A Cautionary Tale

Among the coin dealer community, comments occur more and more frequently about people coming into their shops presenting coins they want to sell that were purchased on eBay. Unfortunately, the coins are counterfeit.

Due to the current popularity of gold, and to a lesser degree, silver, many of the counterfeit coins replicate popular gold and silver coins. As technology advances, the counterfeit process becomes more difficult to detect at first look. Some coin copies contain the right metal, just not enough of it. Others have gold plate over a non-precious metal. Still others have minute, but telling, signs that to an expert indicate the coins are not real.

Now, this is not to say that every coin presented on eBay is counterfeit. Many ethical coin dealers use eBay as a sales channel along with many ethical numismatists.

However the anonymity of the Internet makes it much easier for counterfeiters to take advantage of the unwary and to prosper with their illegal activities. (Take a look at our article Buying Coins on the Internet.)

Another important point to remember, other countries do not have the same counterfeit laws as we do. This means the counterfeiter can legally make and sell copies of US coins on the global realm of the Internet. However, those counterfeit coins will not be valuable, and not worth what you paid for them, in the numismatic or investor market.

Regrettably, the eBay rules, identified with good intentions to protect both the buyers and the sellers on their system, make it difficult for the ethical buyers and sellers to get coin counterfeiters removed.

What can you do to protect yourself?

Well, perhaps the easiest, though not the most practical, is not to purchase any coins via eBay or the Internet. That seems drastic considering the many ethical Internet coin marketplaces. However, coin shows and coin shops offer the opportunity to view coins closely with your own eyes, and a loupe if you desire, before you purchase the coins.

The next option requires research – lots of research – to determine the reputation and ethics of the coin seller. First, you can research the internet to see what, if any, comments people have made about the seller. But, be careful here, too. The Internet allows people to make comments either true or false. That’s why you need to do lots of research.

Ask other numismatists, such as coin club members, if they have bought anything from the seller. Visit coin forums on the Internet and ask what people know about the vendor.

Check the seller’s memberships in the coin collecting community.

Determine if they are a member of any best business practice groups, especially those on the Internet.

What if you cannot find much information, and you still want to pursue the coin that interests you?

Determine your risk tolerance. Are you willing to gamble the money for the coin? It is gambling in that you don’t know if you will receive value for your money or a counterfeit.

If the value is beyond your risk comfort zone, but the coin calls to your collector gene, purchase a coin of lesser value from the seller as an experiment. This won’t prove beyond a shadow of a doubt that the seller is ethical, but it will give you an example of their wares.

Basically, the Internet offers many wonderful opportunities in the comfort of your own home. But, you need to be constantly vigilant for possible bad experiences and loss of money as well.