I attended an auction Sunday. The auction itself was very disappointing for me, as the items that I was interested in were in horrible condition (cleaned, damaged, etc.) My question relates to the responsibility of the auction house in regards to authenticity. There were several coins and other collectibles that were out and out fakes (not good ones either). As an example there was a CC Morgan that I was looking at and another bidder was looking at, when I looked at in hand, it was almost a 1/4" too narrow in diameter. An obvious fake. The other bidder questioned the auctioneer, and was told that the buyers are the experts and that he does not know if they are real or not. He did state this prior to the auction beginning as well. However there were a few buyers that came from long distances that were upset and left. I did look through everything and did purchase two mint sets a 65 and 66 sms. There was nothing in the listing that was published prior to the auction day warning of potential "reproductions" as the auctioneer put it. My question is, does the auctioneer have any legal obligation to verify that the items that he sells are real, or only and ethical obligation? Thanks, DC
It is my understanding that the auctioneer or the consignor must refund the purchase price to a buyer if a coin bought at auction is found to be counterfeit - even if the autioneer and consignor claim no knowledge of the coin's authenticity.
Can you tell us what auction it was (so we all know to steer clear)? I (virtually) attended my first auction a few weeks ago and noticed that a lot of people bid like there was not a 15% buyers premium. Some of the "dust settling' bids were outrageous. It's sort of a clever move by the auction house as the prices you "bid" are 15% lower than what you end up paying.
Sure, it was a small auction place in Osseo Michigan. Scorpion Auctions. I found it on auctionzip.com. Hope it's ok to put that info up. If not I apologize in advance. I felt really bad for some of the people that were still purchasing those coins, almost assuredly thinking they really were "uncirculated" or even real for that matter. At one point the auctioneer went so far as to say we passed a magnet over all of the silver coins and nothing stuck to the magnet. The thing that was most disturbing to me was that he had several items that he said he was taking on-line bids for. Man I feel for those guys, bidding with poor pictures and expecting items to be genuine. Hopefully they are able to get there money back if they are so inclined.
I've seen another trend lately at a couple of local auctions. People bidding on their own coins to raise up the price. At one auction a couple of weeks ago, the auctioneer started to bid me up on a 1893-CC morgan. As I started bidding, she pointed at herself and raised the bid. She then claimed to the group that she could sell it to someone for over $300. I couldn't believe my ears. I thought it was unethical for the auctioneer to bid on items at her auction. Furthermore, she wasn't getting that much for that coin in that condition. It was perhaps worth $200 tops.
I believe you are correct if they listed an item as, for example, "1873 Trade Dollar", and it turns out to be fake. However, if they clearly state that they are not experts and that all sales are final I think a court would not hold them liable for selling a fake. Caveat emptor still applies, and an auction from a non-expert is a much different place to buy coins than buying from a dealer. A friend bought some fakes from a non-coin auctioneer one time, and the auctioneer would not take them back since he stated he didn't know what they were, and that all sales were final. My friend lost in small claims court. This really is a big deal too many collectors overlook in pursuit of deals. Buying from dealers is usually more expensive, but with that purchase you usually have lifetime return protection from fakes. I buy from auctions, both in person and electronically, but unless I REALLY know a series will not spend serious money at one, unless it is by a coin firm that I hate return privileges with.
Isn't it illegal for the auctioneer to bid on their own items? I don't even go to auctions anymore. Some noobs kick bids up way to high because they just don't know. They sit there and bid on 1940s wheat rolls for 20 buck. Half the time I just leave.
