An interesting Peace

While browsing on eBay, I noticed a few auctions of what I thought were philatelic (stamp collecting) cachets with Morgan and Peace dollars honoring different aspects of history. Not knowing much about them, I placed some bids based on the estimated values of the coins.

The difference between a First Day Cover (FDC) and a cachet is that the FDC is stamped on the first day of issue usually with a special commemorative postmark. A cache is a souvenir cover that is not postmarked as the first day of issue.

Another interesting collectible that combines philately and numismatics is called a Philatelic Numismatic Cover (PNC) or sometimes just coin cover. The U.S. Mint has produced coin covers for the 50 State Quarters, Westward Journey, and Presidential Dollars series as well as the first Sacagawea dollar. These are fun collectibles and something I will talk about in the future.

When the auctions were over, I won one with the 1926-S Peace dollar. Although the description seemed in order, I did not know what to expect. When it arrived I think it is more interesting than advertised.

First, the item is not an envelope by a heavy stock card that is 9-inches long by 4.875-inches wide. It is to honor the anniversary of the United States agreeing to join the World Court on January 27, 1926. The card includes a 5-cents stamp commemorating International Cooperation Year that was issued on June 26, 1965, and a 33-stamp that was in use when this was created in 2001. It is postmarked on January 27, 2001 in Washington, D.C., the 75th anniversary of the event.

The Peace dollar is definitely circulated and would probably grade in the Very Fine range if sent to a third-party grading service. It is encased in plastic which is sandwiched between two panels of cardboard to make up the card. The back of the card has a longer narrative of the history.

Originally, I was only interested in it for the coin since I am a fan of the Peace dollar. But seeing the card makes me wish I would have bid higher for more of them. The other problem is that I do not know who made them. This card looks similar to ones described as being from the Postal Commemorative Society. However, I have seen several different descriptions to make me unsure.

If anyone can provide more information, please post it as a comment below. I would like to learn more!

Case Dismissed: eBay’s coin listing policy does not violate anti-trust laws

eBay LawsuitThe Ninth Circuit Court of Appeals upheld the dismissal of the antitrust class action suit against eBay for its policy for listing certified coins for sale.

The story begins in 2007 when eBay began to set standards for listing coins on its site. As part of its decision as to which coins could be listed as graded with their grade as part of the listing, the policy was created that grading services had to have been rated good or better in the 2006 Grading Services Survey performed by Professional Numismatic Guild and Industry Council for Tangible Assets.

After a lot of protest from the numismatic community, by 2008, eBay changed their policy for listing coins to require coins worth more than $2,500 to be graded and listings that mention grades be graded by an approved grading service. To become an approved grading service the company has had to grade 50,000 pre-1956 coins, provides an online population report, has three professional graders on staff with at least one a member of the Professional Numismatic Guild, provide a written guarantee, encase coins in a tamper resistant holder with anti-counterfeiting measures, and provide an online serial number verification service.

Initially, only coins graded by Numismatic Guarantee Corporation and Professional Coin Grading Service qualified under these rules. Shortly before the ruling was to take effect, ANACS and Independent Coin Graders make the necessary adjustments to have coins in their holders qualify for listing as graded on eBay.

Universal Grading Service (UGS) was a nascent New Jersey-based grading service decided to file an antitrust suit eBay, the American Numismatic Association, then ANA President Barry Stuppler, and PNG claiming that the rules are preventing them from competing in the market. Their claim was that coins in their holders were allegedly banned by eBay claiming that by using the study, eBay was in collusion with the ANA and PNG to prevent them from participating in the market, an alleged violation of the Sherman Antitrust Act.

UGS initially filed the anti-trust case in the Eastern District of New York. The court, based in Brooklyn, determined that since eBay was the lead defendant and the service most impacted by the suit, New York was not the proper jurisdiction. The court ordered that the case be transferred to Northern District of California.

The case was move to the San Jose Division for the Northern District of California and assigned to Judge Ronald M. Whyte. In mid-2011, Judge Whyte granted motions (with prejudice) to dismiss the case against the ANA, PNG, and Barry Stuppler. That left only eBay as the lone defendant.

On January 9, 2012, Judge Whyte granted eBay’s motion to dismiss the case with prejudice. Judge Whyte noted that the case was flawed from the beginning and gave UGS every opportunity over two years to amend the case in order to prove their claim. Judge Whyte agreed with eBay that USG did not provide evidence that eBay violated the Sherman Antitrust Act or other associated laws.

UGS appealed to the Ninth Circuit Court of Appeals saying that Judge Whyte wrongly dismissed the claim and that they met their filing responsibility under the Sherman Antitrust Act and associated state laws. The three judge panel affirmed the Judge Whyte ruled properly and let the dismissal stand.

