The Hobby Protection Act of 1973

[CaptHenway]

Full text available here:

 

http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&sid=6ba90b1f402763bcb0388569596c3f4b&rgn=div5&view=text&node=16%3A1.0.1.3.28&idno=16

[CaptHenway]

Terms defined, excerpted from above:

 

§304.1 Terms defined.

(a) Act means the Hobby Protection Act (approved November 29, 1973; Pub. L. 93-167, 87 Stat. 686, (15 U.S.C. 2101 et seq.)).

 

(b) Commerce has the same meanings as such term has under the Federal Trade Commission Act.

 

© Commission means the Federal Trade Commission.

 

(d) Imitation numismatic item means an item which purports to be, but in fact is not, an original numismatic item or which is a reproduction, copy, or counterfeit of an original numismatic item. Such term includes an original numismatic item which has been altered or modified in such a manner that it could reasonably purport to be an original numismatic item other than the one which was altered or modified. The term shall not include any re-issue or re-strike of any original numismatic item by the United States or any foreign government.

 

(e) Imitation political item means an item which purports to be, but in fact is not, an original political item, or which is a reproduction, copy or counterfeit of an original item.

 

(f) Original numismatic item means anything which has been a part of a coinage or issue which has been used in exchange or has been used to commemorate a person, object, place, or event. Such term includes coins, tokens, paper money, and commemorative medals.

 

(g) Original political item means any political button, poster, literature, sticker, or any advertisement produced for use in any political cause.

 

(h) Person means any individual, group, association, partnership, or any other business entity.

 

(i) Regulations means any or all regulations prescribed by the Federal Trade Commission pursuant to the Act.

 

(j) United States means the States, the District of Columbia, and the Commonwealth of Puerto Rico.

 

(k) Diameter of a reproduction means the length of the longest possible straight line connecting two points on the perimeter of the reproduction.

 

[40 FR 5496, Feb. 6, 1975, as amended at 53 FR 38942, Oct. 4, 1988]

[CaptHenway]

Imitation numismatic items defined, excerpted from above:

 

(d) Imitation numismatic item means an item which purports to be, but in fact is not, an original numismatic item or which is a reproduction, copy, or counterfeit of an original numismatic item. Such term includes an original numismatic item which has been altered or modified in such a manner that it could reasonably purport to be an original numismatic item other than the one which was altered or modified. The term shall not include any re-issue or re-strike of any original numismatic item by the United States or any foreign government.

 

Notice this line:

 

"Such term includes an original numismatic item which has been altered or modified in such a manner that it could reasonably purport to be an original numismatic item other than the one which was altered or modified."

[CaptHenway]

It does not matter that the altered item began life as an original numismatic item. The fact that the altered item "could reasonably purport to be an original numismatic item other than the one which was altered or modified" makes the altered item subject to the marking requirements of the Hobby Protection Act.

[coinman_23885]

We both cited the Code of Federal Regulations for the HPA in previous threads concerning certain contemporary productions, all of which fell on deaf ears. There are a number of bullion round producers doing the same. Unfortunately, the law is meaningless unless the FTC finally does it job and enforces the HPA, or private parties begin suing to enforce it.

[mark]

coinman_23885 and CaptHenway:

 

I have a question about over-striking a coin. The mint did not strike any cents in Philadelphia in 1922. Suppose I used my engraving skill over-stuck a bunch of U.S. mint issued cents with the fantasy date 1922 and no mint mark, thereby creating this fantasy coin. What is you opinion? What do you suppose might be the opinions on the other side of the issue?

 

I ask because, frankly, the assertions that it's perfectly legal to over strike U.S. mint coins with a fantasy date or mint mark and that no one can be possibly be hurt by these fantasy over strikes seem to flounder when confronted with this particular possible "fantasy" over strike.

 

Mark

[coinman_23885]

coinman_23885 and CaptHenway:

 

I have a question about over-striking a coin. The mint did not strike any cents in Philadelphia in 1922. Suppose I used my engraving skill over-stuck a bunch of U.S. mint issued cents with the fantasy date 1922 and no mint mark, thereby creating this fantasy coin. What is you opinion? What do you suppose might be the opinions on the other side of the issue?

 

I ask because, frankly, the assertions that it's perfectly legal to over strike U.S. mint coins with a fantasy date or mint mark and that no one can be possibly be hurt by these fantasy over strikes seem to flounder when confronted with this particular possible "fantasy" over strike.

 

Mark

 

You mean so that it looks like this one?

