Coin Scam Alert!

Recently a Proxiblog viewer asked what dealers and auctioneers should do when authentic coins are switched with counterfeit ones inside the holder or flip and then returned for a refund. This is one of many numismatic scams. Here’s how you can protect yourself.

In one month, top grading company PCGS typically sees 500 counterfeit coins. That is due not only to the flood of fakes from China but also ones from the Middle East in the 1960s when gold merchants there realized they could sell more precious metal if they replicated US coinage. And they were right.

That’s why the gold in estate bank boxes (which auctioneers love so much) also may contain counterfeit coins.

Criminals, being what they are, often see opportunity in the predictability of honest auctioneers. Trustworthy people tend to do things based on right and wrong, so it is fairly easy to see how such auctioneers may react if told a coin was counterfeit … when it was not.

The scam usually involves a new bidder. Typically he will place winning bids on low-ball items, such as a mint set or two, and allow you to charge the credit card. He may even do this in a few auctions before he springs the bait and wins an expensive coin. When he receives it, he notifies you that it is a fake and asks to return the coin. You allow this, because you are trustworthy and honest, and then send it back to the consignor.

Only it is not the seller’s coin or the one that the bidder won in your auction. The criminal has replaced it with a fake.

To counter the scam, you have to assess the authenticity of every consignment. Once you do that, you can inform the seller of any suspect coins. Here are tips:

  1. Purchase an electronic gold tester that does not require acid or gels that can harm coins. There are handheld digital analyzers. They’re expensive, but worth the investment if you are an auctioneer dealing in precious metals.
  2. Subscribe to CoinFacts or other databases that contain weights and measures of coins. Even if you use a gold tester, remember that many fakes of rare coins are made of gold and handheld analyzers also can be fooled by gold plate. Knowing correct weights and measures with sharp photos of coins will help you identify many replicas.
  3. Use a digital scale to weigh precious metals in grams, karats, etc., and a caliper to measure coins, as many fakes have wrong rims or dimensions.

If you do this when you receive a consignment, you’ll know in advance which of your coins are obviously genuine or fake. But counterfeits can be sophisticated, so do consult with a local numismatist to look over your consignment especially if you do not know the seller.

Here are tips to guard against scammers taking your authentic coins and then returning counterfeit ones.

  1. Do not broadcast in your terms of service that “we are not coin experts.” That is tantamount to hanging a sign on your home stating “we are away on vacation. Rob us.”
  2. Take sharp pictures of all the coins in the consignment. A clear and expandable photograph that contains specific markings–such as bag or mint marks–will go a long way in identifying the fake coin.
  3. Examine returns carefully. If coins are mailed to you without the original holder or flip, that also may be a sign of a scam. While it is possible to extract coins from flips and insert fake ones, not every crook is skilled in doing this.

If you have done due diligence as recommended above–first in checking for fakes in a consignment, and then in gathering evidence that genuine coins were switched for replicas–you can provide Proxibid’s quality control officer with those data and, depending on the strength of your case, potentially ban scam bidders from your site and the portal.

Throw out those Proxibums!

Proxiblog is an independent entity with no connection to the auction portal Proxibid. Our intent is to uphold basic numismatic standards as established by the American Numismatic Association and the National Auctioneer Association and to ensure a pleasurable bidding experience not only on Proxibid but also on similar portals such as iCollector and AuctionZip.

2 thoughts on “Coin Scam Alert!

  1. This has been an issue for some time. The switch can, however, work both ways. An auction site shows photos of a coin but when you win, you receive a lower grade. This happened to me with one of the auction houses using your auction site. I complained and never received a response from either source. I simply do not bother to even open an auction list from this company as a result.

    I believe the gold fakes are rampant! One dealer friend told me long ago that he had reached the point where about 9 of every 10 gold coins he was seeing and being offered was a fake, at that time mainly from the mid-east.

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