http://www.smgov.net/departments/cao/Content.aspx?id=46293
February 13, 2014
Contact: Adam Radinsky, Head, Consumer Protection Unit
310-458-8327
The Santa Monica City Attorney’s Office today filed a consumer protection lawsuit against Santa Monica-based precious metals dealer Seacoast Coin, Inc., doing business as Merit Financial and Merit Gold and Silver.
Merit is one of the nation's largest precious metals dealers. It advertises extensively, including on national TV outlets.
The lawsuit accuses Merit of a massive, nationwide bait and switch scam. Merit advertises gold and silver bullion on TV, online and in print ads, at "1% over cost." The complaint alleges that when consumers call in to buy bullion, Merit's salespeople allegedly use false, deceptive and aggressive tactics to trick them into buying heavily marked-up so-called “collector” coins instead, including falsely telling consumers:
- that the coins are a better investment than bullion
- that the coins offer more privacy than bullion
- that the coins are not "reportable" on consumers' taxes
- that the coins can't be confiscated by the government, while bullion can be
The complaint further alleges that, in fact, the collector coins pushed by Merit have none of these advantages over gold or silver bullion, according to the lawsuit.
Merit is also accused of gaining consumers' trust by falsely telling customers that the company's co-owner, Peter M. Epstein, is a police officer.
The complaint names Merit co-owners Peter M. Epstein and Michael J. Getlin as defendants for their role in training, controlling, and overseeing the illicit operation.
The City brings the case under California's Unfair Competition Law, which protects consumers from false advertising, fraud, and other unlawful business practices.
This case marks the third time in the past three years that the Santa Monica City Attorney has taken a national gold dealer to court for wrongdoing. In 2012, Santa Monica obtained judgments against Goldline International and Superior Gold Group, both of whom were accused of using schemes similar to Merit's. Goldline agreed to provide more than $5 million in refunds and to a sweeping injunction; its practices are still being scrutinized by a court-appointed Monitor. Superior Gold was shut down, placed under receivership, and ordered to pay $2 million in restitution to customers.
The Santa Monica City Attorney’s Office is continuing to investigate Merit. Anyone with information about its practices, including former customers and former employees of Merit, should contact the City Attorney’s Consumer Protection Unit at 310-458-8336 or file a complaint online at gold.smconsumer.org