By Jesse Robitaille
This is part one of a two-part series involving counterfeit coins in Canada. See the next issue of Canadian Coin News for part two.
There’s cause for concern in the coin community over something that has been brewing for decades. Now, with a perfect storm of anonymous markets, advanced “replicating” techniques and shady morals, counterfeit coins are being called a plague on the hobby.
Sean Isaacs, of Alliance Coin and Banknote, said counterfeiting is among the most serious issues facing collectors today.
“In the olden days, one really had to worry only about good counterfeits of rare coins, as well as crappy counterfeits generally intended to fool tourists or complete novices.”
Today, he said, the risk has grown exponentially.
“Yes, we still encounter the crappy fakes of far-off shores, but now the Chinese counterfeiting market – or ‘replicas’, as they like to lie – has exploded.”
And the problem doesn’t end with common coins like Canadian and U.S. silver dollars, Isaacs said.
“Virtually every notable Canadian and world type coin you can think of is now entering the market in the form of fakes – right down to Canadian bullion as well as Royal Canadian Mint commemorative coins.”
According to Canada’s Criminal Code (sections 448-450), making, selling and uttering counterfeit legal tender coins – both circulating and non-circulating – is illegal in this country; convictions lead to up to 14 years in jail. As such, the Mint works with law enforcement around the world to help quickly authenticate potential counterfeits.
Representatives from the Mint were unable to be reached for comment by the time of printing, however, on the Mint’s website (mint.ca/store/mint/customer-service/faq-1100010#Q1a), collectors can find tips on how to avoid counterfeits as well as a list of reputable sellers.
Mike Marshall, a well-known counterfeit researcher and educator out of Trenton, Ont., said he reported nine sellers on eBay on the day we spoke, March 25, for a total of 54 counterfeit items in one day. Alarmingly, he says he reported more than 200 counterfeits within that one-week period.
“I believe that I reported over 2,000 counterfeit coins in a one-month span in February of 2013 on eBay alone,” he said, adding that most were non-circulating legal tender (NCLT) – or collector coins. He has reported more than 100,000 coins since 2007, he estimates.
Isaacs said the problem is now so widespread that it involves more innocuous coins, like the George V nickels, which have never required as close of a look as they do today.
“The problem is quite serious, and the corresponding risks increase in proportion to one’s knowledge in the hobby.”
And it’s not just your knowledge that’s important – the quality and authenticity of an item being sold is often dependent on the knowledge and expertise of the seller, he said.
“A 14-year-old kid selling an older silver dollar on eBay might have great intentions, but there is nothing to prevent him or her from handling a piece of questionable authenticity and not knowing it.”
For this reason and many others, Isaacs said buying in person is very different from buying online, where return privileges are increasingly turned down.
For the careful collector, Isaacs said purchasing from a reputable dealer is the best way to acquire coins, whereas buying online presents a certain level of risk in terms of both satisfaction and economics.
“As it has always been, any security in a buyer-seller transaction hinges on relationship. As the obvious extreme example, purchasing a good coin off someone from Kijiji out of the back of a van carries with it an entirely different set of dynamics and risk compared to visiting the shop of a known CAND (Canadian Association of Numismatic Dealers) dealer and doing the same deal.”
He said as recently as one decade ago, experts would have simply said “buy certified” to collectors who wished to avoid the majority of risks.
“However, today – in the age of complete slab and coin counterfeiting – you simply have to be able to purchase with confidence.”
For “sight-unseen transactions,” like at auction or by mail, Isaacs said secure and transparent return privileges help boost buyer confidence.
Terms such as “returns not accepted” are a large red flag in a deal, he added.
“The second … obvious risk of buying online is either being outright defrauded – watching the mailbox until the end of time – or being shipped unsatisfactory or counterfeit material.”
He said the terms of recourse and reputation of a seller are both paramount when buying online.
“Like me, many collectors today are forced to utilize whatever venue offers what they are interested in. EBay is wonderful for tracking down incredibly specific or obscure pieces that you would never find in the pre-Internet days. I am a regular shopper there, and I’ve never had to return anything and do take note of their customer-feedback rating on the rare occasion I get involved with an expensive purchase.”
All things considered, it’s the relationship with your dealer that matters most, he said.
“At the end of the day, there is nothing like establishing a long-term relationship with a dealer who can take active note of your own particular collecting interests, even if such a relationship – either through geography or mobility – never actually involves a face-to-face encounter.”
And while buying in person allows for instant verification of a purchase before any money exchanges hands, “one method is not absolutely better than the other,” said Isaacs.
“Trust and buyer confidence can be just as effectively established through an exchange of communications as it can through a handshake.”
And if that trust and confidence fades, Isaacs said the average collector probably isn’t capable of conducting comprehensive tests to differentiate an authentic item from a fake.
“When dealing with coins, however, the most readily-accessible test is to weigh a piece. Traditionally, the vast majority of what we have termed ‘crappy counterfeits’ will have wildly incorrect weights. This is a quick and easy first level of defence.”
However, counterfeiters are more skilled today than ever, and in many cases the weight test no longer offers protection.
“Again, it is one test that just about everyone has access to, if there is any doubt as to legitimacy. Other than the weight test, there is simply no substitute for experience and exposure to the item in question,” said Isaacs, adding that many other tests are invasive, and few collectors are willing to “scrape out their 1948 silver dollar to ensure there really is silver beneath the surface,” for example.
“If one has the ability to request certification of a coin before purchase – a service your dealer may be willing to do in order to make the sale work – this is an ideal scenario which goes a long way to eliminating risk in a transaction.” W
Join us next issue as we delve deeper into the counterfeit problem with esteemed coin researcher and educator, Mike Marshall.