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PCGS Responsibility to Collectors (Re: Yet another ARTIFICIALLY FROSTED Proof Frankie! And, this one
LickThoseStamps
Posts: 1,028 ✭
Russ's original thread makes a compelling argument, that a number of coins certified by PCGS, may have been artificially frosted. Although the PCGS may have been duped, the coins continue to be traded on the market. What responsibility does the PCGS have to investigate the possibility that these coins, apparently submitted by the same person, are indeed fraudulent? If confirmed to be fraudulent, should the PCGS have some sort of recall process or at least a mechanism to warn collectors?
As a new collector to third party graded coins, I am deeply concerned. Especially, if these coins are sold through major auction sales.
As a new collector to third party graded coins, I am deeply concerned. Especially, if these coins are sold through major auction sales.
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<< <i>What responsibility does the PCGS have to investigate the possibility that these coins, apparently submitted by the same person, are indeed fraudulent? If confirmed to be fraudulent, should the PCGS have some sort of recall process or at least a mechanism to warn collectors? >>
There is no "possibility" that they are fake - they are, period. PCGS knows all about them and the submission they were on. But, there is simply no way for them to track them down after all this time. They were graded more than three years ago. They do, however, step right up and compensate current owners of the coins without hesitation whenever one is returned for guarantee.
<< <i>As a new collector to third party graded coins, I am deeply concerned. Especially, if these coins are sold through major auction sales. >>
You have nothing to be concerned about. As I said, PCGS honors their guarantee without fail. In fact, I bought one through a major auction sale - Heritage - and not only did PCGS step up, I made a profit on it since they paid me market value, and I'd paid less than that.
Russ, NCNE
<< <i>There is no "possibility" that they are fake - they are, period. PCGS knows all about them and the submission they were on. But, there is simply no way for them to track them down after all this time. They were graded more than three years ago. They do, however, step right up and compensate current owners of the coins without hesitation whenever one is returned for guarantee. >>
When one submits a PCGS certification number, the following is claimed: "When you see a listing of a PCGS coin for sale, you can verify the grade and authenticity of the coin by simply entering the certification number below. The unique certification number is sonically sealed inside each coin capsule. With the PCGS certification number, you can verify the authenticity and quality of the certified coins you see for sale online as coins evaluated by PCGS experts."
When I use the two certification numbers that you provided, there is nothing that comes up from PCGS to alert me that there is a problem with the authenticity of either coin. If the PCGS is aware of the problem, shouldn't this be revealed when the certification is verified?
In my opinion they should. Otherwise, what good is the certification process?
By the way Russ, how does the coin you returned under the guarantee, show up in the certification database?
<< <i>LickThoseStamps >>
This submission is such a miniscule part of the over 10 million coins they graded that it really makes no sense for them to do anything other than honor the guarantee when one comes in. You're worrying about nothing.
<< <i>By the way Russ, how does the coin you returned under the guarantee, show up in the certification database? >>
It still shows up as a PR67CAM Accented Hair. But, it doesn't matter, since the coin no longer exists in that holder.
Russ, NCNE
<< <i>This submission is such a miniscule part of the over 10 million coins they graded that it really makes no sense for them to do anything other than honor the guarantee when one comes in. You're worrying about nothing. >>
I disagree! I don’t think it matters how many there are. The facts appear to be:
1. They certified the coin as being authentic.
2. They became aware that the coin is fraudulent.
3. They control the certification database.
4. They know that the coin continues to be traded.
5. They continue to certify the coin as being authentic, given 2, 3 and 4 above.
Does anyone from the PCGS monitor this board? Are the assumptions listed above correct?
<< <i>I disagree! I don’t think it matters how many there are. The facts appear to be:
1. They certified the coin as being authentic.
2. They became aware that the coin is fraudulent.
3. They control the certification database.
4. They know that the coin continues to be traded.
5. They continue to certify the coin as being authentic, given 2, 3 and 4 above. >>
1 agreed
2 The only way they can become aware that the coin is fraudulent is if it is returned to them
3 If the coin is returned to them and they agree it is fraudulent they crack it out and would most likely then remove it fom the database.
