PSA Card Guarantee

[benjulmag]

As has been noted in the thread about Blowout's latest revelation, what Blowout has brought to light represents only the tip of the iceberg in regard to the number of altered slabbed cards in the marketplace. My personal opinion is that it is the rule, not the exception, that vintage high-grade cards that have significant market value and which do not have documented provenance to a period when there was no economic incentive to alter, are altered.

This got me to thinking about the recourse defrauded collectors would have against PSA, and I looked up the latest version of the PSA Guarantee. One provision in particular stood out, which I don't recall having previously seen.

In each case of a Guarantee claim, there is a per-card cap of $250,000 and a lifetime cap of $500,000 per person (together, the “Maximum Amount”). PSA will not pay Guarantee claims in excess of the Maximum Amount.


As I read this, PSA in one fell swoop is trying to wipe out probably the great majority of its contingent liabilities, which, if successful, would probably save it from economic collapse should someday all these alterations come to light and PSA is bombarded with Guarantee claims it cannot afford to pay. There are many cards in the six-figure range. And there have to be a significant number of collectors whose card holdings are tied up in cards that are the prime alteration suspects where a $500K lifetime cap would not come close to making these collectors whole.

In past discussions about the PSA Guarantee I and others made the point of saying someday it could pose an existential threat to the company. Based upon this latest version, and assuming it is enforceable against collectors whose claims under the Guarantee involve cards acquired before this provision was added, PSA quietly in a brilliant legal move might have prevented doomsday from ever occurring.

[Smarti5051]

Well, not sure the wording of this guarantee was well thought out by the legal department. I suppose it successfully limits liability of a few crazy alteration claims: ie a 52 Mantle PSA 10 that is determined to be altered. But, I have to think less than .001% of all cards that would be subject to the guarantee would end up above the $250K per card cap.

The total cap of $500K "per person" could limit some liability. But, if you are at your cap and you paid $50K for an altered card which, if known, would reduce the value to $1K, wouldn't that card still have a value of close to $50K to any person that is not at their $500K PSA guarantee limit? Nothing in the language quoted would preclude a person from knowingly selling or assigning a card covered by the guarantee to another person who could, in turn, submit a guarantee claim to PSA.

[Peter_Spaeth]

It's meaningless in my opinion because THEY control the determination of whether the card sent back to them is altered or not. As we saw in the case of AJ's obviously altered Leaf Jackie where they stood behind the grade. They don't need fine print to cap their liability, just their own bad faith.

I do agree with Corey that the cards that have been specifically outed are the small tip of a big iceberg.

[benjulmag]

Originally Posted by Peter_Spaeth

It's meaningless in my opinion because THEY control the determination of whether the card sent back to them is altered or not. As we saw in the case of AJ's obviously altered Leaf Jackie where they stood behind the grade. They don't need fine print to cap their liability, just their own bad faith.

I do agree with Corey that the cards that have been specifically outed are the small tip of a big iceberg.

I agree that THEY control whether a card is altered. But assuming an obligation of good faith is required of them when making this determination and given that in many instances I believe it can be conclusively shown the card has been altered, I don't think this is a meaningless provision.

Granted as a practical matter no one is going to bring an action unless the claim is astronomical enough to justify the legal expense, but I can foresee where someday somebody might have the economic incentive, and in such an instance this provision could be helpful to PSA. The fact they added it suggests to me that they know the reviews they give cards submitted under the Guarantee are done in bad faith.

[Peter_Spaeth]

Originally Posted by benjulmag

I agree that THEY control whether a card is altered. But assuming an obligation of good faith is required of them when making this determination and given that in many instances I believe it can be conclusively shown the card has been altered, I don't think this is a meaningless provision.

Granted as a practical matter no one is going to bring an action unless the claim is astronomical enough to justify the legal expense, but I can foresee where someday somebody might have the economic incentive, and in such an instance this provision could be helpful to PSA. The fact they added it suggests to me that they know the reviews they give cards submitted under the Guarantee are done in bad faith.

It would be very hard to prove assuming it ever got that far. PSA puts on Reza, the person with the most experience grading cards in the world probably, who testifies it looks good to him and that's why he recommended not buying it back. The collector puts on someone else who can't examine the card outside the slab. I mean if the card was an inch short sure, but most altered cards aren't THAT obvious.