 

http://www.pcgscoinfacts.com/Coin/Detail/3285

 

There is a no-D variety for this year that was produced when the "D" mint mark was sloppily removed from dies at the Denver Mint. Since your hypothetical coin appears to be an original numismatic item (or at least is an original numismatic item altered to look like a different original numismatic item), the plain meaning of the language in the HPA requires that it be marked with the word "COPY."

 

Since this thread is about the HPA, I will limit my other comments and will not post any additional replies concerning the applicability of other statutes including 18 U.S.C. 485-489 and 18 U.S.C. 331, but I think my replies in another thread would cover that. If you actually read through examples of case law where the government has sought prosecutions under these statutes, you will see that they interpret the statutes in an even broader way than I do. The other side will parrot DCarr's argument about the item merely being an alteration without an intent to defraud.

 

Also, not that I think it would make a substantial difference in effect, but are you referring to overstriking the entire design or just using a date/mint mark punch?

[mark]

Coinman_23885:

 

Yes, the coin you linked is exactly the coin I meant.

 

As I read the many related threads concerning Dcarr's over-strikes, it seems that a "defense" being offered is that the over-struck "coin" is a fantasy, and hence legal, because the mints never struck the particular coin Mr. Carr is producing. For example, Mr. Carr's 1964-D Franklin half dollar fantasy half dollar "coin" that was over-struck on a U.S. half dollar is deemed legal because the mint never struck a 1964-D Franklin half dollar. Well, the mint never struck a 1922 Philadelphia cent, So according to the same argument for the legality of the 1964-D Franklin half dollar, over-striking a genuine U.S. cent with a 1922 Philadelphia die would seem to be equally legal? But I suspect that most collectors would disagree that striking a 1922 Philadelphia cent is legal even if was over-struck on a genuine U.S. cent.

 

Mark

[coinman_23885]

Coinman_23885:

 

Yes, the coin you linked is exactly the coin I meant.

 

As I read the many related threads concerning Dcarr's over-strikes, it seems that a "defense" being offered is that the over-struck "coin" is a fantasy, and hence legal, because the mints never struck the particular coin Mr. Carr is producing. For example, Mr. Carr's 1964-D Franklin half dollar fantasy half dollar "coin" that was over-struck on a U.S. half dollar is deemed legal because the mint never struck a 1964-D Franklin half dollar. Well, the mint never struck a 1922 Philadelphia cent, So according to the same argument for the legality of the 1964-D Franklin half dollar, over-striking a genuine U.S. cent with a 1922 Philadelphia die would seem to be equally legal? But I suspect that most collectors would disagree that striking a 1922 Philadelphia cent is legal even if was over-struck on a genuine U.S. cent.

 

Mark

 

Although I think the result is legally the same (because coins need not be exact copies to run afoul of the statutes cited), your example is factually distinguishable from all of his pieces except perhaps the 1964-D Peace Dollar (which was actually struck). Although no 1922 Philadelphia minted cents exist, a 1922 no "D" variety exists. By default, Philadelphia minted coins carry no mint mark; the branch minted pieces do. As a result, a 1922 no D coin compares very favorably to what a 1922 Philadelphia minted piece would look like. There are no 1964 half dollars known or thought to exist with the Franklin Half Dollar design. Of course, we never know what will turn up in the future (who would have expected a master hub or die for a 1964 Morgan?!) or perhaps be confused as a pattern like his 1915 dated coinage (an 1858 pattern IHC exists).

 

[Afterword]

"Original numismatic item means anything which has been a part of a coinage or issue which has been used in exchange or has been used to commemorate a person, object, place, or event. Such term includes coins, tokens, paper money, and commemorative medals."

 

 

What does "used in exchange" mean? Does it mean selling an original numismatic item or buying something with an original numismatic item or a generic trade of one item for another or all three scenarios?

[RWB]

Neither the HPA nor Counterfeiting statutes have exceptions for some sort of substrate used to impress/cast the fake. To admit such would be as stupid as saying a counterfeit is OK if it was struck using melted US coins. An alleged counterfeiter has admitted on these boards of purposefully defacing US legal tender ("The first step in that process is to sand-blast each host coin...) and then using the defaced coins (illegal in itself) to make fakes.

[Afterword]

Counterfeiting statutes do not address numismatic concerns. HPA does, but effectively is nothing more than a guideline or suggestion, and this is because numismatists are the only ones who care about counterfeiting or fantasy coins. If these things are not done on a large enough scale to threaten the monetary system of the US Government or if it has been spotlighted by the national news media to the point where the US Government can no longer ignore it without being perceived as impotent - nothing is going to be done about it.

 

It is an imperfect world and the numismatic world is certainly no exception. Numismatists have lost more money at dealer tables and pawn shops due to fraudulence (without the need of counterfeit coins or fantasy pieces) than will ever be perpetrated by counterfeiters or the possible misrepresentation of fantasy pieces.

