According to the release published by CoinNews, eBay worked with John Albanese to develop the standards that will be used for graded coins. Albanese is the founder of the Certified Acceptance Corporation, a third-party grading verification service, and Numismatic Consumer Alliance, which calls itself a numismatic protection corporation. Albanese is one the the original founders of Numismatic Guarantee Corporation, one of the leading third-party grading services.
On the surface it may look like a good idea to work with someone of Albanese’s alleged stature to set these standards. However, if you look at Albanese’s business interests, Albanese is not working for the ordinary collector.
The standards eBay is adopting are almost aligned with the submission policies of the CAC which Albanese is president. The difference is that modern coins (coins struck after 1964) and bullion coins graded by the acceptable third-party grading services can be listed as graded. Any other coin is considered a raw coin and cannot be listed or described as graded. While a picture of the coin in the holder is allowed, the listed cannot name the grading service or the numerical grade.
I have never met John Albanese and have been told that he is respected by those who know him. I do not know him and only know of his current efforts with the CAC. The CAC is a company owned by high end dealers who had complaints with the work of the grading companies. While a verification service is good, the CAC and its partners are working hand-in-hand to buy, sell, and trade these coins which, in essence, drives up the prices of the coins.
It is part of the CAC business model only to accept coins graded by NGC and PCGS for evaluation. It is part of the CAC business model not to accept modern coins with the exception of certain Lincoln Cent errors. And up until the last year, collectors could only submit coins through CAC affiliated dealers. The business model skews to higher-end coins with the partners creating their own trading market based on the CAC opinion.
Let’s look at the business model of the CAC using a different market. A stock broker buys a series of loan interests he wants to valuate based on a criteria held by those who are not happy with the current valuation services. Rather than look at everything, they start with a series of loan shares whose valuation are certified by certain services because they have a biased opinion against other services. They evaluate shares, put their seal of approval on it, bundle them and trade them amongst themselves create a new market that is currently not existent. Once these shares are traded in this closed market, their value is set then traded to the public. If this sounds like the derivatives market that crashed the economy in 2008, you would be correct. It also parallels the rise of the CAC and its creation of an artificial market.
If the CAC was working as an independent organization without its market-making activities, there would be nothing wrong with what it is doing. However, its market-making activities leaves open questions about its objectivity.
In the securities business, there are laws against artificially building up the price of a stock and then selling them for profit. It is called “pump-and-dump.” Those not in the securities business cannot collude to artificially fix or advance prices, as the airlines have been accused of doing. This is a potential violation of the antitrust laws of the United States. Specifically, it can be alleged that their practices are violations of the provisions of The Clayton Act. The purpose of The Clayton Act is to protect against price discrimination by using influence over markets using exclusive dealing agreements and tying arrangements. Recent cases involving antitrust applies the law to the manipulation of markets to create exclusivity.
Rather than find a better solution to cover the entire market, eBay spoke with someone who has an economic stake in the market for which eBay is trying to regulate. Thus, the new rules adopted by eBay is an attempt to influence the market and create a tying arrangement to manipulate the market to the business model and agenda supported by Albanese, the CAC, and its investors.
Coin collecting is more than the market promoted by Albanese and the CAC. Ebay, Albanese, the CAC, and those who support the CAC do not think in the context of the average collector. I am amongst the average collector. I am the one who sees ICG holders signed by the artist of the New York State Quarter and has to add it to his specialized collection of New York items. If I decide to divest this collection, I would not be able to mention anywhere in the listing the grading service or the numerical grade assigned by ICG. While I can include a picture, I would have to create a listing that would border on being fraudulent for not being able to disclose the actual details of what I was selling.
I am for sensible guidelines that would be inclusive of the ordinary collector as well as protection for those buying higher end coins. However, the route eBay has used to consult with someone who has a fiscal agenda in the market appears to be shaping the market into that agenda that will leave the rest of collecting community behind.
If you think that eBay has gone too far, I urge you to contact their customer support and express your opinion. I also call on the American Numismatic Association to step in on behalf of its member, not all are rare coin collectors, to work as an independent organization to protect the seller against an agenda-based policy. Finally, if you feel that this is the beginning of a restraint of trade violation by eBay, I urge you to file a complaint with the Federal Trade Commission and ask them to look into hampering the sale of legal collectibles.