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78–137 2013

H.R. 6149, THE COIN AND PRECIOUS METAL 

DISCLOSURE ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMERCE, TRADE, 

AND CONSUMER PROTECTION 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

SEPTEMBER 23, 2010 

Serial No. 111–160 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 


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COMMITTEE ON ENERGY AND COMMERCE 

HENRY A. WAXMAN, California, Chairman 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

BETTY SUTTON, Ohio 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 


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SUBCOMMITTEE ON COMMERCE, TRADE, AND CONSUMER PROTECTION

BOBBY L. RUSH, Illinois 

Chairman 

JANICE D. SCHAKOWSKY, Illinois 

Vice Chair 

JOHN SARBANES, Maryland 

BETTY SUTTON, Ohio 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BART STUPAK, Michigan 

GENE GREEN, Texas 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

ZACHARY T. SPACE, Ohio 

BRUCE L. BRALEY, Iowa 

DIANA DEGETTE, Colorado 

JOHN D. DINGELL, Michigan (ex officio) 

CLIFF STEARNS, Florida 

Ranking Member 

RALPH M. HALL, Texas 

ED WHITFIELD, Kentucky 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

MICHAEL C. BURGESS, Texas 


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C O N T E N T S 

Page 

Hon. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 1 

Hon. Ed Whitfield, a Representative in Congress from the Commonwealth 

of Kentucky, opening statement ......................................................................... 2 

Prepared statement .......................................................................................... 4 

Hon. Anthony D. Weiner, a Representative in Congress from the State of 

New York, opening statement ............................................................................. 6 

Hon. Steve Scalise, a Representative in Congress from the State of Louisiana, 

opening statement ................................................................................................ 7 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 8 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

prepared statement .............................................................................................. 90 

Hon. Phil Gingrey, a Representative in Congress from the State of Georgia, 

prepared statement .............................................................................................. 93 

WITNESSES

Julius A. Bazan, Private Citizen, Lynbrook, New York ....................................... 9 

Prepared statement .......................................................................................... 11 

Lois Greisman, Associate Director, Marketing Practices Division, Bureau of 

Consumer Protection, Federal Trade Commission ............................................ 17 

Prepared statement .......................................................................................... 20 

Answers to submitted questions ...................................................................... 112 

Charles Bell, Programs Director, Consumers Union ............................................ 30 

Prepared statement .......................................................................................... 33 

Scott Carter, Executive Vice President, Goldline International .......................... 42 

Prepared statement .......................................................................................... 44 

Answers to submitted questions ...................................................................... 117 

Howard Beales, Ph.D., Associate Professor, The George Washington University School of Business ......................................................................................... 56 

Prepared statement .......................................................................................... 59 

Answers to submitted questions ...................................................................... 123 

SUBMITTED MATERIAL

Letter of July 20, 2010, from Messrs. Rush and Weiner to Goldline International, Inc .......................................................................................................... 97 

Response from Goldline International, Inc ..................................................... 100 

Letter of September 21, 2010, from the National Consumers League to the 

Subcommittee ....................................................................................................... 107 

Letter of September 23, 2010, from the Professional Numismatists Guild, 

Inc. to the Subcommittee ..................................................................................... 109 

Letter of September 21, 2010, from the American Numismatic Association 

to the Subcommittee ............................................................................................ 111 


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H.R. 6149, THE COIN AND PRECIOUS METAL 

DISCLOSURE ACT 

THURSDAY, SEPTEMBER 23, 2010 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCE, TRADE, AND CONSUMER PROTECTION, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The Subcommittee met, pursuant to call, at 2:07 p.m., in Room 

2322 of the Rayburn House Office Building, Hon. Bobby L. Rush 

[Chairman of the Subcommittee] presiding. 

Members present: Representatives Rush, Schakowsky, Sarbanes, 

Weiner, Barrow, Waxman (ex officio), Whitfield, Terry and Scalise. 

Staff present: Timothy Robinson, Counsel; Michelle Ash, Chief 

Counsel; Michael Ostheimer, Counsel; Will Wallace, Special Assistant; Elizabeth Letter, Press Assistant; Kevin Kohl, Minority Professional Staff Member; Brian McCullough, Minority Senior Professional Staff Member, CTCP; and Shannon Weinberg, Minority 

Counsel, CTCP. 

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RUSH. The Subcommittee on Commerce, Trade, and Consumer Protection will now come to order. I want to extend my 

greetings to all who have gathered here. 

The subcommittee is holding today’s hearing on a bill, H.R. 6149, 

the Coin and Precious Metal Disclosure Act. The bill, which was introduced by Mr. Weiner of New York, will cover the sale of gold 

bullion, collectable coins made from other precious metals, and certain coins for investment purposes. 

H.R. 6149 requires dealers prior to selling these items to make 

clear and conspicuous disclosures in writing and orally of all fees 

that consumers could incur in association with the sale of these 

covered items. The required disclosures would extend to the purchase price the melt value of the covered items and the reasonable 

resale price of the covered items to other dealers. Many of us have 

seen at least one of the television advertisements placed by 

Goldline International and others that tell consumers to strongly 

consider purchasing precious coins in order to preserve or protect 

the value of consumers’ investments in precious metals. One of the 

risks that these advertisements and commercials cite repeatedly 

and consistently is that the U.S. government could potentially confiscate gold bullion. This is just one example, but I think is one of 

which many of you can relate. 


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These advertisements and the reported sale practices of these 

dealers concerned Congressman Weiner and myself enough that we 

sent a letter to Goldline asking the company to respond to a number of questions. Today the CEO of Goldline is with us as one of 

our six witnesses, and we are very appreciative of our witnesses. 

In our letter, we asked Goldline to reveal more to us about, one, 

the company’s sales staff training; two, sales staff compensation, 

commission and incentive structures; three, the average differential 

in value between the sale prices of gold bullion, gold coins and how 

much Goldline would pay to purchase those items back from consumers. We also asked Goldline to tell us the following: whether it 

encourages its sales staff through training or in sales discussions 

to refer to government confiscation of gold when they speak to consumers, whether sales staff receive different commission percentages for selling bullion than for selling collectable coins, and what 

is that difference. Finally, we asked Goldline to tell us whether 

Goldline is required to be licensed or is qualified in any jurisdiction 

to act as an investment advisor. 

And Mr. Carter, I want to please extend my thanks to you, and 

please thank your president and CEO for his prompt response to 

us in a letter, that I might add is gold embossed, that was dated 

August 12, 2010. That letter was useful to me and my staff as it 

better defined some of the terms and words that Goldline uses in 

his existing disclosures to consumers, and I would like to request 

unanimous consent for the entry of both letters, both mine and Mr. 

Weiner’s letter to Goldline, and Goldline’s response into the hearing record. 

[The information appears at the conclusion of the hearing.] 

Mr. RUSH. I would also like to take this opportunity to request 

another unanimous consent, and that is for the entry of four more 

documents into the hearing record. One is a letter addressed to me 

from the National Consumers League dated September 21, 2010, 

supporting H.R. 6149. The second is a statement for the record on 

behalf of the Industry Council for Tangible Assets dated today, 

September 23, 2010. There is an additional letter from the Professional Numismatists Guild dated September 20, 2010, and finally, 

a letter from the American Numismatic Association dated September 21, 2010, addressed to myself and to Ranking Member 

Whitfield. Hearing no objection, these unanimous consent requests 

will be granted. 

[The information appears at the conclusion of the hearing.] 

Mr. RUSH. I am very thankful to all of the witnesses for agreeing 

to share their valuable time with us in the interest of examining 

this bill and to making this bill a better bill. 

With that, I yield back the balance of my time and now I recognize the ranking member of the subcommittee, Mr. Whitfield, for 

5 minutes for the purposes of an opening statement. 

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY 

Mr. WHITFIELD. Well, thank you, Mr. Chairman, and today we do 

have a hearing on H.R. 6149, the Coin and Precious Metal Disclosure Act. 


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I might say that after reviewing information about the gold industry, we know that under current law certain fees and price disclosures are already required by the federal telemarketing sales 

rule. Now, this legislation would require many new conspicuous 

disclosures including fees, markups and reasonable resale and the 

melt value of the metal. I am particularly interested in hearing testimony on why reasonable resale and melt value information would 

benefit a customer and whether they are reasonable for a seller to 

disclose. Prices for many items including gold can fluctuate greatly 

day to day, and it would be problematic if legislation required an 

estimate that could mislead a consumer. 

Moreover, it is not clear to me why the coin and precious metals 

sellers in the private sector should be singled out to disclose a resale value when it is not required of the federal government. For 

example, my staff went out today and purchased this from the 

United States Mint. It is Native American $1 coins. There are 25 

of them in here. The cost of the roll is $35. But the melt value of 

the roll turns out to be in the markup of the gold compared to the 

melt value, there is a 2,393 percent markup on this from the federal government, and on this collective set of quarters that comes 

from the U.S. Mint, the retail value of this is $32.95 and yet the 

melt value of this is only $19.20. So even the U.S. government is 

going a tremendous job of marking up the price of their products 

as well. 

One other aspect of this that does bother me a little bit is, I have 

read a number of articles in the news media about this hearing, 

and it is disheartening to see that certain political commentators 

are mentioned frequently in these articles. Glenn Beck’s favorite 

gold company is getting called up to Capitol Hill for a grilling. 

Democrats on Capitol Hill have targeted a big advertising sponsor 

of Glenn Beck and other popular rightwing commentators. Congress will hold hearings Thursday about the practices of Goldline, 

the precious metal dealer, that is broadcast and advertises on popular conservative political personalities such as Glenn Beck, Mike 

Huckabee and Fred Thompson. 

Now, hopefully that is not the reason we are having these hearings, but it is disheartening to see that kind of news coverage on 

it that a hearing might be held simply because someone is advertising on a conservative talk show host program. 

But we do have some experts here today. We have people with 

Goldline. We have the FTC. We have some consumers who have 

been harmed by some of their purchases. So it is important that 

we have this hearing. We know that the Federal Trade Commission 

already does have expansive jurisdiction to tackle many consumer 

protection problems and they have their priorities, and I don’t really believe that this is one of their priorities but I may be wrong. 

Anyway, we look forward to the testimony of all the witnesses 

today, and I want to thank the chairman again for holding this 

hearing and giving us an opportunity to explore this issue. 

[The prepared statement of Mr. Whitfield follows:] 


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Mr. RUSH. The Chair now recognizes the author of the legislation, Mr. Weiner of New York, for 2 minutes for the purpose of 

opening statement. 

OPENING STATEMENT OF HON. ANTHONY D. WEINER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW 

YORK 

Mr. WEINER. Thank you, Mr. Chairman. I appreciate the opportunity to hold this hearing. 

You know, we are here talking about a classic consumer issue 

that affects those people in the middle class and those struggling 

to make it. This is exactly what this committee was empowered to 

deal with, and I am glad that we are taking up this important 

issue. 

The television gold industry is an industry that is led by one particular company that has built up an industry on fear, lies and ripoffs. Fear of the impending collapse of our economy is virtually a 

staple of every single statement from the executives of Goldline 

and other companies that sell these products. They get people 

scared about their future. Then they quickly transition to a lie, 

that if you buy certain types of coins it is a good hedge against the 

downturn in the economy. Mr. Whitfield just held up some coins 

that he can freely buy, no scarcity whatsoever, as many as he 

wants. Yet the only value to the coins that are being sold is their 

scarcity. If not that, then the small amount of gold that is in that 

coin, and that leads us to the rip-off. Once people have been convinced by their fear and the lies to purchase these products, they 

are profoundly ripped off. They are products that it would take 

years if not a generation, if ever, to make any money back on almost irrespective of how high the marketplace rose. 

They are finding themselves being sold a product that is supposed to hedge against the collapse of the dollar when in fact you 

would have to see years of continuing increases in gold prices in 

order to be able to make up your losses. I didn’t make up this data. 

This is freely accessible to people. They can go take a look. The 

exact same products that are being sold by Goldline are being sold 

for a fraction of the price on the open market. 

But let me tell you what this hearing is not about. It is not about 

whether you should buy gold. Some people say yes, some people say 

no. It is not about whether or not Glenn Beck is doing a disservice 

to his viewers for shilling for this company. That is his problem. 

