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Tuesday, September 8, 2009

Practical Advice: Beware of "Limited Edition Collection" Scams

There are a number of companies (which shall not be named in this article) which profit by preying on beginning stamp collectors , exploiting their ignorance and gullibility by advertising so-called "limited edition" collections of stamps and First Day Covers, usually in popular magazines. Generally, these ads suggest that these collections will become valuable heirlooms, and offer the stamps or covers on a subscription basis. The collections are usually mounted by the subscriber in a handsome gold-embossed, leatherette albums, and each is accompanied by a meaningless "certificate of authenticity." Each cover or set of stamps comes with a accompanying description card with information about the issue. The collections often relate to a popular collecting theme such as American history, Sports, or the British Royal Family, and sometimes contain privately produced "gold-foil" stamps, medals, or colorized State quarters.

Unfortunately for the original subscribers who purchase these collections (or their heirs), the collections are not produced in such "limited" editions that they do not glut the stamp market. Typically, these companies sell beautifully mounted, inexpensive sets of stamps for ten to twenty times their value, or else send common, printed-cachet First Day Covers to their victims on a subscription basis for about $5 to $7 each. Usually a collection will contain 50 or more grossly overpriced covers. When the owners try to re-sell the covers, they invariably discover that they can get no more than 10c-20c each for them. Should there be accompanying medals or coins, these sell for whatever the bullion in the medals is worth, or the face value of the coins.

Most experienced stamp collectors or dealers who have bid in stamp auctions or attended stamp shows will almost certainly have seen large groups of such collections offered in lots for about 2%-4% of the original subscriber cost. Often these lots are purchased with the intent of breaking them down and re-offering the individual collections at local antique auctions, where there is an excellent chance that competing bidders, equally ignorant of the stamp market, will overbid for them, thus perpetuating the rapacious cycle.

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