the expert opinion (i.e. stickering), but in the end, it is the commodity of interest or what are they buying that really matters. Is it the coin or the holder?
With the collecting niche of "classic slabs" bringing premiums because of the holder, then the authenticity of the plastic becomes a front line issue. How many people would like to pay a dealer $1000 for an NGC black slab with a real 1881-S MS-65 dollar only to realize that the plastic is fresh from a counterfeiter's mold? Sure, the hand count is mighty low. Sure the coin may be authentic and graded properly, but the value is in the surrounding blanket of plastic.
Is the dealer accountable for the authenticity of the coin? Well, it's a mute point because the coin is real. Is the dealer accountable for the authenticity of the holder? Sure, because the dealer represented and sold the commodity as authentic. Is the TPG accountable? How could they be accountable for the fraudulent holder as they were not involved in its production, promotion, valuation, or sale?
Lane
See http://www.doubledimes.com for a free online reference for US twenty-cent pieces
It amazes me how folks seem to think that the rules in the numismatic marketplace are somehow different from the rules of the real world.
<< <i>just to add another layer of confusion to the discussion, what if said counterfeit slab containing counterfeit coin somehow received a CAC sticker.....now who's liable?
greg >>
Huh?
My guess is if it got to this level, then only you are thinking its counterfeit.
The name is LEE!
<< <i>Is the dealer accountable for the authenticity of the holder? Sure, because the dealer represented and sold the commodity as authentic. >>
Let's say the dealer *is* responsible. Suppose that the TPGs incorporate hidden security features into their slabs (it has been posted previously that this is so). As these features are presumably known only to the TPGs, dealers are unable to use them to identify fake slabs. Now, assume you're a dealer, and you know that you will be held responsible for the authenticity of the slabs you sell. You know there are fake slabs out there, some of which are very convincing, and you also know that there are methods to distinguish fake slabs from real ones that you do not have access to.
Now- what's the benefit of buying a slabbed coin over a raw one?
<< <i>Is the TPG accountable? How could they be accountable for the fraudulent holder as they were not involved in its production, promotion, valuation, or sale? >>
They may not be directly accountable, but their business will certainly suffer if there is a loss of confidence in slabs due to the market's perception that slabs cannot be relied upon to be legitimate without taking extraordinary measures to confirm their authenticity.
At least, that's what I think...
<< <i>In the real world, a merchant who sells fake goods has to make good on the deal, even if someone upstream caused the problem. If you bought a box of sugar that turned out to be a container of salt, how would you respond if the grocer told you to take your complaint to the the company that packaged the salt or mislabeled the box? If you bought a piece of jewelry that turned out to be glass instead of diamond, how would you respond if your local jeweler told you to take your complaint to his wholesaler? Is that okeydokey? Of course not, and for good reason. >>
To take your argument a step further, if the grocery store did not take back the sugar/salt, you would not shop there again and tell everyone you knew about the incident. If the jeweler did not take back the diamond, you would do the same and likely sue the business (and win). The coin dealer who innocently sells a counterfeit coin/slab to a retail customer and does not back it up would face the same likely consequences, and it would be very bad for business for him/her not to back it up. I am not sure that the rules are any different.
I believe that the rules are the same. But, for some reason, many people (both collectors and dealers) think that different rules apply in the context of the numismatic market. See MrEureka's earlier post in this thread as well as a couple of the other comments.
their advise is worth it
<< <i>I doubt you'll find a big time dealer with a counterfeit slab in his case... >>
I recall a while back Heritage had a fake rattler slab up for auction.
On the other hand, I believe a dealer does have a responsibility to guaranty the authenticity of a slab. That's because, unlike the situation with a fake coin in a slab, nobody else can be held accountable.
Again, I agree that things are awfully twisted if a professional numismatist can be held responsible for a fake piece of plastic but not for a fake coin, but that's the world we live in. "
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Most civil-court judges would find that "the consensus is flawed."
Most reputable dealers would simply make good on the deal and
attempt to find their own recourse against the person who vended
the item to them.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
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MOST auctioneers have policies that state they have virtually ZERO
liability, or that their liability is limited to all or some portion of the
value of the lot offered.
BUT, courts routinely find that "any unfair-exclusion" of liability is against
public policy. Thus, defenses against fraud-allegations, based solely upon
"known company policies," can often/usually be defeated.
ALL large auction venues carry "auctioneer's insurance." Some policies
exclude coverage for fraud claims, some do not. Most cover "mistake,"
which is always an alternative pleading in artfully drafted complaints.