That is Fox News’s problem. They made a right decision by telling 

him he had to end his contractual obligation and be a spokesman 

for this company. This is, what is the right and wrong way for consumers to do it and should they be protected. Should middle-class 

Americans who are being exploited every single day by this company and this industry be stopped and protected by legislation, and 

that is what I hope we get to today. 

Mr. RUSH. The Chair recognizes the gentleman from Louisiana, 

Mr. Scalise, for 2 minutes. 


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OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF LOUISIANA 

Mr. SCALISE. Thank you, Mr. Chairman. I look forward to today’s 

hearing and hearing from the witnesses, but it just seems rather 

odd that when we are sitting here and the country is asking Congress to be focusing on creating jobs, when unemployment is almost 

10 percent, and you can see here from when President Obama took 

office to today we are almost hovering at 10 percent unemployment, the American people want us to be focusing on jobs. They 

want us to be focusing on controlling spending. 

And so when you look at what is happening and why people 

across the country are so concerned about the direction of our country, a lot of people are going out and looking for other things to do. 

They are sitting on their money. They don’t want to invest in the 

things that government has control over, so people have been buying gold. Now, you can see right here, this is a chart of the 5-year 

gold average over the last few years. When President Obama took 

office, you can see a trajectory going up. Now, I don’t think there 

is any TV host that had anything to do with controlling the price 

of gold yet people are buying gold because they are scared to death 

about the spending that is going on in Washington. If you look at 

Moody’s, the rating agency, Moody’s is talking about downgrading 

the United States’s debt rating. This is serious business, and it is 

because of the out-of-control spending in Washington. It is because 

of these policies like a government takeover of health care by the 

liberals running this Congress that people are so scared to death 

about what is happening in the country that they are buying gold. 

And so what is the answer of the liberals running Congress? It is 

to go beat up on the people selling gold instead of fixing the problems that are happening in our country, instead of addressing the 

problems with creating jobs, addressing the problems with out-ofcontrol spending. 

And so if you look at what is going on and why we are at a point 

now where we are looking at this legislation, it doesn’t do anything 

to solve some problem that is out there. The FTC can address a 

problem. It has to do with politics. In fact, here is a letter from a 

sitting Member of Congress. It is nobody in this room. But it is a 

sitting Member of Congress who wrote a letter trying to raise 

money off of this issue, specifically mentioning the author of this 

bill in an attempt to raise money for campaign purposes. So yeah, 

there is politics going on here, but if we really were focused on 

things the American people want us to be focused on, we would be 

so concerned why so many people are buying gold since the day 

President Obama took office. It is because of the out-of-control 

spending and because of all these government takeovers and all the 

problems that are leading to higher unemployment. 

We ought to be focused on creating jobs. We ought to control the 

spending in Washington, not beating up on the people selling gold 

to people who want to buy it. 

Thanks, and I yield back. 

Mr. RUSH. The Chair now recognizes the chair of the full committee, Mr. Waxman, for 5 minutes for the purposes of opening 

statement. 


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OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you very much, Mr. Chairman. 

I am interested in the hearing today. I want to find out what 

people who are experts in consumer protection think about this bill, 

whether it is needed. We do have a Federal Trade Commission and 

I am glad they are going to be testifying. 

I do think that there is a very important role to protect consumers from unfair practices, but I must say after hearing Mr. 

Scalise’s comment, the only politics I have heard injected is all the 

political statements he just made. If people want to buy gold for 

whatever reason, that is their business, but to insist they are buying gold because liberals have control of Congress, that seems to 

me a little farfetched. People can decide they want to have a greater diversity in their portfolio. They can decide to buy gold as a 

hedge against inflation. People can have an interest in investing in 

gold for whatever reason. That is their right. And in fact while 

other investments have declined in value, the price of gold has 

nearly doubled in the past 3 years. I don’t think that is because 

Barack Obama is President of the United States unless that is the 

sales pitch that is made. I am not aware of it. 

I also don’t think it is appropriate to hold a hearing because this 

is a substance that is being advertised on Glenn Beck or Rachael 

Maddow or anybody else. The question is, are consumers being informed of the information that they are entitled to make the best 

judgment, and then quite frankly after people have their information, they may not still make the best judgment. A lot of people 

make mistakes. They don’t read the information that is given to 

them. They don’t pay attention to the whole other aspects that 

might be involved in investing decisions. But government can’t tell 

people what to do. That is up to them. 

So I am interested in what comes out of this hearing. I know we 

did have a bill that we passed out of the committee and I think 

out of the House dealing with whether purchasers of precious metals could melt down or destroy a consumer’s jewelry or gold before 

receiving an affirmative acceptance of an offer to purchase the jewelry for a specific price. But this is a different issue. This is a question of how much we need to inform consumers and whether there 

is a problem sufficient for us to change federal law to do that. 

I thank you for the hearing, and it should be an interesting one, 

and I expect we will learn a lot. I yield back my time. 

Mr. RUSH. The Chair thanks the chairman. 

The Chair now recognizes the gentleman from Nebraska, Mr. 

Terry, for 2 minutes. 

Mr. TERRY. Thank you, Mr. Chairman, but I am going to waive 

so I will have more time for questions. Thank you. 

Mr. RUSH. The Chair now recognizes the gentleman from Maryland, Mr. Sarbanes, for 2 minutes. 

Mr. SARBANES. Thank you, Mr. Chairman. I don’t need 2 minutes. 

I just want to thank Congressman Weiner for bringing attention 

to this issue and echo what Chairman Waxman said, which is it 

is just a matter of making sure people have good information at 


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their fingertips and then they can make sound judgments, and the 

problem here is that oftentimes the information is far away from 

the reality of the situation. 

And so we are looking forward to the testimony. We are looking 

forward to moving forward on this piece of legislation, and I yield 

back. Thank you. 

Mr. RUSH. The Chair thanks the gentleman. The Chair thanks 

all the members for their opening statements. 

Now we want to recognize our witness for the first panel, and I 

want to introduce him. He is a private citizen. His name is Dr. Julius A. Bazan. He lives in Lynbrook, New York, and he is going to 

testify regarding his experiences with this product and with this 

company. And so Dr. Bazan, it is important for you to know that 

this subcommittee has a standing practice that we will swear in all 

the witnesses, so would you please stand and raise your right 

hand? 

[Witness sworn.] 

Mr. RUSH. I want to thank you to much for taking time out from 

your busy schedule to be a participant in this hearing, and you are 

recognized for 5 minutes for the purposes of your opening statement. 

TESTIMONY OF DR. JULIUS A. BAZAN, PRIVATE CITIZEN, 

LYNBROOK, NEW YORK 

Dr. BAZAN. Thank you very much. 

I would like to say I have a little bit of difficulty, if you would 

gentlemen would speak up so I can hear you. 

As was mentioned, you know, I am originally from Czechoslovakia. I have been in the United States for 31 years, and I have 

been living in Lynbrook in New York and have been practicing 

neurology for 25 years. 

I am also an investor and I have been investing in the stock market in mutual funds, even commodities and options, for about 20 

years. However, after 9/11 I lost about 60 percent of my investments, maybe probably more. So I decided about 8 years ago to get 

out of the market. I was just having my account in Ameritrade, 

and I was thinking what to do with my money. At that time it was 

clear that the dollar was declining, the value was losing, and I was 

thinking about what kind of investment I would be able to make. 

Around the same time, you know, you listen to the news about 

gold and you listen to these advertisements and all different 

spokesman that you mentioned and you are exposed to these bombardments every day, especially I remember Goldline because I 

didn’t know anything about gold but whatever they were saying 

was making sense to me because, you know, gold was holding its 

value and actually was increasing in value, so I said if I invest in 

gold, maybe I can maintain the value of my dollar, you know, going 

forward. 

So I decided I would like to invest in gold but I didn’t know what 

company to choose. However, at that time Goldline was advertising 

on a daily basis and you were basically bombarded. There was no 

other company which I could find to invest in gold. So eventually 

I decided to contact Goldline by phone number and I decided to 

open an account. Then eventually I was able to transfer the money 


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and I was contacted by one of the salesmen from Goldline, and we 

decided, you know, how to invest the money. Initially I was thinking to purchase the bullion but I was told that bullion is not a good 

value to invest in because in the 1930s the government confiscated 

the gold and set the prices of the bullion and that would not be a 

good investment. On the other hand, I was told that coins have 

much better sell value, they are increasing in price and that will 

be an excellent investment for me because I can preserve my capital. 

So not knowing anything about it, I eventually decided I will invest in gold coins as the representative suggested, and at that time 

I didn’t know actually that his decision to sell me coins was based 

on commissions. It looked like if I was to purchase bullion, he 

would be getting about 5 percent of commission. However, if I 

bought coins he would get 35 percent of the commission. So anyhow, I bought the gold and I was waiting for about 6 months. I got 

the promise that it is very likely that gold price will reach $3,000 

in one year. However, after 6 months I didn’t see the price of gold 

move too much. It stayed around $1,100. So I decided, because I 

found another investment opportunity, that I will liquidate my 

holdings in gold. 

To my shock, when I called the representative, he mentioned 

that there is something called spread, which I didn’t know too 

much about, which now I understand is the difference between selling and buying the price of the gold. And he told me, I had my initial investment which was $140,000. He said that my investment 

now is worth only $83,000. So essentially it meant that that the 

day I purchased this gold, my value, he took about $60,000 in profit and left me holding a bag, $83,000. So I essentially felt robbed. 

It felt like legalized robbery. And so in any case, I decided to sell 

gold at that time, and that is my story. 

[The prepared statement of Dr. Bazan follows:] 


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Mr. RUSH. Thank you so much. We sympathize and are sympathetic to you for your loss of your dollars and your substantial loss 

to your individual retirement account, which I understand you lost 

as a result of your investment. Again, you have the sympathies of 

both myself and the other members of this subcommittee. 

I have a few questions that I want to ask you, and I have 5 minutes in which to ask these questions. How many transactions did 

you conduct with Goldline? 

Dr. BAZAN. This was just one purchase but I bought multiple different coins, but the bulk of it was in premium gold eagle. I believe 

they call it golden proof eagle, which at that time I was sold for 

$3,300 and I understand that the melt price of that coin was only 

$1,000 when I bought it. And on the market price, I think it was 

hiked up by about 30 percent or 35 percent. I was charged for one 

coin $3,300 while the melt price was only $1,000. 

Mr. RUSH. So am I to assume that you only spoke with one salesperson? 

Dr. BAZAN. Only one salesman, yes. 

Mr. RUSH. Were you ever informed of fees that would incur in 

association with your transaction? 

Dr. BAZAN. No, absolutely not, no discussions of any fees or any 

commissions or anything else. 

Mr. RUSH. Okay. Before contacting Goldline in July 2010, when 

you wanted to sell your investment, did you hear or see any disclosures about how much Goldline was marking up the proof American eagle coins you agreed to purchase? 

Dr. BAZAN. No. 

Mr. RUSH. Or how much the spread was on those coins? 

Dr. BAZAN. I had no information about prices of coins at that 

time. 

Mr. RUSH. After purchasing the coins, did you receive any disclosures? 

Dr. BAZAN. No. 

Mr. RUSH. Thank you. 

I will now yield the ranking member 5 minutes for the purposes 

of questioning the witness. 

Mr. WHITFIELD. Is it Dr. Bazan or—— 

Dr. BAZAN. Bazan, yes. 

Mr. WHITFIELD. Well, Dr. Bazan, thank you very much for taking 

time to be with us today, and I also would like to offer my apologies for the loss of your investment. I do want you to know, I have 

lost a lot of money in investments as well and that is something 

that we all deal with. 

I believe I heard the chairman ask you if you had received any 

sort of disclosure when you purchased this gold, and I may be 

wrong, but it is my understanding that before this company will actually sell gold product to a purchaser, that they send this out, 

which is called an account and storage agreement, and on the back 

it says ‘‘client acknowledges that he or she has read and understands all of the terms and conditions of the account and storage 

agreement and shall be bound by them.’’ And I was just reading 

through here, and I know that the very first thing it says here is 

that ‘‘this is speculative, unregulated and volatile and that prices 

may rise or fall.’’ And then it says ‘‘profit can only be made if prices 


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rise over the investment period in an amount sufficient to overcome 

the spread as set forth in paragraph 13.’’ Did you receive this at 

all before you purchased—— 

Dr. BAZAN. I don’t know if it was in this form, but of course you 

mentioned the storage fees. You know, I was aware of the storage 

fees. I mean, my question was about the purchase fees and those 

prices I didn’t know nothing about. 

