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Increasingly, Internet sellers on Proxibid, HiBid, and Live Auctioneers are asking for wire transfers for payment of coins when the amount reaches a certain threshold, as low as $200 in some cases. Here’s an example:
This bypasses seller transaction fees leveled by credit card companies. But again, the buyers are being burdened and paying the price, making some transactions less desirable. For bidders like me, who refuse to wire money, I only bid up to the stated maximum for credit cards, meaning there are fewer bids as a consequence, especially for high-end coins.
The word “wire” is antiquated. Years ago, people moved money over telegraph wires. A person would head to the nearest telegraph office and pay there. Then an agent would send a message to the telegraph office in another locale, where the recipient would be waiting. Only then would funds be released.
Now all of this is done online, with buyers taking money from their accounts and sending it to a recipient who provides a bank account number, routing number, and other pertinent data.
Chase provides three pages of instructions (too long to summarize here) concerning wire transfers. Click on the photo below for the link and content.
According to Bankrate.com: “Wires are one of the most expensive ways to transfer money, because banks generally charge outgoing wire transfer fees. Some banks and accounts may even charge for incoming wire transfers. Domestic outgoing wire transfer fees average about $26 and outgoing international wire fees average $42.”
Wire transfers are used by scammers because such transfers cannot be reversed. Once you hit send, the money disappears from your account. If you send to the wrong bank account, perhaps by erroneously typing in numbers, you still are liable for the funds. If a teller makes the error, the bank may reimburse you.
Wells Fargo reports that some $314 million was lost to wire transfer fraud in 2020.
Another drawback, especially when it comes to expensive coins such as rarities or gold, is the federal law requiring a person to report cash transactions exceeding $10,000. You must file IRS Form 8300. The government monitors such transactions because they often are used for illegal activities such as money laundering, tax evasion, and drug dealing.
One of the biggest risks in transferring funds concerns your computer or cell phone. If infected by trojans or malware, others will have access to your financial data and can withdraw funds from your account.
To understand the seller’s side, requiring wire transfers, I asked auctioneer Brad Lisembee of Capitol Coin Auctions, one of the best sellers on the web. I’ll share the interview momentarily. Brad not only has the best numismatic photography but also is an expert grader. I rely on his descriptions when bidding and never have been disappointed.
Here’s an example from a recent auction:
I would not have bid on and won this coin were it not for Brad’s description. (It’s currently at PCGS—no grade yet—for reholdering).
Unlike Hibid.com and other online venues, Proxibid requires sellers to state whether they see maximum bids or allow consignor/seller bidding. I know many auctioneers dislike Proxibid fees, but this feature alone makes the platform my favorite place to bid online. Here’s what that notice looks like:
Information & Special Terms
PLEASE READ: At the request of the auction company, this auction permits bids to be placed by the auctioneer, an employee of the auctioneer, or the seller or an agent on the seller’s behalf. While Proxibid’s Unified User Agreement prohibits this behavior, in accordance with UCC 2-328, this auction is permitted to engage in this activity by providing this clear disclosure to you, the bidder.
PLEASE READ: This auction company has requested and been granted access to see all bids placed including any maximum pre-bids. This auction is permitted to engage in this activity by providing this clear disclosure to you, the bidder.
Brad doesn’t see maximum bids nor places them himself. His terms of service are straightforward:
Payment Instructions: We accept personal checks (takes 7 to 10 days to clear), money orders, wire transfer, and Visa and MasterCard. You will receive an invoice for all lots you won shortly after the auction. Unless you have made other arrangements with us, we will charge your credit card on file with Proxibid for your invoice amount soon after invoices are e-mailed. Unless you are an established customer, credit card purchases will be limited to $2,500. For purchases in excess of $2,500, we will contact you for payment via money order, cashier’s check, or wire transfer. Upon request, we will reimburse you for any fees involved in obtaining a money order, cashier’s check, or a wire transfer up to $30 (my emphasis).
Michael Bugeja: Tell us about yourself and your interest in coins, including how long you have been a Proxibid seller.
Brad Lisembee: I have been a coin collector since 1973 and have run a coin auction company since 2006. That is also the year we began using the Proxibid platform.
MB: How much fraud or attempted fraud is happening now in online coin transactions, requiring so many auctioneers to rewrite their terms of service for payment?
BL: Fraud — particularly credit card fraud as well as counterfeit coins — has gotten noticeably worse in recent years, as more people realize there is a lot of interest in coins as well as a lot of money changing hands.
MB: Why are so many auctioneers asking for wire transfers?
BL: Wire transfers are being requested more by auctioneers due to the prevalence of bad checks and credit card chargebacks.
MB: As a rule, many bidders will not do those transfers because of additional fees, among other risks. I noticed that you reimburse bidders for those fees. When did you decide to add this to your terms of service?
BL: We offer to reimburse bidders for wire fees for two primary reasons. One, it helps bidders overcome a discomfort with having to pay a fee to the bank to send money via wire. Second, because the $25 or so wire fee on a large transaction is less expensive to us than the 3% credit card fee.
MB: Your terms of service set $2,500 for new bidders via credit card. That is more generous than other auctioneers. What card issues (chargebacks, etc.) from bidders have you encountered as a Proxibid auctioneer?
BL: We are considering reducing the threshold for new bidder credit cards to $1,000, given that we have been burned twice in the past year by credit card chargebacks (new bidders, always gold). Those transactions were between $1,400 and $2,200.
MB: I have reported in Coin Update news about the rise in buyer’s fees in many auctions. Some now are up to 25%. You have kept your fees reasonable, now at 16%. What is the effect of higher buyer fees on bidding?
BL: Any fee ultimately is borne by the seller. Buyer fees are an indirect charge to the seller in that the bidder will factor that fee into what they are willing to pay, which reduces the return to the seller. We structure our fees to cover our costs and make a reasonable return for our time and expertise. Our fees are structured to be both competitive as well as to minimize the “visual” impact to both the buyer and seller.
MB: Anything else you would like to add about payment for coins in online auctions?
BL: Auctioneers need to be very wary of new buyers who specifically target gold coins. That also applies to coin dealers who do mail order. Every instance of a credit card chargeback that we have experienced over the years (ranging from $1,400 to $7,500) has been for new buyers buying gold coins. In the cases that our insurance company has investigated, it was done by people in the U.S. acting as middlemen for players in Africa or Europe. Buyers have up to 90 days after the transaction to file a chargeback, and for us, two of the chargebacks came on roughly the 89th day. I suggest keeping good records for these transactions, including text messages, tracking numbers, and signatures for tracking.
I see that you use the Economy tier for NGC and PCGS. Do you ever find that using this tier leads to less of a chance of a coin being graded with a special designation like Full Steps on Jefferson nickels or Full Bands on dimes?