4 If the coin was returned and declared fraudulent then it no longer trades, if a coin is still trading then it hasn't ben returned to PCGS for them to re-evaluate and declare fraudulent.
5. If they haven't had the coin re-submitted, it will still show in the database as genuine.
<< <i>
<< <i>I disagree! I don’t think it matters how many there are. The facts appear to be:
1. They certified the coin as being authentic.
2. They became aware that the coin is fraudulent.
3. They control the certification database.
4. They know that the coin continues to be traded.
5. They continue to certify the coin as being authentic, given 2, 3 and 4 above. >>
1 agreed
2 The only way they can become aware that the coin is fraudulent is if it is returned to them
3 If the coin is returned to them and they agree it is fraudulent they crack it out and would most likely then remove it fom the database.
4 If the coin was returned and declared fraudulent then it no longer trades, if a coin is still trading then it hasn't ben returned to PCGS for them to re-evaluate and declare fraudulent.
5. If they haven't had the coin re-submitted, it will still show in the database as genuine. >>
2. If I interpret Russ's comments correctly, at least four coins of a cert sequence have been identified and the PCGS is aware of them. Although it could be a coincidence, I suspect that all of the coins in the sequence were submitted by the same owner. There are 14 proof cameo Franklins and several cameo SMS Kennedy halves. Thus, any of those coins are strong suspects for being fraudulent. The sequence numbers are 21037521 – 21037537.
3. According to Russ, the one coin he returned still shows up in the database as being authentic. He did not indicate how long ago he returned it.
I don’t think it takes an unreasonable person to conclude that all of the coins in the sequence are fakes or at least should be reevaluated. Furthermore, I don’t think this was the only batch of coins submitted by the individual. There could be hundreds or thousands of coins! Only the PCGS is in a position to know.
With the current certification verification process, the only one being protected is the person who submitted the fraudulent coins. In my opinion the system is deficient in this regard..
I know that there are a lot of purists on this board who have the attitude that if a buyer is not smart enough to recognize a fake, then they deserve to be burned. However, there are a lot of us, new to this hobby who are not experts. We don’t mind paying extra for a coin that has been certified as genuine. Isn’t that why groups such as PCGS were created? I know the PCGS is not perfect and can be taken advantage of. However, when they have discovered that they have been duped, then they should take extra steps to warn potential buyers that certain certificates may be invalid.
There is already a field in the database for pedigree. How hard would be to put “Recalled” in the pedigree field? If a potential buyer sees that the coin certification has been recalled, then it would be a clear warning.
It's possible that all the coins in that submission were bad, but we don't know. Anyone who believes a coin is bad can have it re-evaluated. They stand behind every coin, not just ones on "suspicious" submissions.
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
Take this scenario. I see a 1966 Kennedy SMS on eBay, graded by the PCGS at 68DC. I put the certification number in the PCGS lookup and it comes back 68DC. The $12,000 buy it now price seems kind of high, and the picture is fuzzy, but what the heck, its PCGS certified! After all, PCGS coins are intended to be traded sight unseen, right?
I get the coin and notice that it looks funny. Being a smart buyer, I did my homework and know that I am protected by the PCGS guarantee. All I have to do is send my coin to the PCGS and they will send me a check for $12,000, right?
RIGHT!
Take another scenario. The PCGS has had several coins returned under their guarantee program. They notice that all of these coins were submitted by the same person. Checking their records, they note that about 20 coins were submitted in the same batch, all being graded cameo. Being a reputable company interested in protecting the consumer as explicitly stated on their website, they change the database for all 20 of these coins to “Recalled”, indicating that they have identified the possibility that a fraud has been perpetrated and they would like to reevaluate the coin.
Two weeks later, I see a 1966 Kennedy SMS on eBay, graded by the PCGS at 68DC. I put the certification number in the PCGS lookup and it comes back “Recalled”. I pass on the coin.
Under which scenario have I been better served?
Otherwise, you have a point.