UGS, who has ceased operations, can appeal the case to the full Ninth Circuit asking for a review. When appealing a ruling to a full circuit court panel, all nine judges assigned to that circuit, including the members of the three-judge appellate panel, will hear the appeal. An attorney familiar with Federal Circuit Courts said that it is rare that a dismissal by a federal district judge that is upheld by an appeals panel will be selected to be heard by the full circuit. He did note that stranger things have come out of the Ninth Circuit and it could be possible that they would hear the case.

After the Ninth Circuit, the next step would the Supreme Court. Sources report that if the full Ninth Circuit refuses to hear the case or the dismissal is upheld, “there is no attorney in his right mind” that would file an appeal to the Supreme Court after two courts uphold a dismissal.

With this ruling, the Universal Grading Service is effectively dead and buried. Whatever the people behind UGS were hoping to get out of this case will not be realized.

One thing this ruling says is that the cost to entry the coin grading market is very high. The court affirmed that eBay can set the market rules and as one of the dominating venues for selling coins, a new grading service would have to meet eBay’s requirements in order to gain market acceptance. The difficult benchmark is to have graded 50,000 pre-1956 coins.

There appears no reason why pre-1956 was picked as the dividing line. For many, it would make sense to select pre-1965 to include all coins that are pre-clad coinage. Calls to eBay to obtain clarification about the policy have not been returned. Since eBay consulted with John Albanese, principal of Numismatic Consumer Alliance and Certified Acceptance Corporation (CAC), contacting him may be an option.

Interestingly, if eBay is to follow its policy to the letter, coins that received verification stickers from the CAC cannot be listed as part of the grade. Titles should not be allowed to indicate that the coins have been verified by CAC nor should the description. As far as I am concerned it would be acceptable for eBay to ban the designation of CAC verification as I am not a fan of the service.

Which raises a thought: considering the CAC’s business model includes only coins certified by NGC and PCGS, and given Albanese’s past associations with both of those services, if the case was limited to eBay and Albanese/CAC would it have been more successful?

John Albanese Sells Out Ordinary Collectors

When I wrote “eBay to ANACS and ICG: You Lose!” it was based on the release eBay provided to sellers. This was not the complete story as reported by CoinNews.

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.

eBay to ANACS and ICG: YOU LOSE!

This week, eBay sent a message to sellers who listed coins and currency for sale on the site to announce new listing policies for coins.

As coin collecting continues to grow and thrive on eBay, customers have told us time and again that knowing they can buy and sell with confidence is important. “We’ll be updating eBay’s Stamps, currency, and coins policy to help foster that confidence—this update may impact your coin listings,” read eBay’s note.

Starting May 30, all new listings and relistings in coin categories will need to meet the following requirements:

  1. First, listings for coins will be allowed to include a numeric grade in their listing title or item description only if the coin grading company meets certain objective standards.* Coins that haven’t been graded by these companies will be considered raw or ungraded. Currently, eBay has determined that only the Numismatic Guaranty Corporation (NGC) and the Professional Coin Grading Service (PCGS) meet these standards.
  2. Second, for US Coins only, grading by companies meeting these standards will now be required for all coins listed with a Buy It Now, reserve, or start price of $2,500 and above.

A footnote for the asterisked line says, “These standards will be posted on eBay’s website shortly.” The policy page has not been updated to explain the standards which the decision is based.

By this rule, coins certified by ANACS and ICG have now been reduced to second class status even though there may be nothing wrong with them. Nice coins still in old PCI holders with J.T. Stanton’s signature are also reduced to “irrelevancy” becuase of eBay’s undisclosed decision.

This is not the first time eBay has made arbitrary decisions about coin collecting based on questionable advice. In January, eBay banned the sale of replica coins where they said they worked in conjunction with the Professional Numismatic Guild to come up with a policy.

“We’ve heard from both buyers and sellers that they’d like to see more coins on eBay graded by companies who meet high standards,” read the eBay release. “These new requirements are an important step toward meeting these marketplace demands.”

As both a buyer and seller, I have never been asked.

By making this statement, eBay and not experts or the numismatic public is telling the marketplace that they know better. By making this statement, eBay will not allow me to search for or buy that old ANACS photo holder or the ICG graded error coin verified by CONECA because ANACS and ICG cannot be used in the title and description.

Rather than managing its market place, eBay has now turned themselves into an enforcement bureau making policies that could be considered a restraint of trade by telling independent sellers what they can or cannot sell that would be legal elsewhere.

Ebay has a right to limit the type of item sold on via its service. Ebay has extensive policies regarding prohibited and restricted items as well remedies for violating these policies. Now, eBay has branched out from prohibited and restricted items to practically banning LEGAL products because they do not meet arbitrary and capricious standard that they have yet to divulge.

