Coin collecting is an enjoyable hobby that can occasionally be very lucrative. Most people have fond memories of their father or grandfather’s coin sets! And that’s one of the reasons why it’s easy to scam people into spending big money on coins that turn out to be worthless.
Online coin selling makes it super-easy to get people to “invest” in commemorative coins. It’s hard to avoid glossy coin ads on social media. But now, commemorative coin fraud has become so prominent that the FBI and Department of Treasury have warned about the dangers of buying counterfeit coins on online auctions, social media, or retail websites. And there’s a sting in the tail of these scams. Many auction websites are fake or malicious, specially created to steal people’s credit card details and other personal information.
Let’s look at what you should consider before buying one of these beautiful, precious items.
What are Commemorative Coins?
Commemorative coins are special coins issued in limited numbers to help raise money or awareness about specific people, events, or causes. They are legal tender, even if most commemorative coins are not intended for general circulation. In the U.S., Congress enacts legislation to dictate the coin specifications and specifies a surcharge amount – a premium – to be paid for each coin. That extra money is intended to fund specific projects associated with that coin.
The U.S. Mint manages the funds generated by this surcharge money to make sure it reaches the intended recipients. Some examples are military or sport-themed commemoratives or coins about breast cancer awareness.
What is the allure and significance of Commemorative Coins?
Commemorative coins are “monetary art struck in precious metal” designed to reflect something of social or historical significance. They come in different finishes (e.g., proof or uncirculated) and metal types (e.g., gold, silver, or clad). The coin’s price and worth vary according to these characteristics.
Collecting commemorative coins is a popular and enjoyable hobby that doesn’t take much time from people’s busy schedules. They also do a lot of good because they’re priced higher than their face value (denomination) or intrinsic (precious metal) value, with the extra money going toward supporting public projects.
How do people get scammed with commemorative coins?
Scammers take advantage of the aura of mystique, romance, and the hype around something people don’t understand but are keen to get in on. They also often target senior citizens and retirees.
- Deceptive sales pitches: They claim that the coins are worth far more than they really are. Some fraudsters even claim that certain mints “accidentally and secretly” contain more silver or gold than the government lets on.
- Disappearing act: They get you to pay but then disappear, and you never receive anything.
- Fake coins: They send you counterfeit coins that have no resale value. Most people only discover the deception when they want to sell the coins years later.
- Scare tactics: They claim that the economy is on the verge of collapse and that only precious metals will have any value. Some claim that the government is about to confiscate private property and that precious metals are the only way to keep some wealth.
- Identity theft: Many coin websites are fronts for phishing attacks. They steal your personal data and credit card details, clear out your bank accounts, and destroy your credit. Always use a high-quality VPN with a link-checker to stop you from entering malicious websites. There are plenty of good VPN deals that can help to find the best service for you.
In legal terms, some offenses they commit can be classified as a breach of contract, deceptive trade practices, violation of laws protecting the elderly, misrepresentation, fraud, and unjust enrichment.
A double or even triple blow for the elderly
Many victims are elderly or retired. Fraudsters are skillful salespeople who are well-seasoned in pressuring people. They often get people to sell their stocks, roll over retirement funds from 401(k) accounts and IRAs, and cash out their annuities and life insurance policies. And as if it’s not enough, the victims risk identity theft when purchasing online.
12 Common signs to look out for
Scammers rely heavily on scare tactics to create a false sense of urgency. They also capitalize on an aura of “secret insider knowledge.”
- Claiming scarcity and a limited supply, e.g., “There are only 7 coins left, and the Asian market wants them”.
- Invoking fears of an imminent stock market crash where only precious metals will be worth anything.
- Exaggerated projections of the future value of gold or silver.
- Insider knowledge of the government’s intention to seize money held in an IRA or other retirement accounts.
- Offering a very special discount “just for you, just for today if you buy now.” 6. Offering you “very special” coins in special packaging or signed by a celebrity or government official that are supposedly more valuable than similar coins.
- Won’t take no for an answer and keeps calling or coming back.
- Calling you incessantly with new special offers.
- Doing personal favors, giving you small presents, and trying to become your friend. 10. Claiming to be “metals dealers” or “metals merchants” in a regulated industry with a government agency.
- Can’t prove that they are registered and licensed to sell precious metals.
- Insists on getting your signature to abide by their “rules” – or clicking on an online form to consent to vague or misleading terms and conditions.
How can you avoid Commemorative Coin fraud?
Most scammy companies focus on the conservative public, zooming in on Christian and politically conservative communities. They often have a large digital footprint on social media. They also operate seemingly above-board websites and even take out adverts on radio and TV. Their adverts promise very
high returns and future wealth based on spurious claims about the prices of precious metals. They often operate call centers for making cold calls and sometimes employ door-to-door salespeople who “happen to be in the area.”
- Be wary of those glossy commercials. If it seems too good to be true, it always is!
- Legitimate coin dealers don’t use the cold-call approach.
- Always check the company’s credentials to make sure they are licensed to trade in precious metals. For instance, the National Futures Association (NFA) is a self-regulatory industry agency. Your state certainly has a regulatory agency. The U.S. Commodity Futures Trading Commission (CFTC) is a regulatory agency where you can check the seller’s registration status and even disciplinary history, if applicable.
- You should also check online reviews or Better Business Bureau complaints before you take the plunge.
What can you do about concerns over Commemorative Coin transactions?
If you’ve previously been at the receiving end of such aggressive sales tactics, it’s not too late to contact the authorities. The U.S. Secret Service is interested in any transactions involving counterfeit coins. You can also file complaints with the U.S. Treasury Office of Inspector General, the Anti-Counterfeiting Task Force, and the FBI’s Internet Crime Complaint Center.
