The days when a convicted bank robber could get a job selling gold coins in Minnesota are coming to an end.

A state law takes effect Thursday that will provide consumer protections for precious metals buyers and, effective next July, give the Minnesota Department of Commerce oversight over dealers and their employees.

The new bullion coin law will require criminal background checks and will ban from the industry anyone convicted of a financial crime in the preceding 10 years. Dealers also must post a surety bond that can be tapped by consumers in the event of misbehavior. Those who violate the law could be charged with a misdemeanor and pay a fine of $10,000 per incident.

A Star Tribune investigation in 2011 found that the unregulated industry was rife with addicts, ex-convicts and con artists who routinely misled or defrauded customers, frequently seniors looking for a safe investment.

While the state has laws regulating pawn brokers and other "secondhand" precious-metal buyers, Minnesota appears to be the first state to regulate retail coin dealers and telemarketers like financial advisers.

Some dealers said the new law was needed to clean up Minnesota's reputation as a hotbed of unscrupulous coin dealers. But others said the law goes too far and will likely drive some smaller companies out of state or out of business.

"We had some rotten apples in the business," said Jim Cook, owner of Investment Rarities Inc. in Bloomington, who is considered the grandfather of coin telemarketing in Minnesota. "The big thing is keeping the felons out of the business."

Cook cited the activities of former business rival David Marion, who's scheduled to be sentenced Aug. 29 in federal court for securities fraud, mail fraud and money laundering related to his now-defunct company, International Rarities Corp. At its peak in 2009, the company did $24 million in annual business.

"I'm glad that he finally got his comeuppance. He was the main cancer," Cook said. "Then the personnel that learned the business there would go out on their own and fleece some more people. It's horrible."

It's impossible to say just how many ex-cons permeate the industry because there have been no licensing requirements. The newspaper investigation found six dozen Twin Cities salesmen with serious criminal records who had worked for area coin companies since the 1990s.

The new law wouldn't have barred Marion from the industry, as he had no criminal record when he started. But it would have barred some of his former employees who've been convicted of fraud, forgery, bank robbery, burglary, or theft.

Gary Adkins, an Edina coin dealer and a past president of the Professional Numismatists Guild, said some regulation was warranted. But he said the new bullion law was "ramrodded through" the Legislature by Attorney General Lori Swanson and needs revisions.

"I think it was ill-prepared," Adkins said. "The result is that it will probably put some smaller dealers that have done nothing wrong out of business."

Adkins said the law may interfere with interstate commerce laws by imposing restrictions on out-of-state dealers who do business in Minnesota.

'We're looking forward to it'

The attorney general's office is comfortable that the law will meet constitutional muster, said spokesman Ben Wogsland. He said the regulatory scheme is similar to the state's oversight of payday lenders, and noted that a Ramsey County judge recently granted summary judgment to the state in a dispute with a Delaware lender that did business in Minnesota without a license.

"It's a great law and we're looking forward to it," said Mike Rothman, commissioner of the Minnesota Department of Commerce, whose agency will enforce its provisions. "We know there were a lot of complaints about scams, and particularly with senior citizens."

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."