At last week’s American Numismatic Association World’s Fair of Money in Rosemont, Ill., I was able to gather many more details on the evolution of the Minnesota coin dealer registration law that became effective July 1.
Apparently, Minnesota was the base of operations for several marketers of different kinds of collectibles at prices that were much higher than those quoted by other dealers. Some of the selling practices by these companies were close to or exceeded the limits of what was legal. Some of these marketers sold numismatic products. In order to obtain products to sell, these numismatic marketers purchased inventory from other coin dealers. Some coin dealers who provided the inventory were aware of the marketing practices of these firms.
A reporter for the Minneapolis Star Tribune compiled an investigative report on some of these marketers, but apparently focused only on the ones selling numismatic products. During the course of the investigation, coin dealers across the country were interviewed. At the ANA show, multiple dealers who were interviewed told me that the reporter’s attitude was that “coin dealer” and “crook” were one and the same, that the reporter was interested only in attacking all marketing of numismatic items, and that none of the information provided in interviews that defended legitimate industry practices were included in the published newspaper stories.
The published articles, therefore, attacked the entire numismatic industry. This information sparked the Minnesota attorney general to do something. That turned out to be the recently effected coin dealer registration law.
Repeated surveys in Minnesota report a high approval for this new law, with almost none of the public aware of the deceptions used to create the impetus for the law to be enacted.
In establishing this law, the Minnesota government has not addressed the overall problem of aggressive marketers selling a variety of non-numismatic collectibles at non-competitive prices. Further, it is hard to see how a single coin dealer who barely makes $5,000 of retail sales annually of covered coins containing gold or silver could be operating a huge nationwide deceptive marketing program. Yet, it is these dealers who are suffering most under the new law. Marketers selling at high prices relative to the wholesale market can much more easily afford 1) the cost of all the background checks, 2) bonding of staffs, and 3) the extra paperwork required to register with the Minnesota Department of Commerce and then sell coins to Minnesota retail customers.
Preliminary indications are that a high percentage of Minnesota coin dealers, perhaps as much as half of them, are closing their operations. One dealer predicted that the aggressive tactics used to hassle dealers attending coin shows in Minnesota will destroy all but two shows across the state. Since several of the shows that will cease provide financial support to local coin clubs, there is a good chance that several of these clubs will disappear.
As of the middle of last week, only five non-Minnesota coin dealers had registered with the Minnesota Department of Commerce to sell to retail customers in that state. I heard multiple complaints at the ANA that Minnesota collectors were turned away from doing business with many dealers, simply because of the state where they live.
To summarize, the new law does little to address the problem of Minnesota-based marketers of high-priced (relative to what most dealer charge) collectibles. It does serious harm to Minnesota and non-Minnesota dealers who are not engaged in the objectionable marketing practices. It is already reducing the options for Minnesota collectors to visit local coin shops, coin shows and to deal with out-of-state dealers. Ultimately, it is the general public in Minnesota that will suffer from the impact of the newly effective coin dealer law in that state.
Perhaps the scariest news is that legislators in another state, one of the most populous in the country, are already considering the adoption of this Minnesota law in that state. To protect the identity of my source, I will not identify this state. Unfortunately, there is a risk that, if the Minnesota law continues in its current form, this could be a precedent for similar laws in other states.
Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes “Liberty’s Outlook,” a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Other commentaries are available at Coin Week (http://www.coinweek.com and http://www.coininfo.com). He also writes a bi-monthly column on collectibles for “The Greater Lansing Business Monthly” (http://www.lansingbusinessmonthly.com/articles/department-columns). His radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com).