[benjulmag]

I think between what could be forensically proven, coupled with the egregious nature of some of the alterations, their so-called expert, regardless how experienced, would be shown to be either a liar or an idiot. Whatever the case, if I was a guy who stood to lose the value of most of his collection and the loss was at the level that warranted a lawsuit, I would file it.

[Peter_Spaeth]

Originally Posted by benjulmag

I think between what could be forensically proven, coupled with the egregious nature of some the alterations, their so-called expert, regardless how experienced, would be shown to be either a liar or an idiot. Whatever the case, if I was a guy who stood to lose the value of most of his collection and the loss was at the level that warranted a lawsuit, I would file it.

How do you forensically prove anything with the card in a holder? And don't you void the guarantee if you remove it? Maybe there could be some stipulated procedure but I don't know.

And I am not sure you could show a loss. The Wagner is almost universally conceded to be first sheet cut (rendering it AUTH even before Mastro) and then trimmed. It's ROI is astronomical. Who has lost any money in the scandal? You don't like your altered card, just sell it for a profit. Duty to mitigate, remember.

[benjulmag]

Presumably the instance in which someone would have the economic incentive to bring an action is when he cannot sell it for a profit. Granted that day may never come because the current market does not seem to care that cards that are selling for hundreds of thousands of dollars are in reality worth a fraction of that, but it still blows my mind that people do that. As was noted by one of the posters in the blowout thread, that person is very distraught that his mint card is altered, and likely will view graded cards differently going forward.

And too I would think that even if it required at some point taking the card out of the holder to do the forensic examination, which I'm not sure is required in all instances, once that was done and the card was shown to be a fake, any trier of fact would look at PSA's expert in a different light. I don't think juries like it when people get screwed and believe it was done in bad faith. And too, I'm not sure how well it will be received by a court that the only way I could mitigate my damages is by withholding material information from the person I would be selling it to.

[doug.goodman]

The opinion sellers DO NOT CARE about any of these conversations, or about Blowout or about YOU or about YOUR CARDS.

Nothing has changed from the beginning of their existence.

They lied then, and they lie now, surprised!

The only thing that the average individual can do is to can be done is to stop using them, and obviously that isn't going to happen.

For those of you who use them, enjoy collecting your plastic slabs and the fantasies that many of them contain. Nothing wrong with enjoying your fantasies.

[Peter_Spaeth]

Originally Posted by benjulmag

Presumably the instance in which someone would have the economic incentive to bring an action is when he cannot sell it for a profit. Granted that day may never come because the current market does not seem to care that cards that are selling for hundreds of thousands of dollars are in reality worth a fraction of that, but it still blows my mind that people do that. As was noted by one of the posters in the blowout thread, that person is very distraught that his mint card is altered, and likely will view graded cards differently going forward.

And too I would think that even if it required at some point taking the card out of the thread to do the forensic examination, which I'm not sure is required in all instances, once that was done and the card was shown to be a fake, any trier of fact would look at PSA's expert in a different light. I don't think juries like it when people get screwed and believe it was done in bad faith. And too, I'm not sure how well it will be received by a court that the only way I could mitigate my damages is by withholding material information from the person I would be selling it to.

IMO you could probably disclose it in most cases and do just fine. You and I are from the generation where it mattered, but I don't think it does any more to a huge swath of the hoibby.

[doug.goodman]

Originally Posted by Peter_Spaeth

IMO you could probably disclose it in most cases and do just fine. You and I are from the generation where it mattered, but I don't think it does any more to a huge swath of the hoibby.

Nailed it

[JeremyW]

"How do you forensically prove anything with the card in a holder?"

They do it all the time at Blowout. Obvious trims & recoloring. Is that not forensic?

[Peter_Spaeth]

Originally Posted by JeremyW

"How do you forensically prove anything with the card in a holder?"

They do it all the time at Blowout. Obvious trims & recoloring. Is that not forensic?

In a trial, who is the collector going to call as a witness, an anonymous poster from BODA? In court it has to be done under strict rules of evidence. Different animal altogether. You could try it through an expert I suppose. In my opinion this card is the same card as the card in this online photo which I've never seen, and it appears to have been trimmed after that photo was taken. Good luck with that.

[JeremyW]

The photo evidence is so obvious. Does it take a jury to confirm?