Mr. WHITFIELD. You didn’t know anything about the purchase 

fees? 

Dr. BAZAN. Nothing about the price but I know about the storage 

fees. 

Mr. WHITFIELD. Okay. And how long did you actually keep the 

gold? 

Dr. BAZAN. The gold, I bought it sometime in December of 2009 

and kept it until May of 2010, 6 months. 

Mr. WHITFIELD. Six months. Well, I noticed that in another one 

of their documents, it does specifically say, it says, ‘‘If you are purchasing coins, bullion or rare currency for investment purposes, 

they should be considered a long-term investment. We believe that 

rare coins and currency should be held for at least 3 to 5 years and 

preferably 5 to 10 years to maximize any potential for gain.’’ Did 

you see that in any of these documents or did you consider that? 

Dr. BAZAN. I don’t think I read it. However, you know, I was 

aware of the risk I am taking. However, I was under the impression that when I am buying these coins I am buying them at the 

market price. So of course I naturally assumed if the price of the 

gold will go down, I will lose my money. However, I didn’t expect 

at the time of the purchase to lose $60,000 the minute I purchased 

that gold. 

Mr. WHITFIELD. Yes. Well, you know, I just read this legislation, 

and I haven’t read it thoroughly and I don’t know what the actual 

definition is for a precious metal dealer, but once I want to go back 

to the U.S. Mint, because you can go to the U.S. Mint today and 

you can buy a 2010 American buffalo 1-ounce gold proof coin, 1 

ounce, and that is $1,560. Well, the actual price of gold today is 

around $1,290 per troy ounce, so buying this from the federal government, you walk out the door and you have already lost approximately $300. And so if this legislation is actually going to be going 

after private dealers, then I am just wondering are we being discriminatory if we don’t do something about what the U.S. government is doing. 

Dr. BAZAN. Well, you know, that price was $1,000. He sold me 

that 1 ounce for $3,300. There is a big difference between the price. 

Mr. WHITFIELD. One ounce for how much? 

Dr. BAZAN. This one coin is 1 ounce. I paid $3,300 for it. 

Mr. WHITFIELD. Were you aware of the price of gold on that day 

in the market, 1 troy ounce of gold? 

Dr. BAZAN. Yeah, I know those prices of $1,200. I was told that 

that was a numismatic value of that coin, that it was an additional 

$2,000 worth of numismatic value on that coin. 

Mr. WHITFIELD. So even though you knew the price of the gold 

for that day, it was your understanding that the value of the coin 

was what you paid for it? I mean, is that what you are saying? 


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Dr. BAZAN. Well, I assumed that the $3,300 was the price of that 

coin on the market, so if I go to redeem it I understand I will lose 

some money and I would not be able to recover $3,300, but I didn’t 

expect that I will lose $2,000 on that coin. 

Mr. WHITFIELD. Well, like I said, we do appreciate your being 

here today and being willing to talk about this issue. I might say, 

and of course, I may be totally wrong because I am in a rural area 

of this country but I haven’t had any constituent write to me about 

this issue. Now, that doesn’t mean that there are not a lot of people 

maybe in the same boat you are, but thank you for being with us 

and we look forward to the other testimony. 

Dr. BAZAN. Thank you very much. 

Mr. RUSH. The Chair recognizes Mr. Weiner for 5 minutes for the 

purposes of questioning. 

Mr. WEINER. Thank you, Mr. Chairman. 

Just to pick up on what Mr. Whitfield said, Dr. Bazan, you are 

a perfect witness because you are not alone. The same exact experience led to 50 Better Business Bureau complaints, $170,000 consent order signed by this company in Missouri because they are 

ripping off Missouri constituents, 28 FTC complaints. They are 

under investigation by the L.A. district attorney, the Santa Monica 

District attorney. There is a class action lawsuit against them in 

South Carolina. ABC News just this morning reported that three 

of their high-ranking current employees were banished from selling 

securities of their fraudulent activities. 

But you are perfect for another reason. I talked about the fear, 

the lies, the rip-off. Your case speaks to all three. You called because you were fearful and you were probably led to be fearful 

maybe by a document like this that Goldline puts in all of its pitch 

packets. It is a scary looking executive order saying that gold can 

be seized at any time. Gold bullion, don’t get into gold bullion because it can be seized. Now, they don’t explain to you that this executive order hasn’t been enforced since the 1970s. It was only 

seized then because it was the currency backer for the dollar, 

which it no longer is, and they don’t explain to you well, if you 

want to really get frightened, they can seize your coins as well. 

And then you are told oh, no, it is a better value not to be in bullion, which you called for, but for these coins. 

Let me explain to Mr. Whitfield and the rest of the committee 

how these coins operate. Numismatic coins have their value derived from two things. One is the amount of gold in it. If you are 

really scared about the economy and you want to buy gold, that is 

the little element that you care about. There is another element, 

though, in fairness. It is the scarcity. Mr. Whitfield demonstrated 

the scarcity of these products by calling up the Mint and buying 

some. There is no scarcity. If tomorrow the dollar goes into rapid 

inflation, maybe it will, maybe it won’t, you will have those coins. 

Good luck buying a loaf of bread with those coins, because if you 

went on eBay today, you will find that those coins are readily available for nowhere near the price is being sold at, which brings us 

to the rip-off, and this is the part I want Mr. Whitfield and Mr. 

Scalise to understand. This gentleman thought when he spent 

$3,000, he got $3,000 worth of gold. Is that a preposterous assumption? Is he a naif? Is he naive? No, it is a reasonable assumption. 


PWALKER on DSK7TPTVN1PROD with HEARING
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I am buying gold, here is my $3,000, give me $3,000 worth of gold. 

He gave them $140,000. That moment he lost about $80,000. That 

second, he was ripped off. 

This is not about whether or not you should buy gold, Mr. Scalise. It is not about whether or not you can buy a coin, Mr. Whitfield. You have to understand, these people are being told to buy 

these coins for investment purposes. If you want to buy a nice van 

Gogh because it is very scarce and you think it will still be valuable in generations to come, more power to you. But no one is saying that in these ads. None of these salesmen are saying that. They 

are saying it is a hedge against a downturn in the economy; they 

will have value. And to say that the disclosure says that there is 

a 30 percent spread value, well, you know, Dr. Bazan, that what 

that means for consumers is a 54 percent markup. It is a clever 

use of language, but that is really what it is. 

Look, it is fair to say we should get a few extra dollars because 

we are storing it or we should get a few extra dollars because we 

have these high-quality salesmen like the ones who were investigated by the FCC. But it is simply wrong to leave our constituents, middle-class people struggling to make it who are getting the 

bejesus scared out of them based on these lies, who are then taken 

from a bullion investment and put into a coin investment based on 

the out-and-out near fraud of saying that those things are going to 

retain value better and then taking the exact same product and 

saying we are going to provide triple and quadruple what this is 

available for elsewhere. This is why we need improved laws. And 

I say to my friend, Mr. Whitfield, yes, you can open this thing and 

say 30 percent, it is right here, does that make it less of a rip-off? 

Does it make it less of a rip-off? Does it mean that consumers 

shouldn’t be protected? Dr. Bazan, who is an articulate, smart guy, 

was it so naive of him to believe that if I invest $100,000 in gold 

I am going to have $100,000 in gold? 

These coins, this firm, this industry is an orchestrated effort first 

to scare people, then to lie to them—the coins are a better deal— 

and then to rip them off on those coins. That is what happened to 

this gentleman. That is what happened to all these people that I 

just listed and that is why we need improved disclosure. 

And I say to Mr. Whitfield, you concluded, ‘‘I haven’t heard a lot 

of complaints.’’ Well, here is something you might be interested to 

know. If you complain to Goldline and they agree to settle with 

you, do you know you have to sign an agreement saying you won’t 

file a complaint with the Better Business Bureau, you won’t file a 

complaint with Congress, you won’t call Congressman Whitfield? 

What kind of reputable company does that? So not only you are 

only going to try to settle this with you, your complaint, if you don’t 

talk about it. Well, I am glad you are here to talk about it and so 

I am. 

Dr. BAZAN. Thank you. 

Mr. RUSH. The Chair wants to announce that there is a vote that 

occurs on the Floor. There are five votes remaining, and there are 

less than 5 minutes to get to the Floor. So this subcommittee will 

have to recess for approximately 40 minutes until we conclude voting on the series of votes that are now occurring on the House 

Floor. So please accept our apologies for the recess but we have to 


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get to the Floor in order to vote on these important matters on the 

Floor. 

So the subcommittee now stands in recess until 10 minutes after 

the last votes. 

[Recess.] 

Mr. RUSH. The subcommittee will come to order again. 

The Chair now recognizes Mr. Scalise for 5 minutes for the purposes of questioning the witness. 

Mr. SCALISE. Thank you, Mr. Chairman. 

Is it Mr. Bazan? 

Dr. BAZAN. Yes. 

Mr. SCALISE. What was the motivator to make you want to buy 

gold? I think you were kind of talking about that earlier, but can 

you give—— 

Dr. BAZAN. The main thing was to hedge against inflation. Of 

course, we knew that the dollar was losing its value and investment was going down so the only way I believed to protect myself 

was to invest in gold to hedge against inflation. 

Mr. SCALISE. And the value of the dollar obviously dropping, 

when did all this really start? When did your interest in buying 

gold come about? 

Dr. BAZAN. I mean, at that time there was a lot of talk about 

gold and, you know, indeed the price of gold was going up. That 

was the only investment which sounded reasonable. I didn’t want 

to trade too much so I put it in gold and keep it there and see what 

happens. 

Mr. SCALISE. And obviously with the price, and I know I have 

shown the chart earlier with the price of gold, there are dramatic 

increases. I am not sure exactly when—— 

Dr. BAZAN. The problem, the minute I bought the gold, they 

charged me 35 percent on my commission so I invested 140 and at 

that moment I had only $83,000 so that means that I will have to 

wait years before I can recover my losses. I was hoping that I am 

buying it at market price and I was deceived. There was no discussion about price of gold, and I was almost forced to buy coins instead of bullion because I was told that government will confiscate 

the bullion or they fix the price and it may be useful, and the coins 

are the only way to go because they will always increase in price 

and government cannot touch them, which is a lie. 

Mr. SCALISE. Right, but ultimately you could have brought—— 

Dr. BAZAN. Say again? 

Mr. SCALISE. Ultimately you did have the option to buy either 

one? 

Dr. BAZAN. And I bought all the coins, which was suggested by 

the representative. 

Mr. SCALISE. And then how long did you hold it for? 

Dr. BAZAN. For 6 months. 

Mr. SCALISE. Six months. All right. Thanks. 

Yield back. 

Mr. RUSH. The Chair doesn’t see any other members from this 

side. 

Mr. Bazan, we certainly appreciate you taking time out from 

your schedule to be with us. 

Dr. BAZAN. Say again, please. 


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Mr. RUSH. I said we certainly appreciate you taking the time out 

from your busy schedule to be here with us, and again, you have 

our sympathy and our sincere regrets for your experiences, and we 

intend to continue to take a serious look at this issue and try to 

resolve this issue so that we can bring your situation and similar 

situations experienced by other Americans to a screeching halt, so 

again, thank you so very much, and we wish that you will continue 

to be the kind of citizen that you would be a courageous citizen. 

Thank you so very, very much. 

Dr. BAZAN. Thank you. 

Mr. RUSH. The Chair would ask the second panel now, would you 

please take a seat at the witness table. 

I want to welcome all those who are the witness desk, those who 

comprise the second panel for this subcommittee hearing, and before we begin, I want to introduce each and every one of the members of the second panel. Seated to my left is Ms. Lois Greisman. 

Ms. Greisman is Associate Director of the Marketing Practices Division for the Bureau of Consumer Protection for the Federal Trade 

Commission. Next to Ms. Greisman is Mr. Charles Bell, who is the 

Program Director for Consumers Union. And seated next to Mr. 

Bell is Mr. Scott Carter. He is the Executive Vice President of 

Goldline International. And seated next to Mr. Carter is Mr. Howard Beales. Dr. Beales is Associate Professor at the George Washington University School of Business. 

Again, I want to thank each and every one of you for participating in this hearing and sacrificing your time for this committee 

and this Congress. 