<< <i>2. If I interpret Russ's comments correctly, at least four coins of a cert sequence have been identified and the PCGS is aware of them. Although it could be a coincidence, I suspect that all of the coins in the sequence were submitted by the same owner. There are 14 proof cameo Franklins and several cameo SMS Kennedy halves. Thus, any of those coins are strong suspects for being fraudulent. The sequence numbers are 21037521 – 21037537.
3. According to Russ, the one coin he returned still shows up in the database as being authentic. He did not indicate how long ago he returned it. >>
2. Agreed the rest of that submission would be suspect. but untill they are re-examined we can't say so for sure.
3. Is it possible that PCGS retained the coin for their archives as a "teaching" example? If so they would not have cracked it, and the database probably wouldn't be altered, but the coin would be out of the marktplace.
<< <i>I don’t think it takes an unreasonable person to conclude that all of the coins in the sequence are fakes or at least should be reevaluated. >>
But until they are actually returned for re-evaluation they shouldn't be removed from the database.
<< <i>There is already a field in the database for pedigree. How hard would be to put “Recalled” in the pedigree field? If a potential buyer sees that the coin certification has been recalled, then it would be a clear warning. >>
But this puts PCGS in the position of having done something to materially "damage" the owners of the coin without having seen the coins again. They have rendered his coins less valuable or even unsaleable based only on suspicion because the original submitter sent in some other coins that were bad. I think you ae on the right track, I just think I would make it a note that PCGS "would like to see this coin again" rather than the term "Recalled". "Recalled" has negative connotations that should be avoided.
<< <i>In my opinion, the certification validation should prevent a known or suspected fraudulent coin from being traded in the first place.
Take this scenario. I see a 1966 Kennedy SMS on eBay, graded by the PCGS at 68DC. I put the certification number in the PCGS lookup and it comes back 68DC. The $12,000 buy it now price seems kind of high, and the picture is fuzzy, but what the heck, its PCGS certified! After all, PCGS coins are intended to be traded sight unseen, right?
I get the coin and notice that it looks funny. Being a smart buyer, I did my homework and know that I am protected by the PCGS guarantee. All I have to do is send my coin to the PCGS and they will send me a check for $12,000, right? >>
It is unwise to buy ANY coin sight-unseen without a return privilege, no matter who slabbed it or what the grade is. The reason goes beyond possible fake cameos - you can have coins that were dipped and improperly rinsed which turned in the holder, coins that were puttied, coins with just poor eye appeal, etc. Please don't buy coins sight-unseen without a return privilege.
You mentioned that you are concerned about coins sold at major auctions. Since you rarely get any type of return privilege there, you should strongly consider making arrangements with a dealer who can review the coins in person, advise you, and bid on your behalf (for a fee).
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
<< <i>Take another scenario. The PCGS has had several coins returned under their guarantee program. They notice that all of these coins were submitted by the same person. Checking their records, they note that about 20 coins were submitted in the same batch, all being graded cameo. Being a reputable company interested in protecting the consumer as explicitly stated on their website, they change the database for all 20 of these coins to “Recalled”, indicating that they have identified the possibility that a fraud has been perpetrated and they would like to reevaluate the coin.
Two weeks later, I see a 1966 Kennedy SMS on eBay, graded by the PCGS at 68DC. I put the certification number in the PCGS lookup and it comes back “Recalled”. I pass on the coin.
Under which scenario have I been better served? >>
Just because several of the coins on the submission were fakes does not necessarily mean that ALL the coins were fakes. Imagine the legal implications to just randomly declare all the coins on a particular submission as fake with out re-examining them?
Additionally, once PCGS determines that a coin is a fake, it is cracked from it's holder, thereby eliminating ANY possibility that the coin would show up on EBAY or some other auction site. With this as the case, you'd never know the cert number nor have any opportunity to query it in the database. So, eliminating that particular number from the database would be rather pointless. I'm sure it is eliminated from the pop reports though...........
The name is LEE!