[JeremyW]

I'm guessing a jury would confirm within an hour.

[Peter_Spaeth]

Originally Posted by JeremyW

The photo evidence is so obvious. Does it take a jury to confirm?

I am not sure I follow the question? Are you asking whether a judge would find for the collector on a motion for summary judgment? I can't imagine that would be the case. You would also need to think about how you even get the photos into evidence. They aren't "self authenticating."

[Peter_Spaeth]

Originally Posted by JeremyW

I'm guessing a jury would confirm within an hour.

If these were easy cases you would have seen the government pursue them, IMO. It's easy to do this in an internet forum, not necessarily so easy in a court governed by rules of evidence.

[JeremyW]

Sounds like we a have a problem in the courts.

[Peter_Spaeth]

Originally Posted by JeremyW

Sounds like we a have a problem in the courts.

Not at all, IMO. The problem would be if we didn't have strict rules of evidence. Are some cases going to fail, or not be brought, as a result? Sure. But the alternative is unimaginable.

[JeremyW]

I guess I'll have to be satisfied with the court of public opinion.

[Peter_Spaeth]

Originally Posted by JeremyW

I guess I'll have to be satisfied with the court of public opinion.

In this case, probably so, I think.

[JeremyW]

The evidence is so glaring.

[Peter_Spaeth]

Originally Posted by JeremyW

The evidence is so glaring.

Indeed, but perhaps not the admissible evidence. Not always the same thing, for better or worse.

[Fuddjcal]

let's just all admit that the hobby is clearly a "BILLION DOLLAR FRAUD" and move on Enjoy the teeth kicking and reaming or don't collect. I guess I just choose to enjoy it, cause I'm crazy like that.

[JeremyW]

For the worse here. No doubt about it.

[Fred]

You have to figure that one of these days this house of cards is going to come crashing down.

This used to be a fun hobby when people bought cards for the enjoyment of it rather than the investment potential.

What is really sad is that there is evidence of card tampering and the investors just turn a blind eye because in the back of their minds they know/understand what will happen to their investments when/if the industry comes crashing down.

As I always comment - I don't care if this stuff comes tumbling down in value because then it becomes a hobby again and the investors will hopefully find something else to spend their time screwing up.

I still can't imagine that in a court of law that the TPGs will be the ultimate authority when the whole case would be about their competence in determining if a card is altered (or not).

Perhaps the grading companies have some weasel wording that will exonerate them from liability, for example perhaps somewhere it's written in the terms of service that the opinion rendered is just that a subjective opinion. In that case, it is what it is and they'll continue to turn a blind eye to this.

[vthobby]

SGC will still be standing no matter what. It's the others that have to worry.

Anyone that has been around long enough sees and knows what I'm talking about.

From day 1 with the McNall/Gretzky Wagner. They just laugh and continue to cash in.

So bad.

Nuff said.

[Peter_Spaeth]

We need an emoticon for blinders.

[Eric72]

Originally Posted by Peter_Spaeth

We need an emoticon for blinders.

0-0

(emoticons are the old text-based predecessors to emojis)

[Peter_Spaeth]

Originally Posted by Eric72

0-0

(emoticons are the old text-based predecessors to emojis)

How many years off was I?

[Eric72]

Originally Posted by Peter_Spaeth

How many years off was I?

It's all good. I actually like emoticons. They're "vintage."

:-)

[perezfan]

Here’s one that’s not vintage, but still on-topic for this thread.

💩

[Exhibitman]

Whats the context? They could cap liability to a submitter since there is privity of contract, but to just announce they won't be responsible and expect that to stick with a non-contracting party, yeah, good luck with that. If that worked, I'd post a liability cap on everything I send out.

[perezfan]

Well they’ve gotten this far, making their own inane rules and policies, with the collecting masses lapping it up to no end. They’ve deemed proven altered cards to be original and have kept people waiting up to a year to receive their “grades”.

So obviously they think theirs is the word of God, and that they’re legally exempt. No amount of corruption or incompetence seems to detract from collectors’ desires to support them. So why not re-write the rules?

[Snowman]

It really is silly that they ever offered any sort of a guarantee whatsoever, to begin with. You'd think they would just accept the fact that they are unable to detect most alterations by this point and just get rid of their guarantee program. It really is pointless. They should just be upfront and honest about what they can and cannot do and simply admit that their grades just represent a particular grader's opinion on a particular day and that there is a very wide range of expectations when sending in cards for grading.