Because auctioneers - big coin-dealers - are assumed to be the greater
bearers of sophistication in consumer transactions, damaged plaintiffs
generally get a pretty fair shake; often resembling nothing more than
"a search for equity by the court." This puts most defendants at a
disadvantage, and they are most always advised to settle PRIOR to a
complaint being filed.
The bottom line is that equity abhors forfeiture, and the courts don't
like to allow consumers to be shafted.
On the other hand, I believe a dealer does have a responsibility to guaranty the authenticity of a slab. That's because, unlike the situation with a fake coin in a slab, nobody else can be held accountable.
Again, I agree that things are awfully twisted if a professional numismatist can be held responsible for a fake piece of plastic but not for a fake coin, but that's the world we live in. "
Storm,
In all due repect, I have to disagree.
Your first line is totally wrong - There is no consensus among dealers that say thay are not liable, in fact the opposite is true. I think all full-time dealers will stand behind everything they sell with regards to counterfeits. They have a reputation to uphold.
Then you say it is disturbing. - You are making a judgment base on your false argument.
The dealer should always guarentee the coin's authenticity, regardless of the holder. Period.
It's only the ones you can't find later, that you have to worry about.
Hi Rick! Talk to some dealers about this. You'll be amazed what they tell you.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Mr. Eureka,
I guess I'm out of the loop. I believe the slab does not protect the seller from any excuse for selling a fake inside it, especially a professional one.
<< <i>Sorry, Storm!
Mr. Eureka,
I guess I'm out of the loop. I believe the slab does not protect the seller from any excuse for selling a fake inside it, especially a professional one. >>
I agree with Rick.
It would be interesting to hear the PNG's position on this issue.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
"I am sorry you are unhappy with the care you recieved, is their anything I can do for you right now, how about some high speed lead therapy?" - A qoute from my wife's nursing forum
"I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them." – Thomas Jefferson
But we lost sight of the orginal question,
Yes, we did, sorry.
In all due repect, I have to disagree.
Your first line is totally wrong - There is no consensus among dealers that say thay are not liable, in fact the opposite is true. I think all full-time dealers will stand behind everything they sell with regards to counterfeits. They have a reputation to uphold.
Then you say it is disturbing. - You are making a judgment base on your false argument.
The dealer should always guarentee the coin's authenticity, regardless of the holder. Period.
It's only the ones you can't find later, that you have to worry about.
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As noted, I was quoting a previous poster; and, disagreed, as you did, with his posted premise.
My position is, essentially, in agreement with yours:
The dealer should always guarantee the coin's authenticity, regardless of the holder. Period.
BUT, the question at hand was, "What if the slab is bogus (and thus the grade is/maybe bogus, too?)"
In that case, the LAST seller IS still responsible for satisfying the buyer. NOT every court would likely
find the same. But, in most instances, it would not be worth the seller's litigating. He would simply
"solve the problem to the buyer's satisfaction."
A fun rub to the question would be:
What if the buyer believed, at the time of purchase, that the coin auctioned for $10,000 was actually
worth $50,000? The buyer had seen similar coins trade at $50,000, and thought that his $10,000
purchase would result in great profit to him. Now, he finds that the slab is fake and the grade is in
question.
Since the coin is authentic, the buyer would try to mitigate his damages by having PCGS grade the
coin. If it came back as previously "graded" in the counterfeit slab, no harm. If it came back graded
much lower than noted on the fake slab, we have a problem.
The buyer thinks he is entitled to the true value of his bargain; $50,000. The seller says, "You only
paid $10,000, and that is all I am refunding."
What happens now?
<< <i>
<< <i>just to add another layer of confusion to the discussion, what if said counterfeit slab containing counterfeit coin somehow received a CAC sticker.....now who's liable?
greg >>
It is my opinion that the CAC sticker adds nothing to the issue. The CAC is not guaranteeing authenticity of either. >>
I disagree. IMHO, the CAC is essentially guaranteeing the authenticity of BOTH. The sticker means JA has examined the coin and thinks it's nice for the grade. If it's subsequently proven to be counterfeit, or overgraded, he's gonna take it off the market.
Shame on him for not seeing that the coin didn't match the grade on the holder to begin with. (if in fact that is the case - I doubt a properly graded coin would be in a fake slab)
Auction companies should guarentee the holder as well.
Everyone needs to be vigilant about fakes - holders and coins.