CITY HALL — One of the nation’s largest precious metals dealers is being sued by City Hall for allegedly engaging in a nationwide “bait and switch scam” by using false, deceptive and aggressive sales tactics to trick customers into buying heavily marked-up collector coins instead of gold or silver bars.
The Consumer Protection Unit of the City Attorney’s Office filed the lawsuit Thursday against Santa Monica-based Seacoast Coin, Inc., which does business as Merit Gold and Silver. The company has been in business since 1986.
The complaint alleges that when consumers call in to buy bullion, Merit’s salespeople tricked them into buying heavily marked-up so-called “collector” coins instead, including falsely telling consumers:
• That the coins are a better investment than bullion;
• That the coins offer more privacy than bullion;
• That the coins are not “reportable” on consumers’ taxes;
• That the coins can’t be confiscated by the government, while bullion can be.
The complaint further alleges that the collector coins pushed by Merit have none of those advantages over gold or silver bullion.
City attorneys claim the scheme bilked consumers out of tens of millions of dollars. Many of Merit’s customers are seniors, according to the complaint.
The complaint names Merit co-owners Peter M. Epstein and Michael J. Getlin as defendants for their role in training, controlling, and overseeing the operation.
Getlin told the Daily Press that the company has some of the lowest pricing available in the industry and more than 50 percent of the ounces of gold and silver shipped is bullion “and priced at 1 percent over dealer cost.”
“We are shocked by this lawsuit,” he said. “We have what we believe to be the best, most transparent and fairest practices in our industry.”