How to Protect Yourself: Rare Coin Investment Schemes
Source: Florida Attorney General's Office
Thousands of consumers fall victim each year to rare coin investment schemes. It is not uncommon for individual victims of rare coin investment scams to lose more than $100,000.00 to a single telemarketing scam. Slick telemarketers try to convince you that the dollar is weak and that rare coins or gems or precious metals are a solid investment that quickly increases in value. Don't be fooled. Few consumers ever profit from investing in rare coins or other commodities, simply because the consumers do not know enough information to make smart investment decisions.
If you are looking to invest in rare coins, do your homework first.
Independently research the rare coin market
Instinctively disbelieve everything the telemarketer tells you on the phone. Go to the local library. Read numismatic (coin) and investing publications. Talk to a respected coin dealer in your area. Contact the American Numismatic Association (818 N. Cascade Ave., Colorado Springs, Colorado 80903; phone (719)632-2646). Ask questions. Understand rare coin quality and grading. Learn realistic market values. Research profit history in rare coin investing. Certainly, an informed investor can make money with rare coins. An uninformed investor can lose a fortune with rare coins.
Deal with a reputable company
Call the consumer protection agency or the Attorney General's Office in the company's home state. Find out when the company first became incorporated. Find out the company's history of consumer complaints. Ask the company for written information first. Be very wary of companies that telephone or write you unsolicited to sell you rare coins.
Be skeptical of the seller's certificates guaranteeing the value
of the rare coins
Value and grading are merely subjective. That means that different people may have very different opinions about the value of the rare coins. Value can also be based on many different things (retail price, wholesale price, replacement cost, cash liquidation value, etc.). Independently hire someone you trust to perform the appraisal of the rare coins. Learn the cash liquidation value -- as this is the price you will probably receive when you sell the rare coins. This price might be much less than you anticipated.
Do not be pressured into making a bad decision
If the telemarketing salesperson uses high pressure tactics to force you to buy now (we only have a few good items left or the offer expires tomorrow), do not do business with this company. Ask the seller to put all the terms of the sale in writing before you buy the rare coins, including return and resale privileges.
Reselling your rare coins
Remember, rare coins are not a liquid investment. That means that they cannot generally be resold quickly for a profit. If you need to sell your rare coins quickly and the market is down, you could lose money on your investment. Also, although you will buy your rare coins at retail prices, you will probably sell them at wholesale prices. In fact, most investors hold on to their rare coins for at least ten years. It may be very difficult to find a buyer. Beware: telemarketing scammers (using a new name) often target previous rare coin buyers for revictimization using claims that they can help sell your rare coins.
If you become defrauded
File a complaint with the Attorney General's office in the state where the company is located. That office may be able to help you and the other victims of this scheme.