Restraint of trade is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business. By eBay telling me and other sellers that we cannot properly list and sell any other coin but those encapsulated by PCGS or NGC is restricting my freedom to conduct business. Ebay will not let me sell or advertise the ICG graded error coins or the artist signed state quarters also slabbed by ICG. In other words, I would be restrained from appropriately advertising LEGAL inventory by contractually restricting my freedom to conduct business.

If there is an alternative to eBay for selling legal coins, I would like to know. The extra coins from the divesting of part of my collection will be listed there. Ebay is no longer a viable outlet to sell collectible coins.

eBay to Ban All Replica Coins

This past week, the online auction company eBay announced that effective Febrary 20 listings for replica coins will no longer be allowed on the site. “eBay defines replica coins as a copy or reproduction of an actual coin, including U.S., foreign and other historic coins.” The announcement said that eBay is working with the Professional Numismatists Guild “to help ensure the coin experience on eBay meets industry standards and is an effective destination for customers selling or shopping for coins.”

First, the wording of the press release was confusing. After mentioning that eBay will ban all replica coin listings, the press releases from eBay and PNG said that the “This policy decision will help ensure compliance with applicable laws (the Hobby Protection Act) that require replica coins to be permanently marked with the word ‘COPY.’” It suggests that coins marked as “COPY” would be allowed. However, an in an email from Johnna Hoff, Media Relations from eBay, all replica coins are being banned. “Because of the nature of our
marketplace – specifically that we don’t control the inventory – we’re not able to confirm before purchase that a coin is truly stamped. Customer feedback told us that often coins shown in pictures as stamped werenrsquo;t delivered that way.”

When asked specifically about replica currency, Ms. Hoff responded that the new policy just “applies to coins at this time.” A follow up question as to whether silver rounds, specifically the Buffalo Silver Rounds, and replica medals, including ones produced by the U.S. Mint, will be included in the ban.

Another question that would have to be answered is what about restored coins, legitimate coins that have been restored by artificial means. These are not copies but could be passed as original coins to the unsuspecting buyer. Buffalo Nickels fall into this category. There are many “acid coins,” Buffalo Nickels whose dates are raised by using a liquid date enhancer, and coins that have undergone tooling to restore the features. Another similar collectible are “reprocessed” steel cents that are recoated with zinc to make them look better than when they left the U.S. Mint and are not marked in any way. These deceptions may cause more of a threat to the hobby than replica or downright counterfeit attempts.

While it is good that eBay and PNG are working together to make eBay a safer marketplace for collectors, this is a heavy handed act suggesting that eBay protect the consumer from themselves. Rather than eBay and PNG working together to work with law enforcement against the people who break the law, both groups are turning their back on a legitimate market for replica coins.

The Hobby Protection Act of 1973 (15 U.S.C. § 2101 et seq.) allows for both private enforcement, such as a civil action (15 U.S.C. § 2102) and reporting violations to the Federal Trade Commission (15 U.S.C. § 2103 and 16 CFR 304).

Further, eBay has extensive policies regarding prohibited and restricted items as well remedies for violating these policies. Rather than ban these items, PNG should work with eBay to find a way to enforce their existing policies alienate a market segment.

In the press release from PNG, Executive Director Robert Brueggeman said, “Stay tuned for more exciting announcements over the coming year – this is only just the beginning. eBay is committed to working with PNG to grow the business of its member dealers.” I hope any follow up on this will be more thoughtful and consider the marketplace as a whole rather than sever a legitimate market.

Selling Coins on eBay

A few times a year, I am asked about how to sell your coins, currency, tokens, and other numismatic items on eBay. If you have not sold anything on eBay, there are a few good resources for you to learn the basics. But to be successful selling coins, you should include these extra steps:

  • Know what you are selling. In over 200 years, the U.S. Mint has produced many coins. It may not be enough to know the denomination and date to figure out the type of coin you are selling. On a few occasions, the Mint produced two types of coins in the same denomination in the same year. One example was in 1921 when the U.S. Mint produced both the Morgan and Peace Dollars. It is important to know the difference.
  • Understand the basics of grading. If you are selling coins that have been graded and encapsulated by a one of the grading services, then you do not have to worry about knowing the grade. But if you are selling ungraded coins, also known as “raw coins,” you should have an idea of the grade. You can estimate the grade by using the visual guide at PCGS Photograde™ Online. PCGS has created an app for iOS devices with the same pictures.
  • Set realistic pricing. Not every coin is worth hundreds or thousands of dollars. In order to set realistic pricing, you may want to look at recently closed auctions to see the prices realized. This is a good tool find an average price. If you are still unsure about the value of your coin, try looking up your coin in the Numismedia Fair Market Value Price Guide. There is a page for each coin type and the pricing is different for each grade.
  • Take clear pictures of the front and back of the coin. Even if the coin is encapsulated by a grading service, many collectors want to see what they are buying. Taking the time to take clear pictures will enhance your listing and entice interested bidders into bidding on your coin. Remember, if you are selling graded coins, you must have pictures of the grading service’s label on both sides of the slab.
  • Write a descriptive title. You may be selling a coin with great eye appeal, but collectors will not look at your auction if you do not tell them what your auction is for. Include the year, mintmark, and coin type in your title. If the coin is encapsulated, include the name of the grading company and the assigned grade. If the coin is not graded, use just the letters abbreviating your estimation of the grade (G, VG, F, EF, AU, and UNC for uncirculated). If the coin is a proof coin, make sure that is noted in the title.