I'd love to see a hobby "secret shopper" like the apparel and restaurant industries have where a mix of altered and unaltered cards are sent to every grading company and statistical reports get published with their results, showing each company's Type I and Type II errors (TPG said a card was not altered when it was, and TPG said a card was altered when it was not). I'd place my bets on SGC being by far the most accurate.

[Peter_Spaeth]

Originally Posted by Snowman

It really is silly that they ever offered any sort of a guarantee whatsoever, to begin with. You'd think they would just accept the fact that they are unable to detect most alterations by this point and just get rid of their guarantee program. It really is pointless. They should just be upfront and honest about what they can and cannot do and simply admit that their grades just represent a particular grader's opinion on a particular day and that there is a very wide range of expectations when sending in cards for grading.

I'd love to see a hobby "secret shopper" like the apparel and restaurant industries have where a mix of altered and unaltered cards are sent to every grading company and statistical reports get published with their results, showing each company's Type I and Type II errors (TPG said a card was not altered when it was, and TPG said a card was altered when it was not). I'd place my bets on SGC being by far the most accurate.

Relatedly, I've always wanted to see someone buy up say 100 random PSA 10s from a seller like 4SC and resubmit them and report the results.

[Peter_Spaeth]

Originally Posted by perezfan

Well they’ve gotten this far, making their own inane rules and policies, with the collecting masses lapping it up to no end. They’ve deemed proven altered cards to be original and have kept people waiting up to a year to receive their “grades”.

So obviously they think theirs is the word of God, and that they’re legally exempt. No amount of corruption or incompetence seems to detract from collectors’ desires to support them. So why not re-write the rules?

You are thinking like an old school card collector, not a new age flip collector.

[steve B]

Originally Posted by Peter_Spaeth

How do you forensically prove anything with the card in a holder? And don't you void the guarantee if you remove it? Maybe there could be some stipulated procedure but I don't know.

And I am not sure you could show a loss. The Wagner is almost universally conceded to be first sheet cut (rendering it AUTH even before Mastro) and then trimmed. It's ROI is astronomical. Who has lost any money in the scandal? You don't like your altered card, just sell it for a profit. Duty to mitigate, remember.

I look at that the same way I looked at my employer telling me to simply palm the fake 10 I'd taken off on someone else. (I covered the 10 and kept it. )

Can a duty to mitigate be a defense for fraud? I'm thinking no, but stuff can be weird....

[steve B]

Originally Posted by Snowman

It really is silly that they ever offered any sort of a guarantee whatsoever, to begin with. You'd think they would just accept the fact that they are unable to detect most alterations by this point and just get rid of their guarantee program. It really is pointless. They should just be upfront and honest about what they can and cannot do and simply admit that their grades just represent a particular grader's opinion on a particular day and that there is a very wide range of expectations when sending in cards for grading.

I'd love to see a hobby "secret shopper" like the apparel and restaurant industries have where a mix of altered and unaltered cards are sent to every grading company and statistical reports get published with their results, showing each company's Type I and Type II errors (TPG said a card was not altered when it was, and TPG said a card was altered when it was not). I'd place my bets on SGC being by far the most accurate.

I wouldn't be so sure.

And how would you count rejections based on how giving a deserving card a number grade? Of my three rejects,
1 "miscut top and bottom" Very rough cut, factory but not at all typical.
2 "Min size" also factory, and the difference in height was less than the difference in width on another card in the same submission. I suspect the narrow card - a non AB T206 that's very near as narrow as my AB backs got through while the short one didn't because the size they use for width accounts for AB, but the height is more strict.
3 Trimmed all four sides. Totally blew it including that one as I delayed then rushed to pick a card to make the minimum number for that special. It is trimmed.

I get that the first two would probably look "bad" to someone who doesn't know what a factory edge looks like, so they wouldn't give it a number. I got the explanations by requesting not to holder as "A"

[Peter_Spaeth]

Originally Posted by steve B

I look at that the same way I looked at my employer telling me to simply palm the fake 10 I'd taken off on someone else. (I covered the 10 and kept it. )

Can a duty to mitigate be a defense for fraud? I'm thinking no, but stuff can be weird....

