Maybe you have seen them or have heard about them, but counterfeit coins primarily from China is a problem in the numismatic industry. But collectible coins are not the only problem. Great Britain has been having problems since the issue of new £1 coins entering circulation starting in 2010. Even though arrests have been made, there remains an undetermined amount of counterfeit coins in circulation.
Recently, counterfeiters were arrested in Greece and Turkey for producing fake 2 Euro coins. These counterfeits look very similar to the standard 2 Euro coin with the standard Greece reverse. A real 2 Euro coin is a bi-metalic coin that does not separate. The counterfeits will separate and are lighter than the real version.
Canada recently made a move to prevent counterfeiting of their new $1 (Loonie) and $2 (Toonie) coins. New Loonies and Toonies produced by the Royal Canadian Mint will have micro-engraved images of a maple leaf and a virtual image using an angled design. The RCM hopes these fine details added to the Loonie and Toonie will prevent them from being counterfeited.
While the United States does not have a problem with counterfeit circulating coins yet, it is a problem for collectible coins. Why counterfeit a quarter when you can make more money counterfeiting a Morgan or Trade dollar by selling it online to unsuspecting online buyers?
The problem perpetuates itself when the buyer looks to cover the money spent turns around and tries to resell the coin. Some people will purposely buy better counterfeit coins that will begin to fool dealers and try to resell them in the United States using a U.S. address to try to give the coin an air of credibility.
Currently, the Hobby Protection Act (15 U.S.C. §§2101-2106 and 16 CFR 304) does not allow for enough protection for the buyer. Aside from requiring the word “COPY” to appear on a copy, it does not allow for buyers or the government to take action against resellers, only the manufactuers.
When the Hobby Protection Act was first enacted in 1973 and updated in 1988, the online world did not exist the way it does today. It was easier to trace the manufacturers and the overseas sellers than the distribution channels are today. By the time a counterfeit coin reaches the United States, it could have been bought and purchased several times before being noticed. Then there is no remedy for those who have been duped.
Another problem is that the counterfeiters are learning to counterfeit slabs. Both NGC and PCGS have seen their slabs counterfeited or altered holding counterfeit coins. Both NGC and PCGS have the same problems with trying to protect their brands against counterfeiters.
A significant step forward would be to update the Hobby Protection Act!
Last month, H.R. 5977, the Collectible Coin Protection Act was introduced in the House of Representatives by Representatives Lamar Smith (R-TX) and Fred Upton (R-MI). Since then, Representatives Pete Sessions (R-TX), Henry Waxman (D-CA), and Bill Cassidy (R-LA) has signed on as co-sponsors.
The introduction of the bill is the result of the work of the Industry Council for Tangible Assets (ICTA) and Gold and Silver Political Action Committee (GSPAC), and the numismatic community working with key representatives to craft an effective legislation. It is also written to ensure support from congress. Benefits of the new law are as follows:
- Include the distribution and sale of items not properly marked as being a COPY
- Expands the provisions to include “any person who provides substantial assistance or support to any manufacturer, importer, or seller” who knowingly engages in any act or practice that violates the Act;
- Expands the ability for those who were sold counterfeit items to include the counterfeiter, their agent in the United States, or anyone who knowing “transacts business” in violation of this Act;
- Extend trademark violations and remedies to help third-party certification services protect against counterfeit holders.
These new provisions will allow collectors, dealers, and grading services to bring legal actions that are much more effective, with much stronger remedies than previously existed. It will allow those harmed to work with the Justice Department to bring criminal actions, where apporpriate.
WE NEED YOUR HELP
The only way to ensure that H.R. 5977 becomes law, especially since we are approaching the end of this session in an election year, is to contact your member of congress will let them know that the numismatic community supports this Act and that their support is important.
To contact your representatives, visit house.gov and enter your Zip Code at the top right of the page. When you contact your representative, you should mention that H.R. 5977 is revenue neutral and will not require additional appropriations. The bill will go a long way in combating counterfeit rare coins in the marketplace, saving collectors and investors millions of dollars in fraudulent transactions.
DISCLAIMER; I am working as Political Coordinator for the Gold and Silver PAC.
Images courtesy of the Gold and Silver PAC.