NH Auctioneers have a code of ethics to go by. I would think most states have something along these lines PART I: PROFESSIONAL RELATIONSHIPS 1. In the best interest of the public, of his fellow Auctioneers and his own business, the Auctioneer should be loyal to the New Hampshire Auctioneers Association, Inc. 2. The Auctioneer should so conduct his/her business as to avoid disputes with his fellow auctioneers. Two Auctioneers who are members of the New Hampshire Auctioneers Association, Inc. should submit any differences to arbitration by the New Hampshire Auctioneers Association, Inc. and the decision of such arbitration should be accepted as final and binding. If the dispute should be with a nonmember, he should offer the services of this Board to arbitrate. 3.Where a member is charged with unethical practice, he should promptly and voluntarily place all pertinent facts before the proper committee for investigation and report. 4. A member should never publicly criticize a competitor, and where an opinion is specially request, it should be rendered in conformity with strict professional courtesy and dignity. 5. Any member of the New Hampshire Auctioneers Association, Inc. should not collude or pool with any other person or persons at any auction sale to suppress bidding on any item. 6. In the best interest of society, of his/her associates, and of his/her own business, the Auctioneer should at all times be loyal to the New Hampshire Auctioneers Association, Inc. and active in its work, and he/she should willingly share with his/her fellow members the lessons of his/her experience. PART II: RELATION TO CLIENTS 1.In justice to those who place their interests in his/her hands, the Auctioneer should endeavor to keep abreast of business conditions, to keep informed in matters of law and proposed legislation affecting such interest, so as to give intelligent business advice and effective service. 2. In accepting the sale of real or personal property, the member pledges him or herself to be fair to both seller and buyer, and to protect the owner's interest as he/she would his/her own. PART III: RELATIONS TO THE PUBLIC 1.It is the duty of every member, to the best of his/her knowledge, to protect the public against fraud, misrepresentation or unethical practices in connection with the sale, disposal or liquidation of any real or personal property the Auctioneer is called upon to dispose of at public auction. 2. No special conditions, real or assumed, or inducements or directions from anyone relieve the member from his/her responsibility strictly to observe the Code of Ethics in this letter and spirit.
Not so. The law states clearly that title (ownership) cannot be passed when a fake item is purchased as being genuine. So any time it happens the seller has to, by law, refund the buyers money. And there is no time limit on this, the law still applies even decades later.
But legally most of the time the auctioneer is not the seller, he is merely the agent. Would you consider property consigned to an auctioneer his property Doug? How much of a chance do you think someone would be able to go back to the seller, the consignor, after the auction is over? I was talking that if the auctioneer was not a coin expert, and sold as is/where is, he would not be on the hook for a fake coin usually, since he never promised it was authentic and shouldn't have known better. My friend I referenced bought coins at an estate sale, and tried to sue the auctioneer. The judge ruled that since the auctioneer was not a coin dealer he could not have known it was a fake. Edit: Regarding an auctioneer "bidding", its highly likely that they had a bid left with them prior to the sale, and they were simply executing that bid. There is no way of knowing for sure, and I agree I hate the practice, but at small sales happens a lot. Sometimes I have stuff to do and cannot attend the auction, but will leave some bids with the auctioneer to bid for me.
Then the judge was mistaken and unversed on the particular law. And, you should have appealed your case. When an auctioneer takes an item on consignment, he then becomes the seller. You bought the item from the auctioneer, not the consignor. The auctioneer is required to make to make you whole. He then has to revert to the consignor to have the consignor make him whole. There have been many, mnay cases like this. Many were between auctioneers and buyers, even more have been between coin dealers where the dealer had items consigned to him. And in every one the buyer had to be made whole. By accepting a consignment, you become the seller, not just an agent. You should contact Vartian (spelling) the attorney that writes in Coin World all the time about this kind of thing. He will confirm what I have said.
Maybe the difference would be an auction house versus estate auction. In an estate auction they come out to the house and conduct the auction, and checks are made out to the estate, not the auctioneer. That would be the only difference I could see versus what you describe.
The auctioneer at the local auction I attend bids on coins, but he too is a coin collector/reseller. 99% of the time if someone else is interested, he'll let that person win it and he'll usually claim back up bid. Once in awhile, something will catch his eye that he really wants and will outbid ya. lol
Not if he does so openly, and usually the auction rules will state that the auctioneer reserves the right to bid on items in the auction for their own account. (Check the terms of sale for any of the major coin auction houses and you'll find that clause.) But the use of covert shill bidders just to run up the sale price often is illegal. As long as the auctioneer pays the consignor for the items he wins, it is legal. The problem comes when the auctioneer is also the consignor. Then he is bidding on his own items and in effect shilling them.
In most instances, it is perfectly legal for sellers to bid on their own items. This usually, but not always, takes the form of a reserve bid. Heritage will identify a seller bidding on their own items during a floor auction if we're aware that this is happening.
