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Jeff Garrett: Why Rare Coin Security Is So Important

Jeff Garrett: Why Rare Coin Security Is So Important

Whether a dealer or collector, here are some tips and suggestions for protecting your rare coins

 

By Jeff Garrett for Numismatic Guaranty Corporation (NGC) ……
Jeff GarrettThe rare coin business produces billions of dollars in revenue each year. In fact, a few companies can boast of billion-dollar-plus revenues individually. With this much money floating around, we are all targets of theft. This includes dealers, investors, and collectors. In the past year or two, there have been several high-value thefts at coin shows. Not a day goes by that we are not made aware of a missing package that was sent by FedEx or UPS. Most security experts who specialize in the coin business are convinced organized crime has identified our hobby as a rich target.

The point of this article is making readers aware of the problem and to give a few tips on how to protect yourself. Many of the above-mentioned thefts were the result of neglectful oversight and could have been prevented. At every show I tell my staff that thieves are there to steal something and their job is to find someone not paying attention.

Coin Show Security

The days of leaving your table unattended with hundreds of thousands of dollars in merchandise is over. If you have that much in material, you need to have enough staff to make sure someone is watching it. For decades, dealers stacked their cases up and covered them with a cloth, followed by a stack of chairs. The days of this antiquated method of security are long gone. Valuable merchandise should be locked up securely.

One of the biggest mistakes I see my fellow dealers making is leaving their bank bag (with sales invoices) in open sight. This is an invitation to theft. Thieves would rather steal a bag of cash than a group of coins that are hard to fence.

But collectors are not immune from the theft of coins. Over the years, countless individuals have been followed from a show only to have their cars robbed when they stopped for food or restroom breaks. Never leave your coins unattended in a vehicle when traveling. It only takes minutes for your valuables to disappear.

Whenever you attend a coin show, you should always be vigilant and never let your guard down. Don’t be the person the bad guys are looking for that isn’t paying attention.

Shipping Merchandise

One of the consequences of the explosion in e-commerce over the last several years has been the greatly increased volume of rare coins and bullion that is shipped around the country. Nearly every collector has sent or received coins in the mail in some fashion. Many rare coin dealers would be out of business if they could not ship coins with insurance and some level of security. This privilege should not be taken for granted.

Companies who issue insurance for shipping have suffered heavy losses in the last few years. Insurance rates have been rising and could become unsustainable if losses increase further. It is similar to what is happening to flood insurance in Florida.

When sending a package, never address the package so that its contents can be identified. For instance, you should address packages to my company as “Mid-American RCG”, not “Mid-American Rare Coin Gallery”. Also, be sure to package coins securely so they don’t rattle around in the box. This seems obvious, but believe me, a lot of people make this mistake.

Plus, make sure you have purchased additional insurance when sending a high-value package. Murphy’s Law of “if something can go wrong, it will” applies here. My only FedEx loss was for an $85,000 coin that was covered for only $50,000 when I failed to buy extra insurance for $200.

Cyber Theft

One of the worst episodes of my career happened in the fall of 2020. My bank called to confirm multiple bank wires for hundreds of thousands of dollars. They were only calling for the last wire, as it was overdrawing my account. The previous wires had been sent. My business checking account had been depleted entirely without my permission.

It’s hard to describe the shock and sickening feeling that ensued. My optimism and hope that the bank would take responsibility for the theft was soon dashed. My decades-long banking relationship instantly became adversarial. My loan officer was no longer allowed to even communicate with me after litigation was mentioned.

After weeks of agonizing delays upon the advice of my very capable attorney, we were able to settle the litigation. The expense and trauma had a lasting impact on my views of cyber security. After the incident, we hired a cyber security firm to review our company and tighten our exposure.

These are a few of the tips they provided:

Make sure to install and monitor the latest online security software. My knowledge is limited on this subject, but it will pay to have an outside expert provide this service. Ransom attacks are rampant and can shut down a company if you have not protected yourself. Be much more cautious of opening any email file from an unknown source. Several rare coin companies have been attacked in the last several years and the damage can sometimes be staggering in cost and delays of lost business.

Never keep sensitive files on a computer that has exposure online. There are so many tricks to infiltrate your computer that the only safe option is to not have anything you want to keep confidential accessible. Keep important files and information on a flash drive and only use when not online. I’m pretty sure this was how the thieves were able to steal my identity with enough information so they could dupe my bank.

Consider using a local bank who will know your account and understand your concerns for security. Many large banks are now run with minimal staff and the use of call centers. Wires from my account can now only happen when I visit my local bank and give the instructions in person. The extra trouble is worth the peace of mind.

Coin dealers checking accounts are a big target for crooks. Our Florida operation has been attacked with counterfeit checks more than once. The best protection is a service called Positive Pay that most banks offer. With Positive Pay, you have until 11 a.m. each day to approve or disapprove a charge against your checking account. It is the only way to be sure a fraudulent charge has not been posted to your checking account. If you have not heard of this service, call your bank today!

