Fixing the Third Party Grading (TPG) Problem

As we all have very passionate views either for or against the TPG process. What would be your solutions to the myriad of problems associated with TPGs, some gripes are; guaranteed buyback enforcement, over-grading, counterfeit, miss-attributed, fly-by-night slabbers, etc....

Does government regulation need to be inplace to enforce an industry standard? I mean a totally independent (not-for-profit) set of eyes established by the Governments of the countries these TPGs operate out of. This establishment would have to approve any TPG before they began offering their wares to the suspecting or unsuspecting collectors. Substantial fines would be levied against those who violate industry standards and complete background checks of TPG Company Executives would be completed in order to determine the veracity of impartiality, no hidden agenda claims, etc. This check would also alert the government to any shady dealings in the past of the key TPG players. The background check could also be used to see if there are any prior convicted felons operating in the industry and weed them out. We are talking about money here...

What ideas would you employ to clean the industry up?

Take Care
Ben

 

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The best "fix" you can get is education. And the one you absolutely do not want is government. Name me one thing that the government has run better than the free enterprise?

 

I'll give you two:

• Collecting taxes
• Wasting money.

 

The Telephone companies...

 

the easiest fix is to not buy from crap slabbers

 

Scientific research.
A lot of good education is private, but all successful universities depend heavily on the government for research funding.

 

Huh?
Now Bonedigger, you get respect for being a fellow USAF veteran, and you get respect for being a fellow WINS member, but on this, I have to say again... HUH?

You mean like the breakup of ATT into the baby bells, and then the transformation from regional to division, to now include wireless and cable so they have even more influence on you the consumer to now we have SBC (Southwestern Bell Corporation) morphing into Cingular (once just a wireless company, then took over land lines as well) to now we have... you guessed it ATT which now has wired, wireless, and cable.

The devil is back, and this time he even has his old name!

 

Yes, the Baby Bells... Phone rates were crazy before regulation.

Ben

 

Cripes, Ben.
You of all people volunteering more governmental interference in our lives!
I'd rather have crummy TPG'ers out there than more idiotic laws.
Besides, what senator could grade a coin? Then we would have a Department of the Grading?

Punt.

 

I agree with this...we definitely don't want TPG's and coin collecting in general government regulated.

 

Well, what's your idea to fix the problems when one TPG comapny give a coin a MS-65 and charges $100 S&H included, another says it's been cleaned and charges you $70 for this opinion, and the third says the coin is counterfeit and sends you (instead of a refund) a coupon for 5 free grades... LOL, What ideas to do you have to stabalize this?

Take Care
Ben

 

This could be done without government involvement.

First, the TPG's must have no financial interest in overgrading. That would eliminate any TPG (or self-slabber) that sells the same coins they certify.

Second, TPG's should agree voluntarily to an industry-standard guarantee that they could work out amongst themselves that simply states that if they make a mistake, they will bear the financial consequences for it.

Third, various back-room deals (like endorsements, exclusivity arrangements or co-marketing schemes) with TPG's should be prohibited.

These rules could be self-determined by the coin-collecting community. A certification process could be established to ensure that the TPG's meet all the requirements. This is similar to the process involved in certification of health care facilities so you can be sure that when you check into a hospital, the physician doesn't have a fake license and the hospital doesn't reuse their instruments without sterilizing them. That's a voluntary effort by a non-governmental body (JCAHO). But it works because the marketplace demands JCAHO certification. That would be a much better use of the CAC than simply creating more grading tiers to extract more money from collectors.

If the coin buying community and sellers (like auction houses) accepted certification only from TPG's that followed these guidelines, there would be more confidence in their grading and it would also eliminate the need for auction houses (like ebay) to arbitrarily exclude some TPG's while accepting others. The buyers could make those decisions.

 

Until a (separate and IMPARTIAL) control of the Hobby Standards is established there will be no industry wide grading continuity and the problems collectors are experiencing now will continue to escalate. It's a fact. Something needs to be done, government or otherwise...

If wine producers can do it TPGs can do it also.

 

The military's the only thing I can think of (and only because having national defense not controlled by an elected government would be at the very least impractical... having the military answer to a civilian government is how we prevent a military-run dictatorship.) If you want to improve anything, get the government OUT of it, not INTO it.

TPGs sell opinions, and opinions are by definiton subjective, I don't see how setting any consistent standards would help any, because they're not universally agreed upon, not even by indivdual graders within the same company.

Bias is impossible to eliminate from grading. Opinons are by defnition biased by the person giving them, and any grade is an opinion.

I'd say any company that has a financial interest in grading fails the definition of being a Third Party Grader anyway. I think existing laws against false advertising could work against any self slabber; all you'd need to do is establish a legal definition of "Third Party Grader" and sue any that called themself one without meeting thar definition for false advertising. Or skip the legal route and just let negative word of mouth take care of it, as people vote against such companies with their wallet. Feel free to expose them with education to the novice collectors.