 

You and the others are accomplishing next to nothing dogging Carr. As things stand at present, the distribution and availability of numismatic knowledge is the only remedy for numismatic fraud, but it is by no means a cure.

 

[CaptHenway]

The HPA is a law, not a "guideline or suggestion."

[Afterword]

But not an effective law.

[RWB]

Numismatic "concerns" are immaterial to counterfeiting statutes.

...and both are laws not some guidelines for crooks.

[DC Dawg]

Having some knowledge on the unseen discussion about Daniel Carr's fantasy, his "coins" fit into an area where there are loopholes in the law. Since the items he has produced (or produces) are not copies of legal tender coins and are not sold to defraud anyone, the government is afraid that any case would not hold up in court. Even though Carr's work is in the fringe of legal, they do not feel that they can make an example of him. Treasury is watching and waiting for him to cross a line before doing anything else.

 

Afterword: How is the HPA not an effective law? What would you like see changed, forgetting the political realities?

 

One of the problems with this discussion is that it is using the text of the original 1973 law. It has been updated. One of the updates is the Collectible Coin Protection Act of 2014 that allows the prosecution of those distributing/selling counterfeit coins. It fixed the Hobby Protection Act which said that the government could only prosecute the producers of the coins. CCPA also allowed the government to add to their regulations (15 CFR) to make the platforms liable after being informed. This is why eBay stopped allowing copies even if they were marked as "COPY" on their site. It was just too difficult for them to control.

 

If you want tons see the full legal text of the Hobby Protection Act will all amendments and changes, it is under 15 U.S. Code Chapter 48 and can be found https://www.law.cornell.edu/uscode/text/15/chapter-48

[Mr.Mcknowitall]

The HPA "changes" were previously discussed in another thread by a number of the participants in this thread. T hihe options of the Government are not limited to HPA.

 

The attorney for Boggs had the similar thought that the government might be timid, given the collecting community support for Boggs. I have some knowledge on that unseen discussion.

 

The loopholes are only such when the person using the loophole has achieved legal adjudication in his/her favor.

That has not occurred. Lack of action by the government is not acknowledgement of compliance.

 

[CaptHenway]

Having some knowledge on the unseen discussion about Daniel Carr's fantasy, his "coins" fit into an area where there are loopholes in the law. Since the items he has produced (or produces) are not copies of legal tender coins and are not sold to defraud anyone, the government is afraid that any case would not hold up in court. Even though Carr's work is in the fringe of legal, they do not feel that they can make an example of him. Treasury is watching and waiting for him to cross a line before doing anything else.

 

Afterword: How is the HPA not an effective law? What would you like see changed, forgetting the political realities?

 

One of the problems with this discussion is that it is using the text of the original 1973 law. It has been updated. One of the updates is the Collectible Coin Protection Act of 2014 that allows the prosecution of those distributing/selling counterfeit coins. It fixed the Hobby Protection Act which said that the government could only prosecute the producers of the coins. CCPA also allowed the government to add to their regulations (15 CFR) to make the platforms liable after being informed. This is why eBay stopped allowing copies even if they were marked as "COPY" on their site. It was just too difficult for them to control.

 

If you want tons see the full legal text of the Hobby Protection Act will all amendments and changes, it is under 15 U.S. Code Chapter 48 and can be found https://www.law.cornell.edu/uscode/text/15/chapter-48

 

Here is the text of the Collectible Coin Protection Act of 2014:

 

https://www.congress.gov/bill/113th-congress/house-bill/2754/text

 

I do not see that it alters the definition quoted in the first four postings in this thread, which were obtained from the FTC's website. If you have a link to a different, more recent version of the HPA, please post the link and I will inform the FTC of their error.

[CaptHenway]

While looking for a more recent copy of the text of the HPA, I found this fascinating document:

 

https://www.federalregister.gov/documents/2016/04/20/2016-09103/rules-and-regulations-under-the-hobby-protection-act#footnote-18-p23220

 

Notice the part where it specifically addresses the topic of "fantasy coins" with "(M)inor variations in dates between an original and its alleged 'copy':

 

"Additionally, it is not necessary to modify the Rules to address specific collectible items, such as “fantasy coins,” as some commenters suggested. The Commission can address specific numismatic items as the need arises. Notably, the Commission has already addressed whether coins resembling government-issued coins with date variations are subject to the Rules. In re Gold Bullion Int'l, Ltd., 92 F.T.C. 196 (1978). It concluded that such coins should be marked as a “COPY” because otherwise they could be mistaken for an original numismatic item. See id. at 223 (“[M]inor variations in dates between an original and its alleged `copy' are insufficient to deprive the latter of its status as a `reproduction, copy or counterfeit of an `orginal numismatic item' and do not eliminate the requirement that the latter be marked with the word `Copy'.”).[18]"

 

As I read this, the use of a non-extent date does not exempt the 'fantasy' coin from the provisions of the HPA.

