This article was originally printed in the latest issue of Numismatic News.
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News that Collectors Universe filed suit at the end of May against a number of individuals who allegedly doctored coins and then submitted them to its Professional Coin Grading Service can be a game changer as far as organized numismatics is concerned.
At last we have passed from the “everybody knows doctored coins are a problem” stage to a set of legal papers where specific allegations are made against specific people. And PCGS seeks to collect damages from those named in the lawsuit.
These papers were filed with the U.S. District Court of the Central District of California. They are interesting reading.
Most readers probably wonder why it takes so long for such a legal action to occur when everyone knows coin doctoring is going on. They are right to wonder, but when you think about it, it does take a while to construct a paper trail and for a pattern of behavior to become obvious.
Historically, by standard hobby business practice, if you happen to find a doctored coin in your holdings, you are very likely to go back to the original seller you bought it from and that seller is likely to give you a refund. End of story for you. That seller is likely to go back to his source. At each step of the way, the intention is to preserve reputations and treat it like an unfortunate error, which historically, has usually been the case.
Only those involved have knowledge of each situation, so nobody can really see the proof of the big picture even if they think they know.
It is not in the interests of the parties involved to make the process take even longer and become even more expensive to rectify. So at each step along the way, as each seller makes good on an unfortunate purchase, it ends any legal avenue for further remedy. All of the actors behaved in an ethical and professional manner.
In law, if you have been damaged and that damage has been made good, you generally don’t have a legal basis for further action even if you would want to for the good of the hobby.
However, with PCGS guaranteeing that coins in its slabs are not doctored and by having a buy-back policy that actually buys back problem coins, PCGS is not only practicing good business, but it is also making itself suffer damages. It pays out the money for coins that are not what they were represented to be. It has the right to seek a legal remedy. The firm’s records are the evidence behind its allegations.
Further, PCGS protected itself by having those who submit coins sign an agreement that stated they would not “knowingly submit to PCGS coins which have been ‘doctored.’” This tightens the legal knot because, while everybody is entitled to a mistake, when it happens over and over, that becomes an interesting pattern.
Courts try cases on the basis of facts and all parties will be heard. But if PCGS prevails and is allowed to collect damages, the game indeed has changed.
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