What should you do if you purchase a fake coin on Proxibid or eBay and discover it when your options have run out–a few months, or even years, after the sale? What if you buy a counterfeit in a private coin dealer auction online? Or an Internet estate auction?

Portals like Proxibid and eBay have service terms that prevent the selling of fakes. Yet, you can spot dozens on eBay, especially California Gold. I wrote about that in Coin World.

In fact, some bloggers routinely post about fakes being sold on eBay. Check out this one.

As viewers of Coingrader Capsule know, I buy on Proxibid as well as eBay. Some Proxibid sellers announce that all of their lots are genuine. Here’s an example:

I especially like “Auctions by Wallace” (screen shot above) because its owner Sheena Wallace understands that all lots must be authentic and that Proxibid’s Unified User Agreement forbids fake coins on the block.

Unfortunately, Auctions by Wallace is the exception on Proxibid (although many of my favorite sellers identified in my personal blog also have similar service terms).

Too many auctioneers on Proxibid and Internet estate and coin sales warn bidders “All Sales Final–No Warranties” in their service terms. When it comes to Proxibid, I routinely warn auctioneers about clause 5.16. of Proxibid’s Unified User Agreement:

“If, within a reasonable amount of time, Buyer gives notice in writing to Seller that the lot so sold is a counterfeit and after such notice the Buyer returns the lot to Seller in the same condition as when sold, and establishes to the satisfaction of Seller that the returned lot is in fact a counterfeit, Seller as agent for the consignor will rescind the sale and refund the purchase price.”

Sheena Wallace guarantees her lots are genuine not because of the above clause but because it is the ethical auctioneering thing to do.

Many Proxibid auctioneers (as well as eBay mega-sellers and auction houses) are members of the National Auctioneers Association. Before they post service terms, they might want to read their Ethics Code, particularly this:

ARTICLE 2. Members owe the buyer (from now on referred to as the Customer) the duties of honesty, integrity and fair dealing at all times.

Fact is, at any given time, I can identify a half dozen fakes on the Proxibid portal.

Despite repeated warnings, however, many auctioneers–used to calling the shots in local sessions–aren’t paying attention to posts like this, because they think they know better–or rely on their consignors for that. (Their default defense is to protect the consignor–more on that momentarily.) As a recourse, if you fall victim to buying a fake coin and the portal or auction house refuses to refund your purchase, you can check to see if the seller is a member of the NAA. If so, you may open a formal complaint.

You can read about the process on the NAA Ethics Code page here. Here’s the operative clause:

Upon receipt of a written complaint alleging that a Member has violated the Code of Ethics, the Chief Executive Officer shall forward a copy of such written complaint to the accused Member and request that the accused Member provide a response in writing to such charges.

The NAA Ethics code also speaks about violations of law. That can occur with the US Hobby Protection Act, which states:

Imitation numismatic item means an item which purports to be, but in fact is not, an original numismatic item or which is a reproduction, copy, or counterfeit of an original numismatic item. Such term includes an original numismatic item which has been altered or modified in such a manner that it could reasonably purport to be an original numismatic item other than the one which was altered or modified.

General Requirement §304.2 of the act warns that distribution of counterfeit coins constitutes a violation of the act as well as the Federal Trade Commission Act.

Our advice if you buy a counterfeit coin, or even if you learn about it months or years later, is to contact the seller and politely but firmly inform him or her about consequences for sale of fake goods. (We have done that several times, and each time with Proxibid sellers, and one eBay seller, we got refunds.)

You can also tell auctioneers to state in their consignor contracts that consignors are liable for the sale of fakes and must refund money to the auction house. You can read a blog post about that by clicking here.

In any case, this is why bidders should cite Proxibid’s Unified User Agreement and eBay’s anti-counterfeiting service terms. Both strive to be in compliance with NAA’s code as well as the Hobby Protection Act. To be sure, however, this also gives them a strong defense against charges of “contributory liability,” a concept that holds online sellers responsible for facilitating the sale of fake goods.

You can read about how eBay won a recent case about contributory liability by clicking here. EBay had invested over $20 million annually in combating counterfeits on its portal, bolstered by notices warning sellers offering counterfeits with a quick “take-down” notice.

The legal matter concerning contributory liability is still being decided abroad. The European Union, in particular, does not allow a hosting defense (such as online organizations enjoy when viewers post libelous comments) and carefully scrutinizes a portal’s “take down” terms.

With the rise in counterfeits from China, including ones sold through U.S.-based sellers, you need to be vigilant about the coins you buy online.

Do you have an story to share about buying a fake on Proxibid, eBay or another Internet source? How were you treated? What can you recommend to do or not do?

We want to hear from you. We depend on viewers like you to help resolve numismatic issues. This is one of the most serious you can encounter buying coins online.