If significant changes had not been made before the final vote, a new Texas law aimed at protecting consumers from some questionable, out-of-state, “hotel gold buyers” probably also would have killed the legitimate business of many Texas numismatic companies. That legislation, H.B. 2490, now has been signed into law by Texas Gov. Rick Perry, but without the potentially devastating requirements for coin dealers and customers that earlier were contained in the bill.
The elimination of burdensome, ruinous language from the bill was the result of constant monitoring of proposed legislation that could affect numismatic transactions, one-on-one relationships with supportive legislators and the assistance of an experienced lobbyist. These actions averted the potential company-killer mandates while still protecting the public when they sell precious metals in Texas. It’s a lesson in vigilance that every dealer in every state should learn.
Here’s what happened in Texas.
The numismatic community works closely with lobbyists to continually monitor legislative bills and their evolution. We were originally watching for possible legislation that would have repealed an existing Texas tax exemption for sales of numismatic coins and precious metals items priced at $1,000 or more. The repeal of that exemption fortunately didn’t happen. But while trying to protect that important exemption we discovered H.B. 2490, proposed legislation that would have put onerous reporting requirements and intolerable 30-day holding periods on purchases of precious metals, namely coins, medallions, bars and other forms of commonly traded precious metals. These constraints obviously would kill the business of major numismatic dealers in Texas as well as put an end to most coin shows in the state.
This legislation originally was desired by pawnbrokers, working through their lobbyists, along with input from law enforcement agencies. It required registration for all buyers of “crafted” precious metals, including itinerant hotel buyers as well as brick and mortar dealers.
During this period I received and appreciated important assistance from Jerry Jordan, an award-winning newspaper editor. I also received essential assistance from many prominent Texas members of the Professional Numismatists Guild and members nationwide of the Industry Council for Tangible Assets and ICTA staff on how best to prevent this adverse law from getting passed. Because of this persistence, the final version of the law contains exemptions for coins, bars, medallions and items purchased for more than 105 percent of melt. The proposed holding period of 30 days was removed. But during the evolution of the proposed law, and just one week before the scheduled final vote on the legislation, some of our important exemptions were unexpectedly removed. Due to continuous monitoring and interaction with good legislators and their staffs, the exemptions were quickly reinserted into the bill.
Our personal relationships with key representatives and senators helped big time. The lawmakers were made aware of why a holding period of 30 days for buying coins, medallions and bars from dealers and the public would decrease prices dealers offer and end coin shows and auctions as we know them, and why our business model is very different compared to pawn shops. Our 105 percent provision was accepted to alleviate restrictions on valuable art items for auction and resale.
The Texas legislature and rule makers with the Office of Consumer Credit Counsel were impressively attentive, appreciative and receptive to our input; however, that may not be the case with other government organizations. We are currently providing input to the OCCC on implementation of the law. This phase is also critical to monitor, as subtle rules requirements can create unintended burdens on coin dealers.
This law, which we did not create, was mainly aimed at transient buyers whose ads misleadingly state “highest prices paid” and “nobody pays more.” Hotel precious metals buyers were also typically less cooperative with law enforcement in theft cases than brick-and-mortar buyers, according to several police chiefs who spoke to that point in legislative committee hearings I attended in Austin.
This new law will require a relatively simple and inexpensive registration process for buyers. It will require that customers and law enforcement receive a standardized receipt — transient buyers typically refuse to provide transaction receipts — and it also will inform customers on their receipts about a state agency they can contact regarding their concerns. This agency can also take action on consumer complaints.
I believe we avoided a catastrophic law. We ended up with a minimally obtrusive law that only relates to precious metal scrap buyers. Dealers who only deal in coins, medallions and bars are exempt. It provides improved consumer protection as it relates to transient and lowball buyers, and improves assistance to law enforcement agencies.
All PNG and ICTA dealers are urged to monitor legislative activities in their own states. Every time a new version of a bill comes out, you have to read it word for word. ICTA’s primary focus is on federal legislation, but ICTA has provided effective resources and assistance on the state level, too, when Eloise Ullman and Diane Piret are made aware early of potentially detrimental legislation.
If we had not had an experienced lobbyist in Texas, we may have had to live with a more restrictive law until the next legislative session in two years. But repealing an existing law such as this is often exceedingly difficult and expensive.
Be alert. Be vigilant. Be ready to help save your business and our profession, and make a safer market for the public. ■
Michael Fuljenz is a board member of the Industry Council for Tangible Assets and the Gold and Silver Political Action Committee. He is president of Universal Coin & Bullion in Beaumont, Texas.