As more people purchase coins online, especially from auction portals, it is vital that they read terms of service. Overpaying for coins on television has hurt the hobby in the past. Overpaying on Internet can do more damage because the auction company may have access to buyers’ data, including credit card information.
Coin Update viewers might be interested in recent developments on one of the largest auction portals in the country, Proxibid.
For more than a year now, the company has been improving its site to make coin bidding safer and more transparent. It recently cracked down on two dubious practices of online auction houses allowing consignor bidding and auctioneer maximum-bid viewing. (To my knowledge, other major portals allow these practices without informing bidders in service terms.)
In other words, a consignor can bid with auctioneer approval on his own coins, very close to shill bidding, illegal in some states. Or an auctioneer can see just how much a bidder is willing to pay for a coin and immediately jump to that figure rather than allow bidding to increase by increments, standard practice in Heritage, Teletrade and GreatCollections auctions.
Proxibid has taken the lead in posting “transparency” notices to inform bidders about these practices:
- 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, even if such bids are placed solely for the purpose of increasing the bid. 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.
In addition to writing for Coin Update News, I operate an independent blog that has been advocating for these changes since September 2011 in a series of posts. In one I noted how convenient it would be for auctioneers at an onsite auction to read minds of bidders in the audience, seeing their maximums aglow on their foreheads. Auctioneers in live auctions do not possess those superhuman powers. On the Web, however, they do.
That said, many auctioneers have responded positively to transparency in online coin auctions. One wrote, “I had an auctioneer tell me his sales dropped from 65% to 10% when Proxibid disclosed that buyers could see the pre-bids for his auctions. I am a staunch proponent of NOT seeing these bids and Proxibid has responded with new disclosures. Our company will not choose to see the pre-bids nor bid on behalf of the seller at our auctions. We have lost business because we don’t allow this activity, but overall we have survived.”
Survival in the coin trade should not be at the hobbyist’s expense, literally and figuratively. That is why we advise Coin Update viewers using online portals to bid wholesale, or not at all, in auctions that allow sellers to bid on lots or permit auctioneers to see maximum bids.
Concerning Internet, it is not always easy to stop sellers from bidding on their own coins. They can register through other computers with different online names, for instance.
That is why we also advise auctioneers to sell coins to consignors at the company’s normal buyers’ fee percentage and deduct an additional fee on the hammer price when paying funds to sellers who win back their own coins. In other words, if a seller bids up a $75 Morgan Dollar to $100, and wins the bid, he ends up paying $120 ($100 plus 15% buyer’s fee in addition to a 5% seller’s fee).
Transparency rules in online commerce. Too often, however, hobbyists spend too much money bidding on coins and too little time reading terms of service.
In the digital age, the future of the hobby will depend increasingly on consumer information and numismatic education.
Please help us serve our viewers even more by sharing some of your experiences in the comment section below.