TPG Guarantee to the Submitter of Coins Turning Bad *@* the TPG

[gmarguli]

Question:

 

A bunch of modern coins are submitted to a TPG. All the coins on the invoice are listed at a nominal value - say $25. Some of the coins grade 70 making them $300 coins. The invoices are picked up at the TPG. The coins are examined a couple hours after pickup and one of the 70s is horribly spotted. It's beyond salable and needs to be taken off the market.

 

What would/should the TPG do? Would they pay the $25 amount and say the coin was damaged at the TPG and that was the insured value? Would they pay the $300 fair market value as they graded it 70 and it is clearly no longer that condition and must have turned while in their holder?

 

For purposes of this question, assume the coins went directly from the mint capsule to a non-PVC flip provided by the TPG and they were never worked in any way.

[MunkyMan95]

That's a tough one, but it did turn in their holder, so they should pay the FMV for the coin(s).

[coinman1794]

They would need to pay the fair market value.

[WoodenJefferson]

Title:

 

~TPG Guarantee to the Submitter of Coins Turning Bad *AT* the TPG~

 

Body:

 

~assume the coins went directly from the mint capsule to a non-PVC flip provided by the TPG and they were never worked in any way.~

 

The title suggests that the coins were *AT'ed* and turned in the holder while the body claims the coins were not worked in any way?

 

Or is it just the (at) meaning while at the TPG?

[MunkyMan95]

Title:

 

~TPG Guarantee to the Submitter of Coins Turning Bad *AT* the TPG~

 

Body:

 

~assume the coins went directly from the mint capsule to a non-PVC flip provided by the TPG and they were never worked in any way.~

 

The title suggests that the coins were *AT'ed* and turned in the holder while the body claims the coins were not worked in any way?

 

Or is it just the (at) meaning while at the TPG?

 

It's "at," not AT. Well, it is AT, but not the Artificial Toning AT.

 

You follow?

[gmarguli]

It's "at", not AT. I've changed the original post.

[WoodenJefferson]

I can think of several scenarios that might come onto play with the final decision making process. It is quite possible these questions might be asked to assess the situation of a customer complaint.

 

1. How long has the submitter been a customer?

2. How much does this customer submit?

3. Has there ever been a problem with one of the submitters coins before?

4. Is there a possibility we, the TPG did something wrong to accelerate this condition?

5. Did the US Mint production/packaging have anything to do with this anomaly?

6. Are we, the TPG liable? (in other words, does this fit into the model of our guarantee?)

7. And if we are liable, do we assess the value as, declared or Fair Market Value once graded?

8. How are we (TPG) going to assess FMV?

 

The submitter was gambling that a initial $25 investment could be escalated to at least 10X in value and did in fact theoretically for a short period of time achieve that goal. But, since the submitter no longer has a high value coin, the grade is static but the coin is not, they now think they are automatically due the FMV.

 

Feeling that something probably went wrong at the grading company, the submitters complaint is legitimate. It does not matter to the submitter when the hidden condition appeared, it was not there when submitted and it was examined and graded by the staff. As far as the submitter is concerned, they now have a encapsulated & graded coin that does not meet marketable criteria, the reasons are obvious. Well at least to the submitter and they then fall back onto the safety net provided by the company for compensation, their Guarantee.

 

To wit: I see no reason for the TPG to renege on their guarantee and to buy the coin back at a reasonable Fair Market Value and then to be on the lookout for future problems with that customer or with that particular coin series.

 

This is reminiscent of the “Milk Spotting” on ASE’s and the dilemma it caused a certain TPG company.

 

[CHABSENTIA]

That's a tough one, but it did turn in their holder, so they should pay the FMV for the coin(s).

 

Not really. NGC has their guarantee listed on their home page. Their guarantee basically states that they will pay the difference between present value and the value at which it was holdered. I assume that the value at which it was holdered was $300.00 and since it was almost instaneous that it became spotted then they would pay the difference of $300.00 - $300.00 or zero.

 

If the coin was holdered three years ago and the value at that time was $25.00 then the difference assuming $300.00 today would be $275.00

 

It is the difference of the two stated values and not what one puts for Insurance.

 

 

[MarkFeld]

That's a tough one, but it did turn in their holder, so they should pay the FMV for the coin(s).

 

Not really. NGC has their guarantee listed on their home page. Their guarantee basically states that they will pay the difference between present value and the value at which it was holdered. I assume that the value at which it was holdered was $300.00 and since it was almost instaneous that it became spotted then they would pay the difference of $300.00 - $300.00 or zero....

