Buying coins from online auction sites such as eBay can be a good way to find a bargain, but it can also be a good way to get ripped off! One of the most rampant coin-related frauds on eBay is the "graded coin value" fraud.
How The Scam Works
The graded coin value fraud works like this: The unscrupulous seller will post an auction for a coin that has been graded by a "third tier" grading service, and then claim the value of the coin according to PCGS graded values. This is frequently done in lots; you'll see a photo of a small collection that the seller claims he or she inherited or bought at an estate sale. The photo will usually have several encapsulated coins in it. The seller will then link to, or quote, PCGS values for these coins as if they had been graded and encapsulated by PCGS, when in fact, the coins are greatly over-graded and in third tier slabs.
An $7,500 Coin for $400?
For example, a seller will list an encapsulated 1968-D business strike Washington Quarter, graded MS-68. He will encourage potential bidders to visit the PCGS coin values page to verify his claim that the coin is worth $7,500 in MS-68. The buyer checks PCGS, and sure enough, the 1968-D MS-68 quarter is listed, for $7,500 (the price as of this writing.) His asking price of $400 is seemingly a bargain! After all, the coin is graded and slabbed. But there's a problem here...
The Coin Grading Service is WHAT Company?!
The problem is that the coin was graded by SGS. SGS, (Star Grading Service), is a "third tier" service that, according to its web site, "specializes in grades 60 through 70." Apparently, these are the only grades they issue! So, a coin graded by PCGS as AU-50 would grade somewhere between MS-60 and MS-70 at Star, probably near the higher end, as my own testing indicates.
MS-68 by Any Other Name is Not "PCGS MS-68"
The old saying, "A rose by any other name would smell just as sweet" does not apply to the world of coin grading! Each grading service has its own standards, and just because SGS grades a coin MS-68 does not make it worth the same amount of money as a coin graded by PCGS as MS-68! The reason for this is that PCGS has very conservative grading standards. So the next time you see someone claim PCGS values for slabbed coins, consider the holder it's in. If it's not in a PCGS holder, PCGS values do not apply.
The Three Tiers of Grading Services
Coin grading and encapsulation services are generally regarded as belonging to one of three tiers:
- Top Tier - PCGS and NGC
- Second Tier - ANACS and ICG
- Third Tier - All others, including ACG, INB, NTC, PCI, SEGS, SGS, etc.
Because NGC is also very highly regarded for their conservative and consistent grading, coins that are in NGC slabs are valued approximately the same as PCGS coins. But if you see sellers claiming PCGS prices for coins in any other grading company's holder, beware!
EBay Takes Action
In an effort to reduce this type of fraud, eBay has started enforcing new rules when selling coins. This includes a prohibition on selling replica or copy coins. This even includes coins that are marked with the word "COPY" on the coin. Additionally, you can only use the numeric grade of a coin in the title if the coin has been graded by an approved third party grading service. Currently, this includes: PCGS, NGC, IGC and ANACS.
Coins over a certain value (currently: $2500) must be graded and encapsulated by one of the approved third-party grading services. If a coin is not graded by one of the approved third party grading companies, and must follow the guidelines for listing a raw coin. This includes monetary limits and photographs of the coin actually being sold. You can visit eBay's website for a complete description of their coins, stamps and currency policy.
Edited by: James Bucki