When you list graded coins for sale on eBay, there is a rule that says you title may only include the names of four grading services: ANACS, ICG, NGC, and PCGS. If the coin was encapsulated by another service, you must remember to take a picture of the label and note the name of the service in the description. If you mention another service in the title, mention that the coin is graded, or include the grade assigned by another service, eBay may pull your auction for violating their listing policy.

A Dealer’s Experience with PCGS SecurePlus

It is not often I receive comments on posts older than a few weeks. But I found it curious that I would receive a comment on my post “PCGS Demonstrates Its New Technology” from last January. When I read the reply, I thought it deserved more attention than a response to a five-month old post.

The comment is from Christopher Neal Wyatt, President of Superior Bullion from Cincinnati, Ohio who has not had a good experience with PCGS SecurePlus service. Rather than have me explain the problem, Mr. Wyatt has given me permission to make his comment as a main post:

I am a coin dealer on eBay and I have been submitting coins to PCGS for years.

Regarding the new SecurePlus service, I am growing less enthusiastic with each and every submission.

I have come to the conclusion that the there are two critical problems with the PCGS SecurePlus service:

1.) The coin grading staff is now able to see an extremely high-resolution scan of each coin, such that tiny, minor imperfections- which would not have been visible even under 10x magnification- are now being blown out of proportion, and as a result I am now receiving grades which are lower than I believe I would have received under the old method.

2.) Now that PCGS has a ‘fingerprint’ of my coin, I feel as though it is no longer possible for me to re-submit the coins in hopes of a higher grade, as my duplicate submission will immediately be detected, and they will likely send the coin back to me with the same grade as before, without taking the time to properly reconsider the coin for a possible higher grade.

Up until this past month, I felt as though PCGS was giving me consistent grades on every coin I submitted. More recently, however, it seems as though the grades have not been fair; one coin should have been an MS 68, but was given a 67, and a second was graded PR68DCAM, when it clearly should have been PR70DCAM- this coin has no scratches, a full strike, and beaming mint luster. I have the photos to prove it.

I have never posted my thoughts about third-party grading since I have mixed feelings about this type of service. I see justification for both sides of the argument. One aspect about third party grading I worry about is the concept of “market grading” and how some high volume dealers try to play on the subjective nature of market grading to try to get coins graded higher with each submission. I understand this is why PCGS created the SecurePlus service, but the need for it strikes me as a bit unseemly.

My collection includes graded coins and I participate in NGC’s Registry Set competition. But the vast majority of my collection consists of raw (not graded) coins and will probably remain that way. This is how I feel today, but I may change my mind in the future.

Mr. Wyatt said that he will be resubmitting his coins for review and will let me know what happens when they return. I will post the results when I receive them.

UGS Sues for Respect

When a company with the popularity of eBay sets an exclusive policy that says a seller cannot list a coin as certified unless it is one of a perceived top-tier grading service, it was only a matter of time before they would be sued.

It is being reported that eBay, the American Numismatic Association, the Professional Numismatics Guild, and the company of ANA President Barry Stuppler are being sued in the Eastern District of New York alleging anti-competive conduct.

The primary defendant is a company called Universal Grading Service of New Jersey. Others have ownership association with the company.

The case was filed in late August with a conference scheduled to be heard in January. The suit claims that a conspiracy exists between the defendants against small grading companies. According to the complaint, the plaintiffs are saying that eBay’s listing policy “limits the flow of goods in commerce.”

It is expected that the plaintiff will ask for class-action status.

One of the first questions would be whether New York is the proper jurisdiction for this suit. None of the organizations or officers are located in New York. Filing in New York may have been a strategic move since the court is known to be business friendly with a bias to opening markets. But without clear jurisdiction, it can be speculated that this case will be dismissed on those grounds.

Another issue is whether a non-government entity has the legal right to restrict how their site is used. Although I am not an attorney, I seem to recall similar cases where the commercial entity can restrict access to their services.

Interestingly, while UGS chooses to fight in court, Dominion Grading Service, which was formed out of the ashes of PCI, has chosen to let the market decide. DGS wants to earn respect rather than suing for it. That may be a better way to go.

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