I believe that your analysis is incorrect. The "present value" that is used to determine what amount to pay the submitter under a grade guarantee should be/is generally based upon whatever grade the problem coin is lowered to and the value that corresponds with the new lower grade. In Greg's example, the coin was worth $300 when slabbed and presumably $25 or less shortly afterwards. The submitter should get back his coin and roughly $275.

[gmarguli]

These may come into play, but I'm sure they should. These are the best answers:

 

1. How long has the submitter been a customer?

 

Assume a new customer.

 

2. How much does this customer submit?

 

This submission was over $20K in fees. Yearly fees are probably anticipated around $50K-$100K/year.

 

3. Has there ever been a problem with one of the submitters coins before?

 

Assume first submission.

 

4. Is there a possibility we, the TPG did something wrong to accelerate this condition?

 

Coin slabbed as a 70 and turned after slabbing while in your possession. Therefore, it is safe to say that something happened that caused this dramatic change while in your possession over a very short period of time. The coin was fine for several weeks in your possession and thru the grading process, but rapidly changed after slabbing. FYI, some other coins turned, but mostly before slabbing.

 

5. Did the US Mint production/packaging have anything to do with this anomaly?

 

Was not a US coin. Coin was 8 years old and had remained in the semi-sealed mint capsule before being submitted.

 

6. Are we, the TPG liable? (in other words, does this fit into the model of our guarantee?)

 

7. And if we are liable, do we assess the value as, declared or Fair Market Value once graded?

 

8. How are we (TPG) going to assess FMV?

 

:shrug:

 

 

The submitter was gambling that a initial $25 investment could be escalated to at least 10X in value and did in fact theoretically for a short period of time achieve that goal.

 

I suspect that most submitters who submit large quantity of "lottery" coins place a small declared value on them. 90%-99% are going to be losers worth that small declared value, so it makes no sense to pay higher insurance costs for the entire submission if only a few winners are going to emerge.

[Coindude]

You might want to talk to James on the subject.... I believe in certain situations... even the pedigrees turn while in the holder!

[Conder101]

They would probably buy back the coin at FMV. But remember the TPG will be the one who decided what the FMV is, and it often is not what the marketplace thinks it is.

 

Second possibility is they may just say that it couldn't have turned that fast so it must be a mechanical error and should never have received that grade in the first place. You get your grading fees back.

[nwcs]

I don't think anything matters but the fact it's in their holder now with a problem. They should pay FMV.

[WoodenJefferson]

 

Second possibility is they may just say that it couldn't have turned that fast so it must be a mechanical error and should never have received that grade in the first place. You get your grading fees back.

 

 

This would be a total "cop-out" on the part of the grading service company and should be publicized as such. Also, I always thought that a mechanical error was something to do with the label, mis-information as in denomination, date, series, etc. and is a common mistake. How on earth could a reputable grading company put a 70 on a coin and then turn around and claim, "Oh, it's just a mistake."

 

Seems to me they would be loosing a bit of reputation by claiming mechanical error, wouldn't it be better to "save face" and just buy it back at FMV? Could the TPG erase the Cert #, destroy the slab & label and just say it never happened and return the coin in a BB?

 

[Houston Investor]

I can't see how a TPG expects to stay in business paying people for coins that turn in the holder. Sooner or later, many coins will. Time and exposure to the atmosphere, humidity relentlessly march on. But then there is NCS. A friend of mine who runs a coin shop "Heck I have had coins in my inventory I have had to dip 2 or 3 times during their shelf life before I finally got rid of them."

[MikeInFL]

IMO, the TPG should pay the delta between FMV in 70 and what the coin grades out now and return the coin, or pay the FMV of the coin and keep it -- the submitter's choice.

[MikeInFL]

p.s. what about if they are (or were contended to be by the TPG as) "labeling errors"?

[Coindude]

Do you think if you sent it back to NGC they'd send it to NCS and have it conserved (maybe even by a quick swab with MS70!) and reholder it in a 70 holder?

 

 

Sorry, couldn't resist.

[Conder101]

This would be a total "cop-out" on the part of the grading service company and should be publicized as such. Also, I always thought that a mechanical error was something to do with the label, mis-information as in denomination, date, series, etc. and is a common mistake. How on earth could a reputable grading company put a 70 on a coin and then turn around and claim, "Oh, it's just a mistake."

It might be a "cop-out" but grade "mechanical errors" have happened.

[CHABSENTIA]

That's a tough one, but it did turn in their holder, so they should pay the FMV for the coin(s).

 

Not really. NGC has their guarantee listed on their home page. Their guarantee basically states that they will pay the difference between present value and the value at which it was holdered. I assume that the value at which it was holdered was $300.00 and since it was almost instaneous that it became spotted then they would pay the difference of $300.00 - $300.00 or zero....