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
<< <i>I don’t think it takes an unreasonable person to conclude that all of the coins in the sequence are fakes or at least should be reevaluated. Furthermore, I don’t think this was the only batch of coins submitted by the individual. There could be hundreds or thousands of coins! Only the PCGS is in a position to know. >>
Do you really think PCGS wants this plastered all over their Board??? If there are literally "hundreds or thousands" of AF coins in their holders -- doesn't that diminish the credibility of their grading abilities in this particular area???? Doesn't it also require everyone who has made a niche for themselves in proof cameo coins of the 50s and 60s to start wondering whether their coins are good ones or are AF. This might have serious ramifications to not only a couple of owners of perhaps bad coins, but to a whole segment of an industry as well as PCGS directly.
I wouldn't be all too eager to jump on this problem if I were PCGS. It's like opening Pandora's Box for them -- legally. These are high dollar coins we are talking about and it could cause ripple effects not otherwise anticipated.
TPN
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<< <i>I get the coin and notice that it looks funny. Being a smart buyer, I did my homework and know that I am protected by the PCGS guarantee. All I have to do is send my coin to the PCGS and they will send me a check for $12,000, right?
RIGHT! >>
They certainly would cut you a check. More likely for around $10,000, though, since that's not only the price guide value but also right around what the most recent sale came in at. Actually, the most recent sale was slightly more, so the check might be a little more. However, they are under no obligation to pay you the total amount when you OVERPAY for a coin. That's your problem, not theirs. Bottom line is, they do and will honor their guarantee.
<< <i>Take another scenario. The PCGS has had several coins returned under their guarantee program. They notice that all of these coins were submitted by the same person. Checking their records, they note that about 20 coins were submitted in the same batch, all being graded cameo. Being a reputable company interested in protecting the consumer as explicitly stated on their website, they change the database for all 20 of these coins to “Recalled”, indicating that they have identified the possibility that a fraud has been perpetrated and they would like to reevaluate the coin.
Two weeks later, I see a 1966 Kennedy SMS on eBay, graded by the PCGS at 68DC. I put the certification number in the PCGS lookup and it comes back “Recalled”. I pass on the coin. >>
That would be a lawsuit waiting to happen. If they red flag a coin that is legitimate, the seller who lost a sale because of it would have a very real cause of action against them. The fact is that "suspecting" a coin might be bogus is not enough. They must have it in hand to verify.
<< <i>3. Is it possible that PCGS retained the coin for their archives as a "teaching" example? If so they would not have cracked it, and the database probably wouldn't be altered, but the coin would be out of the marktplace. >>
In the specific case on my coin, the answer is no. In addition to cutting me a check for full market value, they cracked it out, dipped off the crap, reholdered it as a PR67 and returned it with the check.
<< <i>I thought that PCGS did not know who submits to them? >>
The graders don't know, but the admin and accounting people certainly do.
Russ, NCNE
<< <i>Doesn't it also require everyone who has made a niche for themselves in proof cameo coins of the 50s and 60s to start wondering whether their coins are good ones or are AF. >>
Anybody who has made a niche for themselves in cameo coinage damned well better know how to detect them. If they are still "wondering", than they should get the hell out of the selling end.
Russ, NCNE
You've showed examples of the altered coins that have turned, now show examples of the supposed altered coins that haven't turned and see who can really spot them. I doubt if a grader, with a raw coin in hand under a loupe can't tell, a dealer looking through the plastic of PCGS might even have a more difficult time -- unless he was aware of the dies and which coins came from which die. From what I understand from RT's book, there are definte die pairings for 50s cameos. PCGS might not know these and certified coins that shouldn't have been certified and detected early on as AF.
Either way, I doubt if PCGS or the vast majority of people who deal in this area want to start admitting they were fooled.
TPN
<< <i>Russ -- didn't even you say that you were fooled by these coins??? >>
No, I've never been fooled. The first one I encountered - long before I started dealing in cameo coinage - took me a bit to figure it out, but even as the rank rookie I was than, I caught it.
<< <i>What about the coins that haven't turned???? If a PCGS grader can be fooled, why not an experienced dealer???? >>
If a grader can be fooled? Hehe, good one! After all the coins I've had bodybagged and then graded the second or third time around, that question is a crackup! An experienced dealer has the luxury of spending more than six seconds evaluating his coins.
