The U.S. Money Reserve Inc., also known as U.S. Rare Coin and
Bullion Reserve, has agreed to pay $5 million in restitution to
customers to settle allegations of false and deceptive trade practices
in an agreement with the Texas Attorney General’s office.
In the agreement, the firm acknowledged no wrongdoing, but agreed
to change its sales practices. The order approving the voluntary
compliance was filed Nov. 15 in Texas’ Travis County District Court,
although the agreement between the firm and the state was reached Oct. 11.
The Austin-based firm stated on its website as of Nov. 22: “As one
of the nation’s largest distributors of U.S. Gov’t Issued Gold Coins,
the U.S. Money Reserve is committed to providing customers with Gold
Coins that command the greatest potential for appreciating in future
value. With the price of Gold rising more than 400% over the past
decade, collectors everywhere are rushing to move their money into
U.S. Gold Coins.”
The firm was established in 2001, according to the Better Business
Bureau. In 2008, the Office of the Texas Attorney General informed
U.S. Money Reserve that the office’s Consumer Protection Division was
reviewing the firm’s sales practices.
Alleged deceptive practices
The Texas Attorney General’s Office had alleged that U.S. Rare
Coin — a seller of U.S. gold, silver and platinum coins — marketed its
coins to consumers in a deceptive manner. The state described the
firm’s business practice in offering American Eagle tenth-ounce gold
$5 bullion coins with “no dealer mark-up” to entice customers to call.
Once consumers called, the firm would try to sell them more expensive
Proof and commemorative coins. The state’s investigation centered on
the firm’s efforts to market commemorative gold coins for
substantially higher premiums than ordinary bullion coins.
The state claimed that the firm would use “truisms from the
bullion gold market, such as the value of gold will go up when the
value of the dollar goes down, to sell the gold modern commemorative
coins and proof coins.”
The voluntary compliance order noted something well known to coin
collectors, stating: “What is true for the bullion gold market is not
necessarily true for the commemorative gold coin or proof gold coin
markets. The value of commemorative and proof coins is based upon
subjective factors such as age, rarity and condition.”
Consumers complained to the state that when they tried to sell
coins back to the firm, the company offered them substantially less
than the purchase price, even in a rapidly rising bullion market.
A voluntary compliance order
In the voluntary compliance order, U.S. Rare Coin and Bullion
Reserve denied the allegations, but agreed that its representations
would not suggest that the firm was affiliated with the U.S.
government or the Mint, and would more clearly describe the risks
involved in investing in precious metals and rare coins. Further, the
firm agreed to not misrepresent the expected growth in value of a coin
or its rarity, and would not use a bait-and-switch technique to try to
entice people to buy more expensive coins by discouraging them from
purchasing the advertised coins.
The firm agreed that it would not represent its salespersons as
being qualified to advise consumers on coins as investments or tax
implications resulting from the purchase or sale of coins, unless the
salesperson is a certified financial planner. It also agreed to limits
in contacting consumers over 65 years of age and limited its calling
from between 9 a.m. and 9 p.m. in the time zone in which the call is answered.
Finally, the firm agreed to disclose the following information in
all advertisements in such a manner as to be clearly understandable
and readable to the normal consumer:
1. The markets for coins are unregulated.
2. Prices can rise or fall. Buying coins carries some risks.
3. The company is not affiliated with the U.S. Government and the
4. Past performance of the coin or the market cannot predict
The firm also agreed to disclose these four points in an audible
voice at such a rate that the consumer can comprehend and understand
during the verification portion of each call in which U.S. Rare Coin
makes a sale.
Still selling gold
The firm had 30 days from Nov. 15 to comply with the order and has
been ordered to make quarterly reports to the Office of the Texas
Attorney General Consumer Protection and Public Health Division that
describe the restitution paid.
As of Nov. 22, the firm’s website generally termed commemorative
gold coins, “U.S. Congressional Gold Coins,” calling them “among the
hottest and most collectible legal tender Gold Coins around.” It also
continued to offer American Eagle tenth-ounce gold $5 bullion coins
“free of dealer markup,” advertising them “at our current market
cost.” The firm adds, “This extremely limited offer is subject to
availability and may be withdrawn at any time.”
As of Nov. 22, the Better Business Bureau’s website stated that 41
complaints have been filed against the business and two serious
complaints filed. Earlier this year, the BBB contacted the company
about its print advertisement for the sale of American Eagle
tenth-ounce gold $5 bullion coins in the Feb. 23, 2011, issue of the
Cincinnati Enquirer and the Jan. 7, 2011, issue of the St. Louis Post.
The BBB expressed concern about the possibility of consumers confusing
the firm with the government, and the advertisement’s claims that
experts predicted gold to reach $5,000 an ounce. The company had not
responded the Better Business Bureau as of Nov. 22.
To inquire about eligibility for this restitution program,
customers should contact U.S. Money Reserve at 800-867-6101. The
amount of restitution depends upon the date of purchase of coins, with
valid purchase dates ranging from May 1, 2005 to Dec. 31, 2010. ■