It is the practice of this subcommittee to swear in witnesses, so 

I would ask that each of you stand and raise your right hand and 

answer this question. 

[Witnesses sworn.] 

Mr. RUSH. Please let the record reflect that the witnesses have 

all answered in the affirmative. 

And now each one of you will be recognized for 5 minutes for the 

purposes of an opening statement. Ms. Greisman, we will recognize 

you for 5 minutes. 

TESTIMONY OF LOIS GREISMAN, ASSOCIATE DIRECTOR, MARKETING PRACTICES DIVISION, BUREAU OF CONSUMER PROTECTION, FEDERAL TRADE COMMISSION; CHARLES BELL, 

PROGRAMS DIRECTOR, CONSUMERS UNION; SCOTT CARTER, 

EXECUTIVE VICE PRESIDENT, GOLDLINE INTERNATIONAL; 

AND HOWARD BEALES, PH.D., ASSOCIATE PROFESSOR, THE 

GEORGE WASHINGTON UNIVERSITY SCHOOL OF BUSINESS 

TESTIMONY OF LOIS GREISMAN 

Ms. GREISMAN. Thank you, Chairman Rush, Ranking Member 

Whitfield and member of the committee. I am Lois Greisman, Associate Director in the Bureau of Consumer Protection at the Federal 

Trade Commission. I appreciate the opportunity to testify before 

you today about consumer protection issues arising from the sale 

of coins and precious metals as investments. 


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As you know, the Federal Trade Commission’s written testimony 

has been provided. My own statement and any responses to questions you may have solely represent my own views. 

With the downturn of the American economy, the Commission 

has committed substantial resources to shut down scams that harm 

financially distressed consumers with a particular focus on job and 

business opportunity scams, foreclosure rescue scams, scams preying upon the economic stimulus package and scams targeting those 

seeking health insurance. With the economic downturn, we also see 

scams focusing more directly on investment opportunities as people 

seek low-risk, high-yield investments and not surprisingly, coins 

and precious metals often are promoted as such good, safe investments. 

We are well aware of consumer complaints involving precious 

metals and coins of investment and are looking closely into some 

of the issues raised, and as always, we are consulting with our colleagues at the State and federal level and in particular the SEC 

and the CFTC. While I cannot address whether we are or are not 

looking at any particular area or entity, I do want to highlight 

some of the problems we have seen thus far and then turn to the 

new consumer educational materials we are issuing today. 

Now, although the written testimony notes that the volume of 

complaints received by the Commission is quite low both for coins 

and precious metal, there are three main categories of complaints. 

First, complaints that some dealers use high-pressure sales tactics 

to persuade consumers to purchase collectible or historic coins rather than bullion coins and that they always may misrepresent the 

value of those collectible coin investments. Second, there are complaints that some unscrupulous marketers urge fast investment in 

a particular metal before the price skyrockets. In fact, consumers 

end up entering into risky and high-leveraged investments. Finally, 

as you are well aware from prior testimony on the Guarantee of a 

Legitimate Deal Act, we have seen complaints about companies 

that purchase consumers’ jewelry and family heirlooms for their 

melt value but fail to provide a price quote before actually melting 

those items. 

Now, the Commission takes investment fraud very seriously. The 

fact that we have not brought any law enforcement action in recent 

years is not to be taken as an absence of concern in the area of 

precious metals and coins. To the contrary, the revamped consumer 

educational materials, and I believe each office has been provided 

them, entitled ‘‘Investing in Gold: What is the Rush’’, highlights 

the Commission’s concern with ensuring that consumers understand the differences among investments in gold coins, bullion 

coins and collectible or historic coins. In fact, the consumer educational materials consist of three discrete brochures. 

As each of these brochures makes clear, these kinds of investments require a level of sophistication that one can acquire only by 

serious research. You have to know what you are buying and 

whether you were buying it as a collectible item or for the value 

of the precious metal itself. We hope these brochures will provide 

a solid starting point for consumers. 

Finally, I do want to touch upon the Coin and Precious Metal 

Disclosure Act. This Act would address many of the consumer proVerDate Mar 15 2010 02:08 Apr 05, 2013 Jkt 078137 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 E:\HR\OC\A137.XXX A137

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tection concerns that we have mentioned by requiring coin and precious metal dealers to disclose not only the purchase price but also 

other fees associated with the sale of the coins and precious metals 

as well as the melt value and reasonable resale value for coins and 

precious metals. Critically, I know that our revised consumer educational materials do suggest that the consumer ask for information on the melt value of a coin before making any purchase. 

Now, as the testimony notes, we do have some concerns with respect to the proposed definition of the term ‘‘reasonable resale 

value’’ in section 1 of the bill and we would be pleased to continue 

to work with staff to address those concerns. Also, as noted in the 

testimony, we do not support the exemption of section 6 because it 

would exclude from the bill’s coverage certain collectible coins that 

have been the subject of consumer complaint. 

With that, I thank you very much for the opportunity to address 

the subcommittee. I look forward to working with you and to answering your questions. Thank you. 

[The prepared statement of Ms. Greisman follows:] 


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Mr. RUSH. Thank you very much. 

Mr. Bell, you are recognized for 5 minutes. 

TESTIMONY OF CHARLES BELL 

Mr. BELL. Chairman Rush, members of the committee, thank you 

so much for the invitation to testify here today on ways to protect 

consumers who purchase gold coins and metal bullion. We commend you for holding this hearing to focus attention on ways to 

protect consumers and encourage a safer marketplace. 

As you know, Consumers Union is the independent, nonprofit 

publisher of Consumer Reports and Consumer Reports Money Advisor. We work to empower consumers by informing and educating 

them about the top consumer issues of the way, and we also as 

part of our work report on scams and fraud both to alert consumers 

and also advocate for public policy measures for greater protection. 

As I summarize in our testimony, over the last several years we 

have seen numerous news reports and complaints received by regulators and law enforcement agencies indicating that consumers are 

experiencing significant problems in transactions related to gold 

coins and metal bullion and we think that those problems are indeed worthy of attention by your subcommittee. 

Many of the problems that we have seen come to public light are 

related to high-pressure sales tactics that entice consumers to buy 

coins that have high markups, that turn out to have much less resale value that the consumer initially expected. 

Consumers are also at risk because sellers of gold coins and bullion may not be licensed or regulated either by the Securities and 

Exchange Commission or the Commodities Futures Trading Commission, and sales representatives may not be licensed as investment advisors, even though they present their products as an investment and may be perceived by the consumer as a financial advisor. So we are concerned that coin and bullion sellers are subject 

to relatively limited public oversight, and that state consumer protection authorities may only be able to offer limited help for consumers who feel they have been defrauded. 

Through our publications, Consumers Union has urged consumers to be cautious in buying gold coins, and to be particularly 

wary of high-pressure sales tactics over the phone. We emphatically agree with the Federal Trade Commission that this is an area 

where consumers need to do extensive homework before making a 

purchase decision. We generally advise consumers who are interested in investing in gold as a portion of their portfolio not to buy 

physical gold, but instead to purchase shares in an exchange-traded fund that purchases gold for clients and holds it in a bank, because of the much lower trading fees and annual expenses. 

By contrast, companies selling gold coins may mark them up by 

significant margins of 20-30 percent or significantly more such that 

it will take many months or years for consumers to even break 

even. 

We then summarize issues and concerns that have been raised 

by a number of companies in the marketplace. We have seen complaints on this issue over the years ebb and flow but we believe 

that for a significant number of customers there has been an ongoing problem for many years, and while the number of complaints 


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that was noted may seem small as a portion of business transacted 

by the industry, it is generally accepted in most customers relations work that for each official complaint that is lodged with a 

company or government authorities, there are a significant number 

of other consumers who experience similar problems but did not 

complain, and this is especially so in things like financial scams 

where the consumer or investor may be very embarrassed and they 

may hope that the situation will get better with the passage of 

time and they may be very reluctant to talk about it. 

So we also believe that in the stories that have come to public 

light, we often see a significant financial loss experienced by the 

customer and bitter disappointment expressed by people who felt 

that there was significant upside to the investments, did not understand the structure of what they were putting their money down 

for, so we think that there is a significant potential for misunderstanding about the value of the coins they are purchasing and the 

fees and services related to transactions. 

We are also concerned that the prospective purchase of gold coins 

and bullion may be an impulsive decision for some consumers who 

may be responding to well-placed TV or Internet ads as was noted 

earlier today. This does not excuse consumers for looking out for 

their economic interest but it does raise the possibility that large 

number of customers in times of high gold prices and/or economic 

distress may be enticed through slick advertisements to quickly 

agree to Internet or telephone offers without carefully considering 

their options. And so for those customers, we think they need to 

be aware that there is a high cost to national television advertising 

and companies that use that business model may use very aggressive sales practices to try to upgrade them to products that are 

more lucrative or remunerative for the sales advisor that is selling 

that product that is earning a high commission. 

So with that in mind, we believe that the draft bill that is being 

considered here today would be very much in the public interest of 

consumers to have much more prominent, conspicuous disclosures 

in the sale of coins and precious metal bullion. These disclosures, 

in our opinion, should include the item’s purchase price, melt value 

and reasonable resale price as well as any fees that the customer 

will incur if the purchase is completed. We strongly favor provisions to make those disclosures orally to consumers if the sales are 

being solicited by telephone and to ensure that the FTC and State 

attorneys general have appropriate authority to investigate deceptive practices. 

We believe that the people who are selling these products have 

a very good idea of what they are worth and they have access to 

information through numerous trade groups and industry sources 

that regularly compute the value of these coins and the person that 

generally may not have that information is the less experienced 

and less sophisticated consumer. 

So we think that we have an opportunity to craft a bill here that 

would be very much in the consumer and public interest. The stories we have seen do not inspire confidence that consumers are getting the information that they need, and we hope this bill will give 

them that information. And other organizations in the consumer 


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protection community such as the National Consumers League we 

expect will strongly support this legislation. Thank you. 

[The prepared statement of Mr. Bell follows:] 


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Mr. RUSH. The Chair thanks the witness. 

And now the Chair recognizes Mr. Carter for 5 minutes for the 

purposes of an opening statement. 

TESTIMONY OF SCOTT CARTER 

Mr. CARTER. Mr. Chairman and members of the committee, I am 

Scott Carter, Executive Vice President of Goldline International. 

Thank you for this opportunity to discuss Goldline’s role as an industry leader in the precious metals and rare coins markets. 

Goldline has long supported the comprehensive disclosure of information for an individual to make an informed decision about acquiring precious metals and rare coins. Indeed, Goldline believes 

its disclosures represent the best practices in an industry of more 

than 5,000 precious metals and rare coin dealers. These disclosures 

include clear examples and explanations of the risks and costs associated with acquiring precious metals, information which we provide throughout the sales process. 

In the highly competitive precious metals industry, there are numerous sources available to compare prices and policies. This intensive competition coupled with existing regulation protects individuals when choosing if and where they acquire precious metals. We 

believe that H.R. 6149 does not improve the information currently 

required under regulations and imposes requirements that cannot 

be met by the industry. As presently written, the proposed legislation appears unworkable and may actually result in inaccurate information being conveyed to the consumer. 

Goldline has been offering precious metals to individuals since 

1960 and has grown to more than 300,000 full-time employees. 

Over the years Goldline has assisted thousands of people to acquire 

and liquidate precious metals and rare coins. We are proud to be 

rated A+ from the Better Business Bureau. 

Goldline provides each of our clients with a risk disclosure booklet, Coin Facts for Investors and Collectors to Consider. Coin Facts 

is written in a large, easy-to-read font and contains important information regarding the acquisition of precious metals. In Coin 

Facts, Goldline explains its pricing policies in extensive detail and 

provides a mathematical example to ensure its clients understand 

how this pricing works. Goldline also provides important information about its sales staff and commission structure in Coin Facts. 

Also, even though gold prices have increased every year in the 

past 10 years, like any asset, precious metals can rise and fall in 

value. Accordingly, Coin Facts clearly spells out the risks of owning 

precious metals for a potential client. For example, we recommend 

that coins and bullion are appropriate for no more than 5 to 20 percent of a portfolio and we believe that assets should be held for at 

least 3 to 5 years, preferably 5 to 10 years. Goldline’s marketing 

and risk disclosure materials encourage prospective to conduct 

their due diligence before they acquire any product. Additionally, 

Goldline discloses its pricing, fees and risks involved in acquiring 

precious metals and rare coins in its account and storage agreement which all clients must read and sign before they finalize their 

purchases. 