As for grading standards, let the market decide, as it does now, which companies give the best and most reliable grading opinions. If a grading company in the minds of people at large consistently overgrades or undergrades, people will vote with their wallet an not submit coins to them or buy their slabs. If a grading company establishes a reputation for accuracy or at least gives opinions generally conistent with the hobby at large, they will get more business.

I don't see that there's anything to be fixed. Expecting standarization of grading is unrealistic, since grading is an opinion, and opinions are by definiton, subjective. Any given coin does not have a "right" or "wrong" grade. Look at any thread here when people post a coin and ask for a grade and look how many different opinions you get, even amongst just the people that post here. How do you expect the entire hobby to agree on a single grade for a single coin?

Keep government out, expose self slabbers for who they are, let the free market take care of the rest. No need for a cure that would be worse than the disease.

 

Now let me get this straight - the government runs it better that private industry because the private industry is running it. Say what?

 

tpg problem...

leave the government out of tpgs..............look what they are doing to the mint!!

 

NOTE: the following applies generally to U.S. transactions and TPGs and "you" used throughout this post is not pointed toward anyone in particular or personally, but is the proverbial "you" of whom it applies. Eventhough I do not know you personally, I will use your name (Ben) when actually talking about/to you.


guaranteed buyback enforcement:
This would apply only to the individual TPGs that offer it. You are a consumer and it is your (and ONLY your) responsibility to know what you are purchasing and what the terms of that purchase are. Just as any sales retailer and wholesaler have their own return policies (as well as manufacturer warranty policies), a TPG is a manufacturer and/or retailer in that aspect, and they have their policies. If you do not like their policy, then do not buy! Plain and simple. You do not have a RIGHT to use a TPG just as you have no right to buy from a specific retailer/dealer if they decide not to sell to you. You also do not have the right to demand that a retailer/dealer/wholesaler/manufacturer sell you a product based upon your terms and conditions. That said, if the TPG refuses to honor/enforce their own guaranteed buyback policy in accordance with their published P&P, then you already have everything necessary at your disposal to enforce their policy. You can report them to the FTC with the equated amount of damages incurred, seek an investigation with the FBI for fraud, turn the company in to your State Attorney General's office as well as the AG of the State where they primarily conduct business, and even file a State or Federal Circuit law suit against them for damages.


over-grading:
A few things here that should be obvious to the seasoned "pros" but will not necessarily apply to those just entering the industry. First, buy the coin not the slab! If you have been a numismatist for any proclaimed amount of time, you have no excuse and deserve what you get in over-graded coins. Second, (and this applies to the "pros" as well as those just getting into coins) you should have at least a working knowledge of what you are purchasing before you do so. There is a plethora of information available today, not just in printed books and magazines, but also online through Newsgroups, forums, coin clubs, collector societies (or universes :whistle, and much, much more. Granted, a lot of people newly introduced to our obsession are not going to really know much (or any) of this. But, like I had said, they are still without excuse with regards to educating themselves. It is just plain foolishness to go out and buy something without having any knowledge of what it is you are truly buying. This is what the TPGs were "supposed" to help with. And this is where the concern with over-grading comes in. Where someone not fully versed in matters of grading a particular coin/series rely upon the "professional" opinion of a TPG. The only tool that could reliably be used against this practice is simply education. Learn before you burn (your money on something crappy). Remember also, grading is subjective. Although a TPG should not hide behind such a fact in justification of their grade, neither do you as a collector have the right to impose your own standards on the TPG. Know before you blow (your money on crap). Find out first what their standards of grading are. Get a grip and understand that there are no unified "standards" that the whole industry stands behind. Education, education, education!!!


counterfeit:
See "Buyback Guarantee Enforcement" above. But, add the Secret Service to any TPG that refuses to guarantee authenticity within their product REGARDLESS of any guarantee or warranty. It is illegal in the U.S. to even pass a counterfeit coin as authentic. Always start enforcement of this type in the court system first after you have documented proof that the coin is in fact counterfeit if the TPG does not reimburse your actual and potential losses.


miss-attributed:
See "Buyback Guarantee Enforcement" above. Again, in my opinion, this is an area where the collector should absolutely KNOW what they are buying and should never take the TPG's opinion on the matter. This opens the collector up to the proverbial snake oil vendor. Know what you are buying. This case may only be enforceable if the TPG actually has a guarantee policy in place for attributions. Even amongst professionals, there are instances where even they argue about certain attributions (some flying eagles come to mind). Too much can't be said about education!!!


fly-by-night slabbers:
Again, get everyone that needs to be involved into this issue. FTC, FBI, Attorney Generals, even the local police department of the TPG's local municipality. File those reports!!!! Stop whining and actually utilize the "services" the government already has in place for this kind of stuff. Nobody can do it on your behalf because YOU are the victim, not them! If you're a "victim", then act like one, and contact every law enforcer you can think of to file your reports! If you aren't a "victim", then obviously nothing "wrong" has occurred. If you don't like the TPG's morals or ethics, then do not use them. And still, enough can't be said about education! Learn who and what these TPGs are first.