Always verbally verify whenever sending or receiving a bank wire. Cyber thieves can easily monitor your email and wait for a transaction to occur. They then insert themselves in the transaction and provide false wire info. One of my close friends lost six figures to this sort of attack. Once a bank wire has been sent, it is nearly impossible to retrieve the money.

It’s impossible to cover all of the ways that dealers and collectors are vulnerable when it comes to rare coin security. One thing is for sure though: The stakes have never been higher, and we should all do a better job protecting ourselves. Consider your risks and explore ways to improve your security and lessen the chances of becoming a victim.

You should also consider financial support for the Numismatic Crime Information Center (NCIC). Its founder, former Texas law enforcement official Doug Davis, does a wonderful job spreading the word about numismatic crimes. He regularly posts lists of stolen coins and bullion and his efforts have led to substantial recoveries for robbery victims.

The Importance of Insurance

Despite all of the precautions you can take, losses will still occur on occasion for some dealers or collectors. Purchasing theft insurance is one way to ensure peace of mind when shipping coins or attending events. I reached out to numismatic and precious metals insurance specialist Jolene Daniello from Gallagher Insurance for any words of wisdom she might share with readers. The following are a few more tips on rare coin security:

“The first rule of insurance is to act like a prudent uninsured. Just because your insurance policy may afford coverage for certain acts, it is best to proceed with an abundance of caution to protect your merchandise. The majority of exhibition losses that we see are because the booth was left unattended during the show. Another vulnerable time is setup and breakdown, as thieves can use distraction techniques such as posing as a cleaner or maintenance worker to steal merchandise.

“When unpacking or packing the merchandise, stay focused and vigilant and do not allow anyone to distract you. Some additional useful tips when traveling in your car with merchandise: 1. Keep your car in good condition and use run-flat tires. 2. Create an inventory of what you are transporting (store one copy in a safe place in your office or home and keep one with the inventory). 3. Do not leave merchandise in an unattended vehicle. 4. Always take some U-turns or alternate routes to confirm you are not being followed. If you feel you are being followed, you should drive straight to a police station. 5. Always have a fully charged cellphone. 6. Have adequate insurance and never risk your life if held up at gunpoint – give them what they ask for!

“Our main source of losses is still shipping. Some additional security tips here are to double-box the merchandise and use packaging material to prevent shifting of the inner box. Use three-inch-wide reinforced tape with multiple layers so it is difficult to open in transit. If you are experiencing multiple losses with the same carrier, it is best to switch up the carrier, as you may have been identified as a target with your current carrier.

“When possible, it is best not to ship on a Friday or the last working day before the public holiday, as the longer the package is with the carrier, the more opportunity for theft. If you have a missing package, immediately file a claim with the carrier as this will trigger an internal investigation and can help locate the package. As always, make sure you are fully insured for your shipments so that in the unfortunate event of a loss, you can file a claim with your insurance provider.”

The Professional Numismatists Guild (PNG) has recently identified rare coin security as one of the most important issues facing its membership. Plans are being made to conduct events to better inform dealers about the latest threats and ways to protect themselves. The first event is being organized for the January 2024 FUN Show.

Jeff Garrett bio

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Rare Coin Gallery

 

Jeff Garrett
Jeff Garretthttps://rarecoingallery.com/
Jeff Garrett, founder of Mid-American Rare Coin Galleries, is considered one of the nation’s top experts in U.S. coinage — and knowledge lies at the foundation of Jeff’s numismatic career. With more than 35 years of experience, he is one of the top experts in numismatics. The “experts’ expert,” Jeff has personally bought and sold nearly every U.S. coin ever issued. Not a day goes by that someone doesn’t call on Jeff Garrett for numismatic advice. This includes many of the nation’s largest coin dealers, publishers, museums, and institutions. In addition to owning and operating Mid-American Rare Coin Galleries, Jeff Garrett is a major shareholder in Sarasota Rare Coin Galleries. His combined annual sales in rare coins and precious metals — between Mid-American in Kentucky and Sarasota Rare Coin Galleries in Florida — total more than $25 million. Jeff Garrett has authored many of today’s most popular numismatic books, including Encyclopedia of U.S. Gold Coins 1795–1933: Circulating, Proof, Commemorative, and Pattern Issues; 100 Greatest U.S. Coins; and United States Coinage: A Study By Type. He is also the price editor for The Official Redbook: A Guide Book of United States Coins. Jeff was also one of the original coin graders for the Professional Coin Grading Service (PCGS). He is today considered one of the country’s best coin graders and was the winner of the 2005 PCGS World Series of Grading. Today, he serves as a consultant to Numismatic Guaranty Corporation (NGC), the world’s largest coin grading company. Jeff plays an important role at the Smithsonian Institution’s National Numismatic Department and serves as a consultant to the museum on funding, exhibits, conservation, and research. Thanks to the efforts of Jeff and many others, rare U.S. coins are once again on exhibit at the Smithsonian Institution’s Museum of American History. Jeff has been a member of the Professional Numismatic Guild (PNG) since 1982 and has recently served as president of the organization. He has also served as the ANA President and as a member of the ANA Board of Governors.

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