The entire sales process beginning with an individual’s initial inquiry to Goldline and culminating with an expiration of the appliVerDate Mar 15 2010 02:08 Apr 05, 2013 Jkt 078137 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 E:\HR\OC\A137.XXX A137

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cable cancellation and refund period often occurs in a span of days 

or weeks. During this time, Goldline clients can easily conduct 

their own due diligence to compare products, prices and policies 

among the thousands of competing precious metals dealers. 

In addition to providing comprehensive information to Goldline 

customers about the risks and costs of acquiring precious metals, 

Goldline has an internal compliance program to ensure best practices among its sales staff. This compliance program was reviewed 

by lawyers and former senior regulators with expertise in consumer 

protection, telemarketing, numismatics and regulatory compliance. 

Goldline’s policies are administered by a full-time compliance department with regular input and assistance from outside counsel. 

Among other things, Goldline’s compliance program trains the sales 

staff about the requirements of the FTC’s telemarketing sales rule, 

Do Not Call obligations, state telemarketing requirements including seller identification and disclosures, and the importance of adhering to Goldline’s compliance rules and code of contact. 

Mr. Chairman, in my written testimony I discuss our concerns 

about H.R. 6149 in greater detail. Today I specifically would like 

to note that the requirement in the bill that sellers disclose the 

reasonable resale value of a product would create an insurmountable burden on precious metals dealers and likely would mislead 

consumers. 

Mr. Chairman and members of the committee, thank you, and I 

would be happy to answer any questions from the committee. 

[The prepared statement of Mr. Carter follows:] 


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Mr. RUSH. The Chair thanks the gentleman and now recognizes 

Dr. Beales for 5 minutes for the purposes of an opening statement. 

TESTIMONY OF HOWARD BEALES 

Mr. BEALES. Thank you, Mr. Chairman. My name is Howard 

Beales. I teach at the business school at George Washington University and I have long experience at the FTC. I directed the Bureau of Consumer Protection from 2001 through 2004 when we created the national Do Not Call Registry, one of the most popular 

government consumer protection measures ever undertaken. Both 

inside and outside the agency, I have studied the FTC’s approach 

to consumer protection issues for over 30 years. 

Thank you for asking me today to discuss these important issues. 

Although I have consulted with Goldline on issues relating to their 

marketing practices under the FTC Act, the views I express in this 

testimony are my own. 

The cornerstone of the FTC’s consumer protection mission is its 

fraud program through which the Commission has returned hundreds of millions of dollars to defrauded consumers. As the FTC 

has detailed, the agency has a long history of activity against deceptive investment claims. Common themes in these cases are false 

claims that high returns are virtually certain in a short period of 

time. The cases involving commodities also feature misrepresentations, usually expressed, of the relationship between the selling 

price and the market value of the item combined with grossly inflated prices. 

Such claims are a far cry from Goldline’s practices. Instead, 

Goldline’s marketing and sales practices include extensive disclosures, encouraging consumers to carefully consider their purchases. 

First, Goldline’s advertising relies on consumers calling the company to get additional information. Typically, customers call with 

initial questions and call back several times over a period of days 

before making a purchase. Thus, consumers have both time and 

the opportunity to check out competing sellers and other sources of 

information. The fact that a sale typically takes several calls suggests that consumers are exercising the kind of due consideration 

that should be given to a purchase that is typically in the range 

of $15,000 to $20,000 for first-time buyers. 

Goldline provides potential customers with a clear, well-written 

disclosure document, Coin Facts, explaining the market and the 

company’s practices in detail. In my experience, Goldline’s pamphlet is a vast improvement over the disclosure documents that 

typically accompany other investment opportunities. In addition, 

all first-time buyers of Goldline’s higher-margin products have an 

unconditional cancellation period of at least seven days, providing 

significant time for any consumer to consider their potential purchase, compare prices and offerings, and access relevant information from readily available sources. Of course, even sophisticated 

consumers can be misled. Goldline, however, is very different from 

the type of company typically found engaging in deceptive investment promotions. A substantial fraction of its sales are repeat purchases, which only occurs when customers are satisfied with what 

they receive. Goldline also has an A+ rating from the Better Business Bureau. 


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Second, Goldline’s advertising and sales material do not guarantee or promise a profit or a specific return. In contract to the 

quick profit claims that are the hallmark of past cases, Goldline advises consumers that rare coins and currency should be held for at 

least 3 to 5 years but preferably 5 to 10 years. Goldline makes no 

representation that it is selling at wholesale or at the lowest price. 

Instead, Goldline provides straightforward disclosures of its 

spreads. It also provides a very clear example of how this differential would affect a consumer’s purchase of a coin from Goldline and 

how much that coin would have to increase in value for the consumer to earn a profit. Rather than illustrating a best-case scenario, the example is based on Goldline’s maximum spread where 

the necessary appreciation is greatest. 

Third, Goldline’s advertising and sales practices are filled with 

sound caution. It advises consumers to balance their portfolio and 

place no more than 5 to 20 percent in precious metals. In short, 

Goldline is the antithesis of the get rich quick seller making gross 

misrepresentations so common in past FTC cases. 

Under H.R. 6149, the bill would essentially require disclosures to 

reveal the seller’s markup on the product. In other markets, we 

rely on competition to police seller markups. In retailing, for example, it is not disclosures of the market at full service department 

stores that keep markups slow; it is the competition from other department stores and other retailers such as Walmart. What matters to consumers is the cost of the transaction, not the seller’s 

markup. As long as information about prices at competing sellers 

is readily available to consumers who are interested and it certainly is in the coin and precious metal market, there is no reason 

to disclose the seller’s markup. 

Although providing consumers with more information almost always sounds appealing, it can in fact create consumer confusion. 

For example, the FTC’s Bureau of Economics conducted an experimental study of the effect of disclosing the yield spread premium 

in mortgage transactions, which is essentially part of a broker’s 

compensation. When the disclosure was included, consumers apparently focused on the disclosure rather than the overall cost of the 

transaction. As a result, they were less able to identify the low-cost 

mortgage. 

The reasonable resale value disclosure may create similar problems. Like the yield spread premium, it risks focusing consumer attention on an aspect of the transaction that is not relevant to the 

overall cost. Confusion seems particularly likely when the resale 

value is disclosed along with the melt value. The melt value is simply irrelevant because it will always be reflected in the reasonable 

resale value of any product whose value is tied to spot prices. 

Moreover, in a market where prices change constantly, consumers may misunderstand what the reasonable resale value disclosure means. If consumers understand the disclosure as a claim 

that they can actually expect to resell the item at the disclosed 

price, they may be seriously misled. The risk of this misinterpretation is increased because consumers will almost inevitably assume 

that they are being provided with this information because it 

should be important in their decision. 


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The Federal Trade Commission has an important role as a referee in policing the market economy. Like other products and services, the best protection remains the common law principles that 

the Commission enforces. Goldline’s practices are entirely consistent with these principles. The proposed legislation is at best unnecessary and it may in fact create consumer confusion. 

Thank you again for the opportunity to testify today and I look 

forward to your questions. 

[The prepared statement of Mr. Beales follows:] 


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Mr. RUSH. The Chair thanks the witnesses, and the Chair recognizes himself now for 5 minutes for the purposes of questioning the 

witnesses. 

Ms. Greisman, the FTC has brought cases of these companies 

that sold overpriced or misgraded historic coins for investment purposes. Do you concur with that, that the FTC has brought cases 

against companies that have sold overpriced or misgraded historic 

coins for investment purposes? Is that a fact? 

Ms. GREISMAN. That is correct. In fact, there have been 17 such 

cases dealing with what we allege to be fraud in connection with 

coins. 

Mr. RUSH. Since 2005, the FTC has received approximately 850 

complaints relating to coins and precious metals. In Mr. Carter’s 

testimony, he stated that there have been relatively few complaints 

about Goldline submitted to the FTC or to the Better Business Bureau. Do you believe that a number of complaints received by FTC 

or the Better Business Bureau accurately reflect the number of 

consumers who purchase coins or precious metals for investments 

who are misled or feel as though they were misled? 

Ms. GREISMAN. No, sir, I do not. I mean, as Mr. Bell pointed out, 

the percentage of consumers who complain, and we know this from 

consumer research that we have done, is a small percentage relative to those who may have suffered injury. 

Mr. RUSH. Do consumers who overpay for such investments 

sometimes not learn that they have overpaid until they try sometimes years later to sell their investments? 

Ms. GREISMAN. We have seen that. 

Mr. RUSH. And even though, there are some who might not realize that they have overpaid. Is that correct? 

Ms. GREISMAN. That is correct, sir. There are lots of reasons consumers may or may not choose to complain. 

Mr. RUSH. Can you think of any other reason that investors in 

coins or precious metals might not complain to the FTC or the Better Business Bureau? 

Ms. GREISMAN. There can be any number of reasons, Chairman. 

I mean, certainly consumers tend to complain most immediately to 

the company from which they purchased whatever good or service 

it was, and whether or not they seek out the Better Business Bureau or the Federal Trade Commission or a State attorney general’s office depends on many factors. 

Mr. RUSH. Mr. Carter, when a customer complains directly to 

Goldline alleging that the company made a misrepresentation 

about the products it sold, what are your steps that you take to resolve the matter? What are your guidelines? 

Mr. CARTER. Mr. Chairman, we take every complaint seriously, 

as it was stated. Forty percent of our business is reorders so it is 

very important for us to have a quality customer service process. 

The initial step we take is to assign the client that has a complaint 

to a special manager, a liaison whose sole role is to take care of 

the client and resolve the issue. We review the account. We ensure 

that our processes with regard to disclosures and account agreements being signed and information has been taken care of and all 

applicable processes have been done correctly by the company. In 

addition to that, we many times are working with the client to 


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come to a solution that is amenable to them so that we can resolve 

the issue and we do that with great care, and I am proud to say 

that most of our complaints are resolved and most of our issues 

with regard to customers are handled effectively by the company. 

Mr. RUSH. And the 40 percent that you mentioned, is that 40 

percent of the total value or 40 percent of the customers? 

Mr. CARTER. No. What I am saying is that our transactions, 

when you look at our number of repeat transactions in our customers, 40 percent of our current customers represent reorder 

sales. So not only have they bought the first time as an initial sale 

but they actually reorder with the company. So it is very important 

for us to ensure that they are happy, that they understand their 

product, because they will buy multiple times over multiple years. 

Mr. RUSH. My time is about up, but I have one final question. 

Do any of Goldline’s sales staff hold or have they ever held, to your 

knowledge, a license to offer investment advice? 

Mr. CARTER. Congressman, our sales staff are not investment advisors. They may or may not have licenses in the past. We are not 

aware of that. It is not a requirement for the role that they play. 

They are not providing financial advice. And in our disclosures, we 

encourage the customer to seek out their financial advisor to get 

that information. 

Mr. RUSH. My time is concluded. The Chair recognizes now Mr. 

Whitfield for 5 minutes. 

Mr. WHITFIELD. Thank you. 

Ms. Greisman, how many consumer complaints were filed with 

the FTC against Goldline last year? 

Ms. GREISMAN. I don’t have the precise number. It is not a large 

number, and as the chairman indicated, in total since 2005 the 

FTC has received roughly 850 complaints regarding precious metals and gold coins. 

Mr. WHITFIELD. And do you know out of that how many relate 

to Goldline? 

Ms. GREISMAN. I don’t know the precise number. 

Mr. WHITFIELD. How many complaints were filed with the FTC 

totally last year? 

Ms. GREISMAN. As indicated in the testimony, the short answer 

is well over a million, I think 1.3 million. The percentage of complaints in this precise area is less than 1 percent of the total number of complaints received. 

Mr. WHITFIELD. Okay. Now, with the authority that the FTC has 

today under the telemarketing sales rule or some other rule, have 

you all issued any judgment against Goldline or any enforcement 

mechanism or any other action against them? 

Ms. GREISMAN. Congressman, I am not at liberty to disclose 

whether or not the FTC is or is not investigating any particular 

company. 

Mr. WHITFIELD. Well, I am not asking if you are investigating. 

I am asking have you rendered any decision against them or made 

any enforcement action against them? 

Ms. GREISMAN. The agency has not taken any action against 

Goldline. 

Mr. WHITFIELD. Thank you. Thank you. 