There is already a governmental system set up to "regulate" any ACTUAL illegal and/or tortuous claims. It is called the Judicial Branch of our Government. With regards to claims against a TPG, this system has been set up on both a State and Federal level. the system is there, use it. However, just because you do not "like" something does not make it illegal. Just because your ethics are different does not make any claim you have of tortuous merit.

Do not take this personally (though with what I am about to say, that's gonna be pretty hard to do), but the system Ben proposes is utterly foolish and disregards the three branch system that has been in place in this country for centuries. Ben proposes to set up a regulatory body that is not elected and has no true legislative nor judicial oversight. This body, according to Ben's description, would act legislatively by defining the industry standard (or being corruptible by those rich enough to "lobby" it to sway "standards"), thus forcing a standard upon myself, the collector that I myself may not approve of (there is a BIG difference between "market" and "technical" grading, and I lean more toward technical grading, whereas TPGs flaunt the fact they are purely "market" graders. One reason they are SO inconsistent, but that's a matter for another post), and putting the judicial oversight in an executive office. Pretty much, Ben is asserting "guilty until proven innocent" which is already proven through other executive "regulatory" agencies to be ineffective (take the FCC for instance).

Not only that, Ben is proposing regulation of a HOBBY. Really think about that one for a few minutes. Why should this stop with the TPGs? Doesn't EVERYONE involved with numismatics eventually grade their coins themselvs by their own standards at some point? Why stop with TPGs and not include the hobbyist as well? And shouldn't a hobbyist be registered therefore and approved before they are allowed to buy and sell coins? And wouldn't it be safer for everyone involved to register your coins with this agency so that the counterfeits will be known and removed from the market more easily? And what about theft!? Surely coin registration will alleviate many of the problems encountered in locating stolen numismatic property. And even better, the government itself should simply grade, encapsulate, register, and track every coin with numismatic value since they're the ones that make all of these determinations anyway. It could even just become another branch of the FRB or Mint, run as a private corporation much like the USPS.

I'm sorry, but government has absolutely NO place in my enthusiasm for numismatics as either a hobbyist nor as a professional. I prefer to look at the worst case scenario on the issue with regards to government and say "absolutely NOT!" from the get go then to fight the uphill battle later when it's already almost too late.

It is purely the individual's responsibility to educate themselves and know what they are getting involved with and what they are buying, and we do not need the government involved as our "nanny". The government already has the proper resources to take care of actual illegal and/or tortuous claims in both the executive and judicial branches of both State and Federal government. If the claims do not have merit with the plethora of agencies there specifically for these issues, then obviously you made a mistake and should learn from it.

Take it all with a grain of salt, and remember, my opinion may not even be worth half the value of a coin in an SGS slab!

 

I don't think anything needs to be "fixed". Just allow the market to work itself out. Collectors will buy what they like and dealers will buy what they can resell at a profit. If the collectors stop demanding slabbed coins- the TPG's go out of business. Many modern collectors are more like investors. They want something that they can rely on to increase in value (or at least maintain it's value). The slabs have done that up to this point in time. Any service or concept that can give that assurance to consumers will be successful.

Just for the record- I'm a collector- not an investor- certainly not a dealer. The slabs to me are irrelevant. Don't own one- probably never will. My very modest collection isn't for sale- trade or swap maybe- but definitely not for sale.

Andy

 

I didn't say private industry was running it. I said that private Universities carry out some of the research, although no credible person is going to argue that private universities do it better, on average.

The federal government controls the research agenda to a large extent through the National Institutes of Health and the National Science Foundation, even the Department of Defense. These government organizations review grant applications, disperse funds and hold the researchers to meet standards in implementation and reporting. If the government wants a particular area of research to be explored, they allocate more money to it and the researchers respond.

Our research university system is the best in the world and a good model of a partnership between the public and private sectors. It would not be nearly as good (in my opinion) without the government's participation.

 

I don't think the TPGs will be able to improve themselves, but here are a few ideas. Government regulation will only double the cost, hardly an "improvement." It would help to have the TPGs and other professional organizations get together and agree upon a single grading standard to be followed by all. It might also help to separate the actual grading of the coins from the marketing and packaging to better utilize scarce grading resources and possibly reduce the cost. If there was a single pool of professional graders utilized by all TPGs for a fee, the grading might be more consistent and the TPGs could compete on price and service. Slabs graded by this pool could carry some sort of special marking regardless of the slab. I'd also like to see every coin submitted slabbed and described even if they are counterfeit, cleaned, damaged or whatever. However, these things would require the TPGs to give up a little independence, so it will never happen.

Edit: The grader pool idea would also make it easier for new TPGs to get into the business because they could outsource the actual grading and concentrate on new slab designs, additional services, price, etc. But this is another reason why the existing TPGs won't permit it. However, it might be a reasonable business idea for a group of graders to consider who don't want to form a TPG company but want to service them all.