'Independent' online review sites can mislead collectors
- Published: Jul 5, 2014, 8 AM
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.
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.”
A review site that claims to be independent, but that is compensated solely by the one coin dealer it always recommends, violates that rule.
Of course, just because a reviewer doesn’t disclose its sponsor relationships doesn’t make the reviews fraudulent. Like an athlete who actually uses the sports drink he promotes, someone can be paid for telling the truth.
Unfortunately, most of these IRA-investment review sites go way beyond the truth, or even an average consumer’s credence.
For example, one site faults coin dealers who have spotless records with their local Better Business Bureaus, speculating that they could have paid an organization to erase complaints, or changed their company names after excessive complaints had been filed.
Others, more insidiously, mislead consumers into clicking on links that send their personal information, including name, email address, and phone number to their sponsoring dealer when it appears the viewer is clicking a link to another page on the reviewer’s website. The consumer then gets a barrage of sales calls from the sponsor.
Fraudulent activity such as the above constitutes common law fraud and violations of applicable unfair business practice and false advertising laws, and possibly also state or federal laws prohibiting telemarketing fraud.
The numismatic marketplace provides a great deal of information about dealers. Consumers can determine whether a dealer is a Professional Numismatists Guild or American Numismatic Association member, whether it is an authorized dealer of the major grading services, and whether it advertises in Coin World, for just a few indicia of longevity, stature and reliability.
Don’t rely on Internet review sites to make the important decisions about where to buy coins.
US Coins Jan 24, 2020, 2 PM
World Coins Jan 23, 2020, 10 PM
US Coins Jan 23, 2020, 2 PM
US Coins Jan 23, 2020, 2 PM