Russ, NCNE
" I bought one through a major auction sale - Heritage - and not only did PCGS step up, I made a profit on it since they paid me market value, and I'd paid less than that."
Chris asks Russ:
How does PCGS determine "market value"?
"Fair market value" has always been defined as the price a willing buyer, not under compunction to buy, pays to a willing seller, not under compunction to sell, at arm's length. Assuming that the coin you purchased at Heritage met those criteria, one strong indicator of the coin's fair market value was precisely what you paid for it. Apparently, however, PCGS sees it differently?
Tiger trout, Deerfield River, c. 2001.
At the time the average selling price over multiple transactions was higher than the price I paid through Heritage. I was compensated based on that average rather than the singular example of one transaction.
Russ, NCNE
What market does PCGS use? "Multiple transactions" at Heritage? Or a conglomerate of auction houses and other sources?
I'm interested in how folks determine "value" for purposes like this.
-c-
Tiger trout, Deerfield River, c. 2001.
Don't know what criteria they used, but my guess is that a variety of pricing sources were looked at. David Hall made the compensation decision. I tried to argue that they were paying me too much, but they insisted.
Russ, NCNE
How would one know for certain that they've never been fooled since by definition if they were fooled they didn't know it?
Good point. The likelihood is slim, though. I've identified several of these since my initial encounter, and gotten three off the market so far. Not everybody cooperates when you tell them they have a bogus coin, though. Some get downright hostile.
Russ, NCNE
Couldn't agree more! An excerpt of an email from an ebay seller hawking a fake trade dollar:
what is your home address so we can settle this and i can shut you up for good ? dont be scared bi*ch !
Looks like you made a new friend!
<< <i>lickthosestamps- listen to Russ and Conder101, as they're giving you the real skinny. But if you're just trying to stir up trouble as Wolf359 suspects, then, uh..... well, stir away- we could probably use the entertainment.... >>
I consider myself a student learning about this hobby. I’ve bought coins on eBay, only to later realize that I had been taken. I recognize the fact that I need to learn more, in order to protect myself in the future. As part of my research, I joined this group and learned about third party grading services. PCGS seems to be a leader in this field and proudly boasts about the security of trading their certified coins sight unseen. In this spirit, I have purchased several dozen PCGS proof cameo coins over the past several months.
When Russ’s thread started, I became greatly concerned. I have no desire to return coins to PCGS for their grade guarantee. I would rather be alerted before a purchase, by a warning when I look up the certification. It’s the responsible thing to do, especially if they want credibility in their "sight unseen" security claim.
There are many companies that acknowledge defects in their products and take active measures to correct them. I hope that PCGS is one of these companies.
Both Russ and Conder101 appear to be very advanced collectors and I appreciate their inputs. I’ll reserve comment on Wolf359’s contribution to this thread and let it stand on its own merit.
If by saying, "in this spirit", you mean that you've been buying coins completely sight unseen, then I would recommend you stop doing that. Obviously, with internet shopping, you can't always tell what you're going to get by a posted image, but you can often times get a good idea about level of contrast, amount of frost, spotting, toning, etc.... It's best to get a reasonable idea of the coin you're buying, and to make sure the seller has a reasonable return policy....
Yes, coins can and do trade sight-unseen, but they are not necessarily the coins you should be buying. Why? Because coins that trade sight unseen without a return privilege tend to be the lowest end coins for the grade. Forget the sight unseen thing because coins do not trade like stocks and never will. If you call a dealer and ask what the dealer will pay for your slabbed coins I guarantee the dealer will say s/he needs to see the coins before making an offer. (If the dealer does not, you will get a lowball offer.)
It's not a question of credibility in the sight unseen market, it's the simple fact that no two coins are identical.
You said
<< <i>There are many companies that acknowledge defects in their products and take active measures to correct them. I hope that PCGS is one of these companies. >>
Again, the guarantee protects buyers of PCGS-graded coins. But your desire that they blacklist coins before even seeing them because they happened to be in a particular submission is unrealistic.
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
The name is LEE!