The Federal Trade Commission has just announced that during 2014 it will be reviewing two laws that happen to affect the coin industry, namely the Hobby Protection Act and the Telemarketing Sales Rule. This type of review usually involves soliciting comments from industry participants, including the general public.
Participants can recommend changes to the relevant laws, or oppose changes, in favor of keeping the law as is. The FTC then considers the comments and its own staff’s views, and decides whether or not to recommend changes.
Hobby Protection Act
The Hobby Protection Act, and its corresponding regulations, located at 15 United States Code §2101 et seq. and 16 Code of Federal Regulations §304.1 et seq., prohibit the manufacture and importation into the U.S. of “original numismatic items” not marked COPY according to size and location parameters set forth in the regulations.
It is enforceable through civil actions in federal district court by “any interested person” (15 U.S.C. §2102), through enforcement actions by the FTC (15 U.S.C. §2103), and “seizure and forfeiture” of nonconforming items by the U.S. Customs Service (15 U.S.C. §2104).
Over the years, it has become clear that the Hobby Protection Act needs clarification and amendment. Congress should address one gaping hole in the act, namely that it doesn’t penalize the sale of noncompliant coins, only their manufacture and importation, which often are managed by foreign (e.g. Chinese) entities that aren’t realistically subject to U.S. regulation.
The Collectible Coin Protection Act, passed by the U.S. House of Representatives last year and currently in the Senate, will cure that defect, and should be supported by the FTC for that purpose.
In addition, it would be helpful to clarify whether the act covers only copies of actual coins, or anything that might appear to be a coin, such as the 9/11-related issues that a 2005 court decision declared required the word COPY, even though they were original designs and not copies of any prior issue.
Telemarketing Sales Rule
As for the Telemarketing Sales Rule, found at 16 CFR §310.1 et seq., it has been amended several times since its initial adoption in 1996, but has failed to keep pace with either technology or the evolution of business methods in the past two decades.