I believe that your analysis is incorrect. The "present value" that is used to determine what amount to pay the submitter under a grade guarantee should be/is generally based upon whatever grade the problem coin is lowered to and the value that corresponds with the new lower grade. In Greg's example, the coin was worth $300 when slabbed and presumably $25 or less shortly afterwards. The submitter should get back his coin and roughly $275.

 

You need to check the site. Last year I was thinking about buying a S.A.E. and the picture suggested that there might be spotting. I called NGC and also sent them an E Mail. Their answer was that I could send it in for an " Appearance review" and if there was a situation where the coin had degraded since they had holdered it that I would be paid the difference of the present day value and the grade to which it reduced.The declared insurance value has nothing to do with it.

 

I don't know what source NGC uses to determine FMV. I assume it is Numismedia but I have no idea.It isn't the declared insurance value of the submitter.If the fair market value was $25.00 today as determined by NGC and the FMV when holdered by NGC was $300.00 then there would be a $275.00 refund but that is only if the $300 and the $25.00 are as determined by NGC. If NGC determines the value to be $200.00 when holdered and when the coin is submitted for an appearance review and NGC determines a downgarde which makes it worth $100.00 then the refund would be $100.00. I sent in a Commemorative that was graded and turmed out to have a Numismedia value of $400.00. When I submit a coin then I use what I paid for it as the Insurance value . If the coin turned in the holder later on then my FMV when holdered would bw $400.00 as I understand it and not my replacement value when I submitted it.

[MarkFeld]

That's a tough one, but it did turn in their holder, so they should pay the FMV for the coin(s).

 

Not really. NGC has their guarantee listed on their home page. Their guarantee basically states that they will pay the difference between present value and the value at which it was holdered. I assume that the value at which it was holdered was $300.00 and since it was almost instaneous that it became spotted then they would pay the difference of $300.00 - $300.00 or zero....

I believe that your analysis is incorrect. The "present value" that is used to determine what amount to pay the submitter under a grade guarantee should be/is generally based upon whatever grade the problem coin is lowered to and the value that corresponds with the new lower grade. In Greg's example, the coin was worth $300 when slabbed and presumably $25 or less shortly afterwards. The submitter should get back his coin and roughly $275.

 

You need to check the site. Last year I was thinking about buying a S.A.E. and the picture suggested that there might be spotting. I called NGC and also sent them an E Mail. Their answer was that I could send it in for an " Appearance review" and if there was a situation where the coin had degraded since they had holdered it that I would be paid the difference of the present day value and the grade to which it reduced.The declared insurance value has nothing to do with it.

 

I don't know what source NGC uses to determine FMV. I assume it is Numismedia but I have no idea.It isn't the declared insurance value of the submitter.If the fair market value was $25.00 today as determined by NGC and the FMV when holdered by NGC was $300.00 then there would be a $275.00 refund but that is only if the $300 and the $25.00 are as determined by NGC. If NGC determines the value to be $200.00 when holdered and when the coin is submitted for an appearance review and NGC determines a downgarde which makes it worth $100.00 then the refund would be $100.00. I sent in a Commemorative that was graded and turmed out to have a Numismedia value of $400.00. When I submit a coin then I use what I paid for it as the Insurance value . If the coin turned in the holder later on then my FMV when holdered would bw $400.00 as I understand it and not my replacement value when I submitted it.

I don't need to check the site. Your original premise in calculating no refund to the submitter, while ignoring the value the coin should have in a 70 holder, was incorrect.

[gmarguli]

I have my answer to this question.

 

The coins were worked to remove the spots and regraded. Of the (7) coins submitted, all downgraded. (2) by 4 points, (3) by 3 points, (2) by 2 points.

 

I received a check as compensation based on the FMV I listed on the invoice for their slabbed grades vs. what they are worth in the new lower grades.

 

I'm very happy with the outcome.

[Bruceswar]

Another happy customer looks like it came out well

[dean1345]

I agree with Mark on this matter. I have a coin in appearance review right now. I was told that they would give me FMV if coin is downgraded.

 

Dean

[Conder101]

I was told that they would give me FMV if coin is downgraded.

The question is,how is FMV determined? PCGS makes the same claim. PCGS publshed a price guide that it claims represents the value of an accurately graded coin. Presumably a PCGS graded coin is an accurately graded coin. Does this mean PCGS uses their price guide for determining FMV? No it doesn't. Often when making a settlemet PCGS uses a FMV that is less than, sometimes significantly less than the price listed in th guide. Does NGC do the same thing with the Numismedia guide?

[James_OldeTowne]

I vote "FMV".