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As of Aug. 1, dealers will have to provide their customers specific details about their transactions in writing, including the content of the precious metals in any coins they sell. They must itemize all of the coins that are traded. And they must deliver the products by an agreed-upon time, or if no agreement exists, within 30 days.
The law also bars dealers from misrepresenting the value, characteristics or earnings potential of a transaction, or the manner in which a consumer’s coins will be handled or stored. Dealers can no longer try to renegotiate a deal after receiving a customer’s money or coins in an agreed-upon exchange. And they must respond to consumer delivery complaints within three days.
If a consumer asks not to be contacted, the dealer may not solicit the person again or sell or give away the consumer’s contact information. The latter provision is designed to curtail widespread theft and sales of customer lists.
Rothman said that once the regulatory portion goes into effect next summer, consumers will be able to look up licensed dealers and salesmen on Commerce Department’s website, just as they do now for debt collectors, mortgage brokers and insurance agents.
Swanson’s office has filed four civil consumer-fraud cases against coin dealers since 2011. In its most recent case, it won a default judgment of $1.38 million against the now defunct Guardian Gold & Silver Exchange of Plymouth and is still litigating the case against its founders, Ray Hanisco and Schaun Waste.
Wogsland said the regulatory scheme and bond requirements of the new law should help prevent future problems in the industry. But he said “jail time and criminal prosecutions” have a greater effect.
Federal authorities are investigating several Twin Cities coin dealers.
Some coin dealers say they’ve been damned by association. One of them is Jamie Lee Smith, owner of American Independent Gold & Silver and majority owner of American Platinum Gold & Silver. Smith settled a consumer fraud complaint filed by the attorney general’s office and said he’s doing his utmost to treat his customers fairly. He said he has referred allegations of consumer fraud to federal investigators.
Smith said he is not concerned about the new law.
“I’ve already been through hell and high water,” he said. “Now it will weed out other people that are not legitimate enough to be in the business.”
Dan Browning • 612-673-4493