 

Edited to add the next, and quite relevant, paragraph:

 

"Lastly, the Commission does not propose modifying the Rules to ban the sale of fantasy coins outright. Sales of properly-marked fantasy coins are lawful under the Commission's decision in In re Gold Bullion discussed above, which held that vendors could sell coins with date variations so long as the coins are marked with the word `Copy.' ” 92 F.T.C. at 223. By contrast, the federal statute prohibiting the alteration of U.S. coins requires fraudulent intent. 18 U.S.C. 331. Accordingly, the Commission finds no grounds to adopt a rule banning fantasy coins."

 

Three additional new comments:

 

1. As I read this, Mr. Carr's fantasy date overstrikes are legal to make AND NOT COUNTERFEITS, so long as they are marked with the word "COPY" in accordance with the HPA.

 

2. Whether or not Mr. Carr's refusal to mark his fantasy coins with the word copy invokes the "fraudulent intent" provision mentioned in this paragraph is a question well beyond my pay grade.

 

3. I reserve judgement as to whether or not 1964-D dollar overstrikes constitute "fantasy" coins, as such coins were in fact struck at a United States Mint facility.

 

TD

[RWB]

Every counterfeiter should be prosecuted to the full extent of law including forfeiture of all materials, implements and revenue from their illegal activity. This applies to ALL perpetrators and ALL who import, distribute or sell this illegal stuff.

 

Incidentally, the HPA allows a successful complainant to recover 100% of the revenue earned by a violator....that means every penny a maker, distributor or seller of items in violation of HPA has taken in on illegal products, from the first to the last.

 

Seems like a fun opportunity for a couple of lawyer-coin collectors to go after violators and nail them to the wall.

 

[CaptHenway]

I would prefer that this thread not get into the question as to whether or not Mr. Carr's legal tender design overstrikes are "counterfeits" or not. That can be discussed in a separate thread that anybody wishes to start. Please do not raise the issue here.

 

I only wish to address the point as to whether or not they are required to be permanently marked with the word "COPY" in accordance with the HPA. I believe that they are. This new document that I just cited seems to indicate that I am correct.

 

TD

[CaptHenway]

By the way, that new document made reference to a suggestion that the marking "FANTASY" be used in some cases. I was not familiar with that suggestion, and found it in these comments addressed to the FTC prior to the adoption of the 2014 changes:

 

https://www.ftc.gov/policy/public-comments/initiative-577

[Mr.Mcknowitall]

It was mentioned previously, though not in this thread. A legislative record review is clear about it. I think I mentioned to Mr. Carr that I had reviewed the record and could not find a reference to him that would indicate he had congressional knowledge of the intent of the wording of the HPA, and would support his adamant position that he is correct and all other positions including your position are wrong. He could only make such a claim if he was an involved individual in the construction of the law, sort of like the Federalist Papers.

[coinman_23885]

It was mentioned previously, though not in this thread. A legislative record review is clear about it. I think I mentioned to Mr. Carr that I had reviewed the record and could not find a reference to him that would indicate he had congressional knowledge of the intent of the wording of the HPA, and would support his adamant position that he is correct and all other positions including your position are wrong. He could only make such a claim if he was an involved individual in the construction of the law, sort of like the Federalist Papers.

 

Congress's intent is specifically indicated in the HPA as it interrelates to other statutes. I also agree with the OP - let's not make another thread about Carr, but to touch upon the law generally. There are a number of bullion pieces out there that also raise issues.

[coinman_23885]

 

1. As I read this, Mr. Carr's fantasy date overstrikes are legal to make AND NOT COUNTERFEITS, so long as they are marked with the word "COPY" in accordance with the HPA.

 

Absolutely. I do no think anyone would describe his coins as counterfeits IF the pieces were properly marked in accordance with the HPA. In that sense, the HPA also protects the maker of replica or imitation items.

[comicdonna]

 

1. As I read this, Mr. Carr's fantasy date overstrikes are legal to make AND NOT COUNTERFEITS, so long as they are marked with the word "COPY" in accordance with the HPA.

 

Absolutely. I do no think anyone would describe his coins as counterfeits IF the pieces were properly marked in accordance with the HPA. In that sense, the HPA also protects the maker of replica or imitation items.