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Mr. Bell, can you tell us how many complaints the Consumers 

Union has received concerning Goldline as a company? 

Mr. BELL. We are not a complaint handling organization so our 

organization has not specifically received any to my knowledge. We 

do have a customer relations staff but I don’t believe that we have 

gotten any across the transom. But we are aware that there are enforcement actions that have been brought by the district attorney 

in Santa Monica against Goldline and another company, Superior 

Gold Group, and so for us, I think we are more broadly concerned 

about what is happening across the entire marketplace, and for us, 

the 850 complaints received by the FTC about a number of companies is a relevant number. 

Mr. WHITFIELD. How does the volume of complaints for this industry compare to that of, let us say, the diamond industry, fine 

arts or antiques industries? 

Mr. BELL. You know, I couldn’t give you that information. I 

haven’t researched the other industries. I would just say based on 

my experience of working in consumer advocacy for 20 years, I see 

a number of danger signals here just in the nature of the complaints that are being filed with authorities in part because they 

echo concerns we have seen with many other types of sales practices over the telephone where unsophisticated customers enter 

into transactions that they are later disappointed in, and in this 

case they could be losing thousands or tens of thousands of dollars. 

Mr. WHITFIELD. Dr. Beales, you state that the advertisements 

and disclosures that Goldline makes that you have reviewed all appear to provide the consumer with the requisite information they 

need to comply with the law. Is there anything you would have 

them change or additional disclosures that you think they should 

make? 

Mr. BEALES. I think the disclosures in their advertising do a good 

job. What I think does an even better job is the Coin Facts pamphlet that, as I said in my statement, is I think one of the clearest 

pieces of disclosure about the risks associated with investments 

that I have seen. 

Mr. WHITFIELD. Mr. Carter, in my opening statement I referred 

to a number of newspaper articles that indicate that some people 

think this hearing is being held because you advertise with conservative TV personalities, radio personalities like Glenn Beck and 

others, Huckabee, Fred Thompson and others. Do you advertise 

with all sorts of networks or do you just focus in on these conservative talk show hosts? 

Mr. CARTER. Well, Congressman, we advertise on a broad range 

of networks. At the present time we advertise on 14 different TV 

networks including CNN, CNBC, History International. One of our 

largest channels for leads is the Internet. We also advertise on 

radio. So we are a broad-based marketer and we have broad-based 

advertising. 

Mr. WHITFIELD. Someone earlier today referred to three of your 

current employees that had been either convicted or had been involved in some sort of fraudulent activity. What were they talking 

about? 

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ducts background checks in accordance with California’s hiring 

practices law. These employees are in good standing at the company. The event that was referred to is over a decade old, was prior 

to Goldline, but as of right now these employees are in good standing and they comply with our compliance policies and they went 

through our background check at point of hire. 

Mr. WHITFIELD. And other question. Ms. Greisman, has the FTC 

taken any formal position on this particular legislation? 

Ms. GREISMAN. Yes, sir. The Commission’s testimony supports 

the legislation. 

Mr. WHITFIELD. So you have endorsed the legislation except for 

the reasonable resale issue and the exemption issue, those two? 

Ms. GREISMAN. That is correct. 

Mr. WHITFIELD. Thank you, Mr. Chairman. 

Mr. RUSH. The Chair now recognizes the gentleman from New 

York, Mr. Weiner, for 5 minutes. 

Mr. WEINER. Thank you, Mr. Chairman. 

Mr. Carter, welcome. Do you recognize this document, executive 

order of the President, all persons required to deliver on or before 

May 1, 1933, all gold coin, gold bullion and gold certificates? Do 

you recognize this? 

Mr. CARTER. Yes. 

Mr. WEINER. Is this included in your packet of information that 

you send to your customers? 

Mr. CARTER. Yes, it is. 

Mr. WEINER. Can you tell us why? 

Mr. CARTER. Because customers when determining what products they want to buy consider many features and benefits, and one 

of those features and benefits that they consider is the prospect of 

confiscation, and this was an order, as we all know, that was completed in 1933, and in the marketplace today, these are uncertain 

economic times. The prospect of discussions in the marketplace of 

the gold standard are—— 

Mr. WEINER. If I can interrupt, so there is a fear that this may 

happen again? 

Mr. CARTER. There is one component that in uncertain economic 

times—— 

Mr. WEINER. There is a fear that this might get—you might have 

this type of thing happen again? 

Mr. CARTER. Yes. 

Mr. WEINER. Now, can I ask you, do you include anywhere in the 

material that this was overturned the following year? 

Mr. CARTER. Congressman, I don’t know. 

Mr. WEINER. The answer is, you don’t. Do you include anywhere 

in the material that the reason that that seizure took place had to 

do with the fact that then our currency was backed by dollars and 

it was an effort to stabilize our currency? 

Mr. CARTER. Yes, I understand that. 

Mr. WEINER. No, no, I’m saying do you let your—you have already said that you agree that this is because some of your customers have a fear and that you reflect that fear in this document 

but in a way that I think you will agree is incomplete because it 

doesn’t say it was repealed, it doesn’t put it in any kind of context. 

But let me ask you this. You then use this document in the pitchVerDate Mar 15 2010 02:08 Apr 05, 2013 Jkt 078137 PO 00000 Frm 00083 Fmt 6633 Sfmt 6633 E:\HR\OC\A137.XXX A137

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ing that your staff makes and you freely stipulate in your documents here that your sales people get a higher commission rate for 

selling numismatic coins than they do for bullion. Is that right? 

You freely say that in this document. Do you somehow make this 

argument because you believe in your heart—and I know that you 

are the host of a show called ‘‘The American Advisor’’—do you believe there is any chance today that gold bullion would be seized 

by the government? Do you think it is a reasonable fear? 

Mr. CARTER. Yes, I do, Congressman. 

Mr. WEINER. Okay. Do you believe then, why would it not be a 

reasonable fear that they seize coins? 

Mr. CARTER. Well, the executive order as it was—— 

Mr. WEINER. So this is 1934. I am talking about 2010. 

Mr. CARTER. In 2010, Congressman, our commission salespeople 

and our training is that if the executive order were reenacted as 

it was in 1933, that coins with collector value were excluded from 

confiscation because their value—— 

Mr. WEINER. I understand. Just to summarize, Mr. Carter, you 

take something that was in 1933 that was repealed in 1934 and 

then you extrapolate what would happen, fear, the fear that it 

could happen in 2010. You use language in your testimony and in 

Coin Facts, language like duration of investment, that you should 

diversify your portfolio. You took explanations about the collector 

value of coins. You even say and I think in your testimony recommend—I know you said it publicly—recommend that people hold 

on to their things for 5 to 10 years. It sounds an awful lot like you 

are giving financial advice. Do you believe that you are? 

Mr. CARTER. No, we don’t. In fact, we instruct the clients that 

we are not financial advisors, that we point them to our disclosures 

and ask them to seek out financial advice. 

Mr. WEINER. But Mr. Carter, when you say you recommend that 

someone holds on to an investment for a certain duration time, how 

is that not investment advice? 

Mr. CARTER. It is disclosure advice, Congressman. It is to say 

that you should be prudent in the decisions you are making, that 

this should be a diversification strategy, that if you are buying a 

physical asset, something that you are buying today, and if your 

plan is to sell it tomorrow—— 

Mr. WEINER. I understand, but Dr. Beales—— 

Mr. CARTER. But my point, Congressman, the reason why when 

you buy a physical asset, whether you are buying a piece of property or anything, there are expenses and fees. 

Mr. WEINER. I understand, but Mr. Carter, let me interrupt because I have a limited amount of time. But Mr. Beales asked a 

question. He is a former consultant to your company, isn’t he? 

Mr. CARTER. Yes. 

Mr. WEINER. Mr. Beales asked the question, why is it different 

than any other commodity. You shop around for the best picture. 

You shop around for the best piece of furniture. The marketplace 

will decide. Here is the difference. Those things are not sold to people as investments. As in the language that you used the other day 

on Fox Business News, you referred to the government debt, the 

large deficits, inflation, the fear of confiscation. You referred to this 

again. It is quite a different thing than purchasing a television or 


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piece of furniture. These are the investments of middle-class Americans like that witness that you saw sitting in that very same seat. 

That is why you have additional protections for these type of people. These are people that when you say in fleeting reference that 

you have a float, a spread of 35 percent, that means that a citizen 

would have to make a 54 percent markup in order to get back to 

zero. 

And let me give you an example from today. Anyone in this 

room, anyone watching at home can look this up. This isn’t me. It 

is not Mr. Carter saying it. One of Goldline’s popular products is 

the one-quarter ounce proof American eagle. They sell it today for 

$685, Mr. Chairman. You can get it from the Mint for $403, available to the public with a bulk discount of more than 100 coins. Another competitor, Apmex, sells it for $425. You can get it on eBay 

today for $445 because it is true, Mr. Carter, that there is not a 

lot of scarcity to a lot of these products. So this is a 38 percent 

spread, a 61 percent markup over your competitor, which means 

the moment that the gold arrives, someone has to make up 35 percent of the market. 

Let me explain what that means to Mr. Scalise. That would 

mean that gold would have to go from $1,293 today to $2,081 for 

that person to break even. When you are selling something as an 

investment, as a hedge against inflation, as a way to protect yourself from the future, what you are doing is like you did to that gentleman who came right before you. You are buying them into the 

whole the minute they walk home. It simply is inexcusable. That 

is why Mr. Beales is incorrect to say that, oh, this is like any other 

consumer product. No, for middle-class Americans, those struggling 

to make it who call up that number, who order these products, it 

is their savings, and as you know, you didn’t limit it to a small percentage of that previous witness’s savings; it was almost his entire 

savings. And that is why this legislation is needed. 

Thank you, Mr. Chairman. I ask for a second round if one is 

available. 

Mr. RUSH. The Chair recognizes Mr. Scalise for 5 minutes. 

Mr. SCALISE. Thank you, Mr. Chairman. 

Ms. Greisman, you had testified earlier that the definition in the 

legislation before us of reasonable resale value could mislead consumers. Can you be more specific on that? 

Ms. GREISMAN. Yes, of course. Our concern is that it might encourage unscrupulous marketers to collude and set prices, but we 

would be more than happy to work with staff and we have had discussions to find a different way to state the same goal. 

Mr. SCALISE. Thank you. So the bill as it is currently written 

could actually lead to collusion, which would actually be very detrimental to consumers as opposed to what we have now. 

Mr. Carter, how many competitors do you have in the marketplace? What is a rough estimate of people that sell gold? 

Mr. CARTER. It is estimated that there are 5,000 competitors in 

our marketplace. 

Mr. SCALISE. Five thousand competitors? Okay. Obviously if you 

had the ability to have collusion by having language like in the bill 

presented before us, according to the FTC, then that number may 


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shrink dramatically and consumers would be much more limited 

and possibly would be exposed to really bad deals. 

Let us equate, when we talk about savings and investments, let 

us say someone is buying stocks. They are not buying gold but they 

are purchasing a stock. Clearly you are going to have some people 

who are going to buy a stock and it is going to do well. You are 

going to have some people who buy a stock and it is going to lose 

money, and maybe if they hold it a little bit longer then it would 

gain money. How many of your customers make money? How many 

lose money? I guess according to people we have been listening to, 

everybody loses money, but if you can kind of expand on that? 

Mr. CARTER. It is important that the whole period is maintained 

by a client. That is why we disclose it. I will give an example, Congressman. Our most popular coin, the Swiss 20 franc, which has 

our highest threat, if you bought that product from us 5 years ago, 

you would have so far achieved a 90 percent return. If you bought 

that product from us 10 years ago, you have achieved a 240 percent 

return, both of those numbers after our fees. So that has been a 

very positive return on that product as compared over the last decade with any stocks. The S&P is down. The Dow is down. We all 

know what has happened with real estate. And yet our product and 

our customers have seen a reasonable, some would say a very attractive return. 

Mr. SCALISE. So what you are saying is, your most popular product that you sell has actually experienced a large rate of return including if you back out the fees and the spread? 

Mr. CARTER. That is correct. 

