The E-Sylum:  Volume 8, Number 46, October 30, 2005, Article 12

MORE ON THE 9/11 "COIN" FINES

Regarding the fines levied against the makers of the 9/11
"coin", Richard Schaefer writes: "Dick Johnson's comments
are disappointing. Mr. Spitzer is a careful prosecutor and
his charges were unchallenged. Yet Mr. Johnson omits
both charges and merely mentions that collectors buy and
Americans use base metal coins all the time. Why doesn't
Mr. Johnson say that these sellers not only sold base metal
coins but claimed the coins were pure silver? This is fraud.

There is no chill for honest business people, only for frauds.
Shouldn't we be glad that the medal business in NY State has
been purified? The great majority of numismatic dealers and
manufacturers are honest, and this case will protect them and
their customers."

Neil Simmons writes: "I'm very surprised by your (and Dick's)
comments about the 9-11 medal marketing.

Are you also opposed to ANA/PNG/IAPN codes of conduct?
Are those organizations merely bothersome "do-gooders" in the
hobby? And was the Hobby Protection Act a bad mistake?

It seems to me that the issue is blatantly false claims by the
company: they weren't pure silver, and they weren't legal tender.

Medal manufacturers have nothing to fear as long as they don't
lie about their product. On the other hand, collectors concerned
about the health of the hobby should fear the effect of marketers
like these... potential new collectors are put off when they discover
they've been lied to... whether that news comes from the State
of New York, or when they try to sell their medal to a reputable
dealer some day and can't even get the (supposed) bullion value."

Kavan Ratnatunga writes: "Allowing for the cost of making the
medals and the advertising costs of the Scam the $370K fine is
probably about 5% of the Pure SCAM profit. Rather than
been excessive, IMHO it is just a slap on the wrist."

[They had to refund about $2 million in addition to the fine.
But that's still relatively small, I suppose, but no mere slap
on the wrist. Where I agreed with Dick was on the unfortunate
effects the prosecution could have on other coin and medal
purveyors who aren't so loose with the facts in their advertising.
Any national advertiser will have tremendous fixed costs that
have to be made up with huge markups on the merchandise.
If the large ads were touting accurately described coins or
medals priced ten times the going price on the coin market,
would that be considered a scam, too? I used to think so,
but no longer. As long as the items are not described in a
misleading manner, then such ads should be perfectly legal.

As a young collector I recall answering ads from Littleton Coin
Company. I enjoyed my packages of coins and didn't know
or care that the same coins could often be found at local coin
shows for a fraction of the cost. I didn't go to those shows,
and was blissfully happy in my ignorance. Later, once I learned
where to buy the coins I wanted more cheaply, I generally
shopped elsewhere. But Littleton had very high marketing costs
for printing, advertising and mailing in order to reach me, and I
feel that whatever I paid was worth it at the time.

It is also an unfortunate that this prosecution affected just one
issue by one marketer from one state. I agree that the advertising
for this particular piece was misleading and that a fine and restitution
were certainly called for. But there are hundreds of these misleading
marketing ploys out there; what I'd like to see is a nationwide
enforcement of the existing laws for truth in advertising such items.
-Editor]

  Wayne Homren, Editor

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