If he marked his coins "COPY", all would be good. The way he's doing it now, isn't fair to others who comply with the law. Laws are made for a reason. Those that break them should be punished.

[dcarr]

While looking for a more recent copy of the text of the HPA, I found this fascinating document:

 

https://www.federalregister.gov/documents/2016/04/20/2016-09103/rules-and-regulations-under-the-hobby-protection-act#footnote-18-p23220

 

Notice the part where it specifically addresses the topic of "fantasy coins" with "(M)inor variations in dates between an original and its alleged 'copy':

 

"Additionally, it is not necessary to modify the Rules to address specific collectible items, such as “fantasy coins,” as some commenters suggested. The Commission can address specific numismatic items as the need arises. Notably, the Commission has already addressed whether coins resembling government-issued coins with date variations are subject to the Rules. In re Gold Bullion Int'l, Ltd., 92 F.T.C. 196 (1978). It concluded that such coins should be marked as a “COPY” because otherwise they could be mistaken for an original numismatic item. See id. at 223 (“[M]inor variations in dates between an original and its alleged `copy' are insufficient to deprive the latter of its status as a `reproduction, copy or counterfeit of an `original numismatic item' and do not eliminate the requirement that the latter be marked with the word `Copy'.”).[18]"

 

As I read this, the use of a non-extent date does not exempt the 'fantasy' coin from the provisions of the HPA.

 

The situation described above (in Gold Bullion Int'l, Ltd., 92 F.T.C. 196) did not involve over-striking or altering existing coins. It involved pieces stamped directly on anonymous blanks, similar to something like Chinese "1886-CC" Morgan dollars (for example).

 

Also, I don't think Gold Bullion International ever informed potential and actual buyers of the coins as to their nature, even though GBI was well aware of it.

 

 

Edited to add the next, and quite relevant, paragraph:

 

"Lastly, the Commission does not propose modifying the Rules to ban the sale of fantasy coins outright. Sales of properly-marked fantasy coins are lawful under the Commission's decision in In re Gold Bullion discussed above, which held that vendors could sell coins with date variations so long as the coins are marked with the word `Copy.' ” 92 F.T.C. at 223. By contrast, the federal statute prohibiting the alteration of U.S. coins requires fraudulent intent. 18 U.S.C. 331. Accordingly, the Commission finds no grounds to adopt a rule banning fantasy coins."

 

Three additional new comments:

 

1. As I read this, Mr. Carr's fantasy date overstrikes are legal to make AND NOT COUNTERFEITS, so long as they are marked with the word "COPY" in accordance with the HPA.

 

2. Whether or not Mr. Carr's refusal to mark his fantasy coins with the word copy invokes the "fraudulent intent" provision mentioned in this paragraph is a question well beyond my pay grade.

 

3. I reserve judgement as to whether or not 1964-D dollar overstrikes constitute "fantasy" coins, as such coins were in fact struck at a United States Mint facility.

 

TD

 

This part is of importance:

 

"By contrast, the federal statute prohibiting the alteration of U.S. coins requires fraudulent intent. 18 U.S.C. 331. Accordingly, the Commission finds no grounds to adopt a rule banning fantasy coins."

 

The FTC seems to be saying that altering of existing coins is ok so long as it is not done fraudulently. I have never been deceptive in any marketing materials for any items I've produced.

 

1964-D Peace Dollars were never issued. As such, they can not be "part of a coinage or issue".

 

 

[dcarr]

If someone took large quantities of 1932 Washington quarters and ran each one through an engraving machine which carved a "3" over the "2" so as to produce "1933" pieces, without changing any other parts of the coins, what would be the legal ramifications of selling them ?

 

95% of the surface of the entire coin would be original and untouched. Only the area of the one date digit would be altered. Stamping "COPY" on such a coin would not be an accurate indication of what it was.

 

[CaptHenway]

There was no need to adopt a rule banning fantasy coins because they were already required to be marked with the word "COPY." Read the text.

 

The document clearly states that a minor alteration of a date does not exempt your altered date pieces from the requirement to be marked with the word "COPY."

 

(“[M]inor variations in dates between an original and its alleged `copy' are insufficient to deprive the latter of its status as a `reproduction, copy or counterfeit of an `orginal numismatic item' and do not eliminate the requirement that the latter be marked with the word `Copy'.”).

[CaptHenway]

By the way, I am familiar with the GBI case. I was with Coin World when they tried advertising them as official German mint "restrikes." I and another numismatist on the staff examined the coins and determined them to be fantasies struck from newly created dies. Coin World notified the FTC, which determined that the pieces were required to be marked with the word "COPY."