Mr. SCALISE. Let me ask Dr. Beales, you know, when we really 

talk about what the focus of this hearing is and, you know, again, 

I have expressed what I think about that, but when you talk about 

the Moody’s warning, and Moody’s is a very respected rating agency, this isn’t somebody on talk radio or a TV show. Moody’s is a 

very respected rating agency. They have warned that the United 

States’ triple A bond rating under the current spending of this Congress is in jeopardy. Are you familiar with that? Are you familiar 

with what Moody’s has warned about the actual credit worthiness 

of the United States of America? 

Mr. BEALES. Not in any detail, no. I am sort of generally aware 

that it is there but I am not familiar with its details. 

Mr. SCALISE. There are a lot of very respected agencies that have 

written about what that threat is, and that threat is not, it is surely not anything that any gold company has laid out there. It is not 

from somebody on a television show running around trying to scare 

people. It is from a rating agency which I haven’t heard anybody 

discredit who actually analyzes the borrowing and spending practices of the United States of America, and the fact that you have 

got Moody’s out there warning of a possible downgrade in the 

United States’ debt rating, that is serious business, and it is real. 

It is not somebody running around talking about the sky falling. 

It is a rating agency saying if this country doesn’t stop borrowing 

money we don’t have and if we don’t stop spending money at the 

rapid pace that this Congress has been spending that we are going 

to be in real trouble. Our children and our grandchildren are in 

jeopardy of losing the opportunities that we have all enjoyed. 


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Our country has had a history of passing on a better opportunity 

to the next generation than the one before it. That has been the 

history of our country going back to George Washington, and that 

is in jeopardy right now, not because you are selling gold, because 

the people running this Congress are spending too much money. 

They are spending money we don’t have. They are taking over car 

companies and banks and they are taking over health care. And in 

the meantime, the public out there is getting scared to death about 

all of this because they are saying where this is going to end, so 

they are going out and they are doing things like they are buying 

gold. You are not driving up the price of gold. It is going up on its 

own because people are concerned about the value of the dollar not 

based on a talk show host but based on real agencies like Moody’s. 

Other countries are telling the United States of America to stop 

borrowing and spending money at this rapid pace because there are 

dire consequences to it. 

So I would hope that rather than Congress sitting up and beating up on people that are selling gold, they should actually go and 

look at why people are buying gold and why the United States’ 

debt rating is in jeopardy according to Moody’s. We have got to control the spending. We have to actually stop borrowing money from 

countries like China and other places and create some jobs in this 

country, and if we do that, that will solve these problems. But right 

now instead of focusing on those problems, Congress is beating up 

on the people selling gold. Clearly, they are not listening. 

I yield back. 

Mr. RUSH. The Chair recognizes the gentleman from Maryland, 

Mr. Sarbanes, for 5 minutes. 

Mr. SARBANES. Thank you, Mr. Chairman. 

Mr. Carter, I had a question about the spread disclosure. So in 

the Coin Facts, I guess you describe this spread issue and talk 

about like it can be as high as 30 to 35 percent, right? 

Mr. CARTER. Yes. 

Mr. SARBANES. If in a particular case a salesperson knows that 

it could be more than that, does the salesperson have any responsibility to make that clear to the potential purchaser or do they just 

leave the customer thinking that—and most customers are going to 

assume that that is sort of the top, the ceiling. Do they lead them 

to believe that that is what the spread might be, assuming even— 

well, actually let me back up. 

Does the salesperson affirmatively bring the spread issue to the 

attention of the customer beyond handing them this disclosure 

form? Is that part of the training or compliance or other directives 

that the salespeople operate under? 

Mr. CARTER. There are multiple points in time when the disclosures of spread are covered, Congressman, and a point I want to 

make is that our maximum spread, the difference between our ask 

price and our bid price, is 35 percent. There is no higher spread. 

That is variable. So point one is that the customer in our sales 

process has to contact us and their first request to us is information that covers the Coin Facts that is mailed to them. That is the 

first point, easy font, easy to understand with an example of what 

the spread means. The second point, if the customer choose to purchase a product, our account agreement, which we have examples 


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of these if anybody would like a copy of it, this account agreement 

covers the risk disclosures again. The customer has to sign this 

verifying that they understand have read the disclosures including 

what we were just discussing before any sale is final. 

And the last point I will make, Congressman, is that we provide 

a 7-day full refund, no questions asked, buyer’s remorse, talk to 

your spouse. We will give you 100 percent of your money back if 

you change your mind. We feel like we have the best processes for 

disclosures and sales process in the industry to make sure our customers are informed. 

Mr. SARBANES. Let me go back to my first question then. It 

sounds as though it is not necessarily the case that the salesperson 

affirmatively describes to the customer what the spread is. They 

give them the materials and you have got a spread of 30 to 35 percent in there, which you claim is the most it can be, and then there 

are opportunities for them to sign saying they have read something, but in the sales pitch, in the discussion, the oral discussion 

that has had with the customer, it is not necessarily the case that 

they are made aware of the spread issue from what I am understanding. 

The second question I had is, if the spread is going to be—well, 

whatever the spread is going to be in a particular case, is that information provided to the customer? I guess following on the first 

point, the answer to that must be no. So 30 to 35 percent is sort 

of the range that they can get off the paper but they are not going 

to know specifically what the spread is going to be in their particular case, right? 

Mr. CARTER. No, sir. We cover in the sales process in the time 

of the sale the spread between the commission salesperson and the 

customer, and in addition there is a sales confirmation process that 

is separate from the sales process where we have a client service 

representative that covers the products that have been purchased, 

the total amount that you are paying, the fees associated with it 

to confirm that—— 

Mr. SARBANES. So if there was a hard sell going on by one of 

your salespeople where that information wasn’t being provided, 

that would be noncompliant with the policies that you claim you 

have in place, it sounds like. 

Mr. CARTER. Congressman, there are multiple places where we 

disclose the spread, as I said. It is not only the initial information 

that is mailed out to the customer where they take a period of 7 

to 10 days to read, there is also a confirmation of that at the sales 

process. 

Mr. SARBANES. All right. I have run out of time. So real quick 

let me just ask you this. You say 35 percent is the highest spread. 

We have information that it is higher, but just based on the first 

witness, who I think if I recall, the investment was $143,000. At 

the sale point, which was 6 months later, at a point when it didn’t 

appear that the value of gold had changed much at all, at the sale 

point he got $80,000 back. The implication of that was that you 

had a loss of value. Now, you would attribute that to the numismatic markup in the spread but that is—I mean, I did the math 

and that is 43 percent right there. So just in that particular case, 

it doesn’t appear that the claim that the spread is limited to 30 to 


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35 percent applied and that suggests there may be other situations 

that are similar to that. 

Mr. CARTER. If I could respond, Congressman, Dr. Bazan’s testimony, the spread was 35 percent on the products that he purchased, the difference between our ask and our bid price. As it has 

been pointed out before, that is a markup of 54 percent. So we buy 

the product back. What was not provided in the testimony is that 

when we bought the proof American gold coins back from Dr. 

Bazan, we paid a price of over $2,080 an ounce. So when gold was 

trading at $1,110, Dr. Bazan received from Goldline double what 

the melt value of the coin was. And the reason why that is, is because these are coins that have a scarcity and a demand and a collector value. So it is not in this case the melt value of the coin that 

drives the price, it is the market price. We paid twice the melt 

value to Dr. Bazan when he liquidated. So the difference between 

what he originally paid in his ask and the bid price is really our 

spread, and he held it much shorter despite our disclosures, he 

held it for a much shorter period of time and was not able to overcome that spread to earn a profit like other customers have held 

our other products and actually earned a profit. We don’t like to 

see any client disappointed, certainly not Dr. Bazan either, but he 

went directly against the disclosures. By the way, the disclosures—— 

Mr. SARBANES. Oh, I understand he sold it faster than you recommend. I understand that point. But I am just talking about the 

markup appears, if that’s equivalent to the spread, appears to be 

beyond what you indicated is the ceiling on that. I have run out 

of time. Thank you. 

Mr. RUSH. The Chair recognizes the gentleman from Nebraska, 

Mr. Terry, for 5 minutes. 

Mr. TERRY. Thank you, Mr. Chairman. 

I am just trying to get my mind around the issue here, if the 

FTC is here, there is inherently an accusation, and Mr. Weiner has 

been very clear with his accusation of fraud and deceptive practices 

and deceptive advertising. So I kind of want to get into that aspect 

of whether there is a real basis for this. And so typically if you are 

providing accurate, truthful information to the consumer, you don’t 

have fraud. It is when you are providing, as Mr. Weiner has said, 

lies, fear and lies is what he says. If you are going to use that as 

the basis for turning someone in or designing legislation, you 

should probably add in the DCCC and some of their advertising. 

But we won’t go there today. 

But I want to ask, this seems to be—I have got the book, account 

and storage agreement. So Mr. Carter, is this what you provide 

your customers like the doctor—what was his name—Bazan, Dr. 

Bazan? Is this what he received? Let me take a step back. You 

don’t do outbound to him. You didn’t call him and try to sell him 

or pitch to buy gold? He contacted you or a consumer contacts you? 

Mr. CARTER. Correct. 

Mr. TERRY. And then you send them the information, correct? 

Mr. CARTER. Yes. 

Mr. TERRY. What information do you send them? 

Mr. CARTER. We send them an investor investment kit. Dr. 

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rect. We do not make outbound calls so he actually was searching 

for a product and originally contacted us by one of our Internet advertisements. The time between he initially contacted us and actually made a purchase was 60 days. In that period of time, he was 

mailed the disclosure—— 

Mr. TERRY. Again, I’m going to interrupt you because I just have 

a little bit of time. What did he receive then after he called and 

requested the information, or generically, what does every consumer receive? 

Mr. CARTER. Every consumer receives the Coin Facts risk disclosures, which is a complete coverage of our pricing, diversification, 

risk factors. This is for him to be prepared and to seek and understand what he is considering. He receives the account and storage 

agreement that he can read at his leisure and must be signed before a sale is final if he chooses to purchase. 

Mr. TERRY. Well, and I have just seen these documents today but 

when we heard testimony earlier regarding the spread, I was handed this, and within about 3 minutes found the information on page 

11 and it seems to be fairly clearly, unlike some of the bills we 

write here, clearly set forth and pretty easy to figure out that if you 

are going to sell it back, you are going to take a 35 percent loss 

on selling it back, or however you want to phrase it. Do you agree 

that that is clear? 

Mr. CARTER. Yes, I do. I think it is very clear in two forms, easily 

understandable with examples. 

Mr. TERRY. And in that regard, with the bill that Mr. Weiner has 

proposed and the disclosure requirements, with what you provide 

the consumers today, do you feel that your disclosures are below 

what he is asking for, exceed or would already meet the requirements that were proposed in his hill? 

Mr. CARTER. As it is presently written, I believe the disclosures 

that we require exceed what the Congressman is proposing. He is 

proposing different disclosures, but what we provide to the client, 

prospective client from a disclosure standpoint, is much more comprehensive than what the bill states, with the exception of the resale value that as I said in my testimony will be very difficult to 

determine with a competitor base of 5,000. 

Mr. TERRY. I am out of time. Thank you. 

Mr. RUSH. We will conduct a second round of questioning for 2 

minutes, and we will allow each member an additional 2 minutes 

to question the witnesses, and the Chair recognizes himself for 2 

minutes. 

Mr. Carter, you were present during Dr. Bazan’s testimony. Is 

that correct? 

Mr. CARTER. Yes. 

Mr. RUSH. And he presently sits right behind you now. So are 

you suggesting to him that he did something wrong in his transaction with Goldline? 

Mr. CARTER. Mr. Chairman, I am suggesting that having known 

the disclosures that we gave him and him acknowledging them 

through his signoff, that if he were to need this money very quickly 

as he did, he decided that he wanted to, according to our account 

notes, invest in a different stock, which is 100 percent his choice, 

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tion put him in a position where because it was such a short period 

of time that he would not recover the fees associated with the original purchase, and so in that regard, and when he called for liquidation, the person he spoke to informed him of that, that this is well 

short of our 3- to 5-year disclosure period and advised him of that 

but yet in his quote he had a hot stock he wanted to pursue. Perfectly fine. We all understand that. But it is directly and contrary 

to what we encouraged him to read and disclose and do, and as a 

result—— 

Mr. RUSH. Dr. Bazan seems to be a man of some wherewithal. 

I mean, he seems to be a man of sound mind and a competent individual. Are you telling me that a member of your organization advised him that if he divested of his purchase that he would lose approximately $60,000 at that moment and then in spite of that he 

went on and divested of his purchase? 

