Insights

Be aware of 'independent' online coin dealer review sites that can sometimes mislead collectors

Collectibles and Law column from the July 21, 2014 issue, of Coin World
By Armen R. Vartian , Coin World
Published : 07/05/14
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The Internet is amazing, but not always in a good way. Consumers can buy nearly anything they desire from their living rooms, and compare vendors by price, reputation and location.

However, in a consumer’s living room, all vendors might appear alike, and reputations cannot be checked easily. Price, availability and reliability are difficult to verify.

And perhaps most importantly, online testimonials and customer “feedback” can be manipulated to make unscrupulous dealers seem on par with the best in the business.

Busy market

Right now, the busy market in modern precious metal coins as IRA investments has spawned a slew of “independent” review sites, which claim to compare coin dealers impartially to assist investors. Some of these sites review dealers individually, others show side-by-side comparisons using various criteria, and still others involve video presentations by so-called investment advisers about precious metal investing, leading to a discussion of from which dealer to buy.

While these sites sound like useful tools for investors, in fact the reviewers tend to not be independent, but rather compensated by the coin dealers they recommend.

One California retailer stands out as the one recommended by nearly every review site. Currently, several lawsuits are pending against that dealer complaining that its network of review sites violates both a Federal Trade Commission rule and California statutory law.

The FTC “Disclosure of Material Connections” rule, codified at 16 C.F.R. 255.5, states, “When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed.”

Rules violation

A review site that claims to be independent, but that is compensated solely by the one coin dealer it always recommends, violates that rule.

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1 comment
I will agree with this article my husband and I have been buying and selling coins since the summer of 1978 we are both members of the sc-na.org that is south Carolina numismatic association I'm a board member we set up at 20-25 shows a year I still consider us to be little dealers even though we haul a 16' trailer and set up at the Fun show in Florida we only sell supplies at most shows now but I tell people build a relationship with someone you can trust and shows are a good place to start you have many dealers to choose from even if it is just a small club show you should we a few good dealers in the room who probably have a site near you! Kathy Leaphart " Fun member , SCNA member, ANA member. We own and run Leaphart Supply and I work part time for Low Country Coins in Columbia SC.