Mr. CARTER. We didn’t advise him. What we said is that this is 

in contrast to a 3- to 5-year hold period before he liquidated to 

make sure that that was a decision—— 

Mr. RUSH. And that he would stand to lose $60,000 if he did not 

accept your scenario, and you won’t call it advice but—— 

Mr. CARTER. Yes, Mr. Chairman, the liquidation process would 

tell him the amount of money that he was going to receive. That 

is why they call the amount of money he would receive if he were 

to liquidate. 

Mr. RUSH. So are you suggesting now, are you telling the subcommittee that Dr. Bazan is totally at fault in this situation? He 

is totally at fault for losing $60,000 of his own money? 

Mr. CARTER. I am saying yes, I am saying Dr. Bazan did not adhere to the compliance and the disclosure requirements that we 

provide. 

Mr. RUSH. The Chair recognizes the ranking member, Mr. Whitfield, for 2 minutes. 

Mr. WHITFIELD. Well, thank you again, and once again I want to 

thank all the witnesses for being here and the members for joining 

us as we explore this issue. Rather than a question, I guess I will 

kind of summarize this in my mind, but the FTC as far we know 

never initiated any enforcement action against Goldline or tried to 

institute any fine or civil penalty against Goldline. I know Mr. Weiner talked about you were giving financial advice, and maybe it 

could be interpreted that way but when you do read the account 

and storage agreement, paragraph 7 says that client understands 

that Goldline believes coins and bullion are appropriate for 5 to 20 

percent of a portfolio although certain individuals or organizations 

might recommend a different percentage. Client will independently 

determine what percentage is appropriate for him or her based 

upon their individual circumstances. 

Now, I would agree that buying gold is not like buying a television or buying any normal consumer product but I would say that 

gold is similar in some ways because they are trying to determine 

value of land, futures, diamonds, silver, fine art, rubies, emeralds, 

all of those things, and it would seem to me that if this is a major 

problem, that maybe this legislation should include other things, 

not just gold, but I look forward to working with the chairman and 

Mr. Weiner, who introduced the legislation, and others. I know that 


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the FTC has already said that they do have problems with the legislation because of the definition of reasonable resale value as well 

as some exemption issues, but I don’t think you can—you have 

been in business 50 years? Goldline has been in business 50 years? 

Is that correct, Mr. Carter? 

Mr. CARTER. Yes, we have. 

Mr. WHITFIELD. So this is a company that has been in business 

for 50 years and 40 percent of its business is repeat customers, so 

I cannot imagine that this is widespread, but I may be wrong, but 

thank you all for your testimony and I look forward to working 

with you. 

Mr. RUSH. The Chair recognizes Mr. Weiner for 2 minutes. 

Mr. WEINER. Thank you very much, Mr. Chairman. 

Mr. Bazan, the previous witness, he didn’t lose all that money 

because of what he did; he lost all that money because you overcharged him. You took $140,000 investment and gave him $85,000 

when he tried to turn it back to you. That is it. That is what happened. If he would have bought $140,000 and someone else gave 

him $120,000 back, they got a better deal there, didn’t they? Of 

course. That is what happened here. The idea, he didn’t follow our 

prescription to wait 5 to 10 years, well, I ask you, Mr. Chairman, 

what if the market went down in that time? Does that then go to 

15, then 20? The whole point is what Mr. Scalise inadvertently 

said. He said the same thing happens in the stock market. You buy 

stock, it goes up, it goes down. Yes, we protect people and make 

sure there is transparency. We make sure that everyone understands what they are buying. One person buys a stock, another 

person buys the stock. It is the same thing. You charge for a product much, much more for someone else. You brag about how much 

the return was, and by the way, you are very good at this. You 

brag about how much the return was if you bought the Swiss franc. 

You didn’t point out that that 200 percent increase corresponds to 

a 319 percent increase in that same period of time in the gold market. It is a bad investment. 

It is not whether or not you think gold goes up and down, Mr. 

Scalise, and it will. But I tell you one thing for sure: if you are 

holding a lot of Swiss francs when the market collapses, good luck 

going and buying a loaf of bread with that. Good luck. Maybe your 

neighborhood store will take your Swiss franc. The only value it 

has at that point is whether or not you can sell it for more dollars 

than you bought it. That is the only measure. That is it. That is 

an investment. I know you are an investment advisor. You might 

want to write this down. This isn’t well, it is my booklet that if you 

hold it 5 to 10 years maybe it will get better. No, 5 to 10 years in 

an up market, right? If it goes down it is going to take more than 

that, won’t it, Mr. Carter? If gold goes down, it takes more than 

that, won’t it? 

Mr. CARTER. Certainly, like any—— 

Mr. WEINER. Of course, of course. So it could be 50. Then are you 

going to have a witness who comes here who lost his life savings, 

some middle-class guy, oh, it is his fault because he didn’t wait 30 

years. This is not whether or not consumers are idiots, it is whether or not they are being lied to and exploited by your company, and 

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ciate Mr. Whitfield’s offer, is that there is some responsibility that 

we have not to exploit people in this moment of fear by making it 

worse. There is some responsibility. There is some responsibility to 

be honest with them. When you are dealing with their life savings, 

50 years and complaints and non-disclosure agreements you make 

people sign, the fundamental question is this, is should you be 

doing this, should you be exploiting people this way, should you be 

taking advantage of the fear and anxiety that they have? Should 

you be implying to people that a confiscation order is in place that 

hasn’t been in place since my father was born? That is just wrong. 

And what we should try to do, Mr. Chairman, is we should endeavor to give people the tools to do it. And I say to my good friend, 

yes, it is in here, we are going to rip you off. That doesn’t make 

it right. It doesn’t make it right when we know by comparing—you 

can go to my website and look at the comparison. 

There are places that aren’t doing it or aren’t doing it as much, 

and this is in the seam, I would say by way of conclusion, Mr. 

Whitfield, because this I think is where we can try to find some 

common ground. This isn’t a seam. It is kind of an investment but 

it is kind of a commodity. I think we do need to structure things 

a little bit differently. To a lot of people, to the witness, to a lot 

of Americans that buy your product, it is being treated as an investment. You go on the business stations to talk about it. You use 

words like divestment strategy. It is treating it like an investment. 

You don’t hedge inflation by buying a TV. And for that reason, I 

say we need to find this way. And one thing is clear. If you look 

at the district attorney of Santa Monica, the FTC, the attorney general of Missouri, the Better Business Bureau, we need to get this 

under control, and I appreciate you shedding some light on and to 

all members of the panel and to you, Mr. Chairman. 

Mr. RUSH. Mr. Terry is recognized for 2 minutes. 

Mr. TERRY. Unanimous consent for 4 minutes to have the same 

amount of time as Mr. Weiner. 

Mr. RUSH. Mr. Terry is recognized for 2 minutes and whatever 

amount of time he wants, he can have it. 

Mr. TERRY. I would agree with Mr. Weiner in part and disagree. 

One is, it is not a good investment. It is not something I would do. 

As a matter of fact, when I was in college, a friend of mine thought 

that gold would be a great investment. We went to a shop. They 

wanted 20 percent on top of the sale. I said I am not going to do 

that. I made up my own mind. But to call what is in here a lie is 

wrong. I mean, it is clearly set forth in here. So the issue is in the 

interpretation of the consumer they get to decide whether that is 

a good investment or not. 

So I would ask the gentlelady from the FTC, have you had a 

finding on the advertising from this company that they have lied 

to consumers? Because you get to decide that, because that would 

be right under your jurisdiction. Have you found that? 

Ms. GREISMAN. Congressman, as I mentioned earlier, there is no 

FTC action against Goldline. 

Mr. TERRY. All right. So is there any actions pending about 

whether or not they have lied? 

Ms. GREISMAN. I cannot indicate whether or not the company 

may or may not be under investigation. 


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Mr. TERRY. I am switching gears on you here a little bit, but how 

many complaints have there been against all of the, was it 500, I 

am sorry, Mr. Carter, 500 or 5,000? 

Mr. CARTER. Five thousand. 

Mr. TERRY. Five thousand companies selling gold. 

Ms. GREISMAN. Over the past 5 years, the FTC has received 

roughly 850 complaints involving coins and precious metal investments. It is a small number but again that is not dispositive as to 

whether or not there may be—— 

Mr. TERRY. True. I would agree with that statement. How many 

against Goldline? 

Ms. GREISMAN. I don’t recall the specific number, sir. 

Mr. TERRY. Do you know how many against ITM? Have you 

heard of them? 

Ms. GREISMAN. I do not know the answer. 

Mr. TERRY. Okay. So all of the complaints totality is what again? 

Ms. GREISMAN. Over the past 5 years, roughly 850. 

Mr. TERRY. And out of the 850, have there been any actions 

against those companies for fraudulent advertising? 

Ms. GREISMAN. I can’t answer that question because I don’t—I 

can’t answer it directly. I can say as I said earlier the FTC has not 

sued any company recently involving misrepresentations in connection with precious metals or coins. 

Mr. TERRY. Okay. So the issue here before this committee is 

whether it is a good investment or not, and I am not sure that is 

wise for this committee to make that decision, but I do think it is 

the obligation of the business to fully disclose all of the costs in 

here in that transaction as well as if you are going to buy it back 

from the consumer, and frankly, I think that information is laid 

out in pretty plain language. 

So at that point in time I will yield back. 

Mr. RUSH. The Chair now recognizes the gentleman from Maryland, Mr. Sarbanes, for 2 minutes. 

Mr. SARBANES. Mr. Carter, you said that you feel that the disclosure that you all provide to the customers is pretty good disclosure, 

correct, in your view? 

Mr. CARTER. Yes. 

Mr. SARBANES. And in fact, I think you said to Congressman 

Weiner or somebody that the disclosure you have even goes beyond 

some of the requirements that are laid out in the legislation as you 

read it. Is that correct? 

Mr. CARTER. We disclose more than is specifically identified in 

the legislation although the legislation does identify things that we 

currently don’t disclose that we would challenge and have issue 

with. 

Mr. SARBANES. Is your disclosure better or worse in your judgment than most of the other companies that are in the industry in 

which you operate? 

Mr. CARTER. Well, as I said, there are 5,000. We believe that we 

have best practices in the industry and full disclosure with our eye 

on the prospective client. I haven’t done exhaustive research on 

what our competitors are disclosing. I want to make sure that our 

disclosures are fair and that the prospective client is making—— 


PWALKER on DSK7TPTVN1PROD with HEARING
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Mr. SARBANES. You don’t have any sense of whether you think 

you are sort of at the top of the class when it comes to the disclosure you do, or middle? 

Mr. CARTER. Yes, I do, Congressman. I believe we are at the top 

of the class. 

Mr. SARBANES. And I presume that you strive for disclosure because you feel like that is a good thing for your customer? 

Mr. CARTER. Absolutely, yes. 

Mr. SARBANES. So one would hope that you would feel the same 

way about the customers of these other companies that operate 

these offerings, right? 

Mr. CARTER. Absolutely, Congressman, and what I said in my 

testimony is that we are for disclosure. That is not our issue with 

this bill. The issue with this bill is the definitions of what is excluded and the type of disclosure about resale value in aggregating 

5,000 competitors is just not workable for any competitors including ourselves. So we absolutely support disclosure. It is just this 

current legislation, the type of disclosure that it is requesting is not 

capable and would ultimately harm the customer because of the information that is provided. 

Mr. SARBANES. Well, I get the feeling that you are generally supportive of what Congressman Weiner is trying to do, and I expect 

there is going to be some further development on this legislation. 

He has put the pieces together that I think make a lot of sense, 

and you certainly are someone who promotes good, strong disclosure, which is what is at the heart of this bill, so I am sure he 

looks forward to having your support going forward, and I yield 

back. 

Mr. RUSH. The Chair will declare to the subcommittee members 

and to the witnesses that the record for this hearing will remain 

open for 14 days so that any member of the committee might want 

to ask questions of the witnesses in writing and the witnesses will 

be asked to respond as quickly as possible promptly to the questions in writing from members of the committee. The record will remain open for an additional 14 days. 

With that said, the committee now stands adjourned. I want to 

again thank the witnesses for your investment of your time in this 

particular matter. Thank you, and may you return home with Godspeed. Thank you so much. The committee stands adjourned. 

[Whereupon, at 5:12 p.m., the Subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 


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