No, it's applicable to a contract claim. But a claim based on the guarantee would not be a fraud claim. Although now that I think about it, the way it's worded, I don't think there would be a duty to mitigate.

[steve B]

Originally Posted by Peter_Spaeth

In a trial, who is the collector going to call as a witness, an anonymous poster from BODA? In court it has to be done under strict rules of evidence. Different animal altogether. You could try it through an expert I suppose. In my opinion this card is the same card as the card in this online photo which I've never seen, and it appears to have been trimmed after that photo was taken. Good luck with that.

Is there a good explanation of those rules that a non lawyer can easily understand?

To me, I'm thinking you'd have provenance on an earlier image. And for some, fairly clear identifiers.
Like
This card with PSA serial number X was shown in this image when it was offered on x date by this particular seller.
Theres a unique wood fiber inclusion visible just here further identifying the card.
That image is X dpi, making that fiber x distance from the nearest edge


This image is a new image created on x date, and at the same dpi as the original. Note the unique fiber inclusion is now Y distance from the nearest edge.

This is the actual card, as shown.

That could be done for all edges and overall size.

Would it not be allowed?

[Peter_Spaeth]

Originally Posted by steve B

Is there a good explanation of those rules that a non lawyer can easily understand?

To me, I'm thinking you'd have provenance on an earlier image. And for some, fairly clear identifiers.
Like
This card with PSA serial number X was shown in this image when it was offered on x date by this particular seller.
Theres a unique wood fiber inclusion visible just here further identifying the card.
That image is X dpi, making that fiber x distance from the nearest edge


This image is a new image created on x date, and at the same dpi as the original. Note the unique fiber inclusion is now Y distance from the nearest edge.

This is the actual card, as shown.

That could be done for all edges and overall size.

Would it not be allowed?

I assume you would have an expert witness try to do all this. Who would that be? If so, here are the applicable standards at least in a federal court:

Rule 702. Testimony by Expert Witnesses

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:

(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts of the case.

One issue I see right away is (c), because comparison with prior photos is not how anyone in the industry authenticates cards. So you would have an initial substantial hurdle of trying to persuade a judge that this new method was reliable.

[steve B]

I think I can see how it works.

I was thinking probably too narrow, identifying that two pictured objects are in fact the same object, and that it got smaller between two different dates.

But it would have to include info about how the edge quality changed, and other things. And since they're all related as "proof" if one was disallowed, the rest are far less useful. Like if you can show the edge quality doesn't match original examples, but can't show that the card got smaller between dates, the edge info won't matter. Or the other way around.

So you'd probably need multiple experts? In my limited experience, people have a hard time grasping someone being a generalist, however knowledgeable.

It seems odd to me that if someone like PSA used a flawed method of determining trimming, then that becomes the standard method.... I guess one of those "things get strange sometimes" things.

[Yoda]

I have often wondered if by some unlikely scenario THE t206 PSA 001 Honus ever ended up in an authentic holder, where it belongs, what would it fetch at auction?

I guess there would be some kind of drop but the publicity, history and prior ownership would keep its' valuation in the stratosphere.

[Snowman]

Originally Posted by Peter_Spaeth

Relatedly, I've always wanted to see someone buy up say 100 random PSA 10s from a seller like 4SC and resubmit them and report the results.

The statistician/data scientist in me would love to run experiments like this. But my financial advisor/wife claims it's an unwise investment. Maybe someone will set up a 'GoFundMe' and I can donate to the cause lol

[benjulmag]

Originally Posted by Yoda

I have often wondered if by some unlikely scenario THE t206 PSA 001 Honus ever ended up in an authentic holder, where it belongs, what would it fetch at auction?

I guess there would be some kind of drop but the publicity, history and prior ownership would keep its' valuation in the stratosphere.

That might be the prevailing consensus, but I doubt it.

[Peter_Spaeth]

Originally Posted by Snowman

The statistician/data scientist in me would love to run experiments like this. But my financial advisor/wife claims it's an unwise investment. Maybe someone will set up a 'GoFundMe' and I can donate to the cause lol

Let's say we could buy 100 random PSA 10s from 4SC fairly spanning their price range, with other people's money. What's your guess as to the distribution of what would come back if we resubmitted them all raw? I would guess something like 20 10s, 50 9s, 10 AUTH, and the rest 8s and 7s. That might be high on the 10s.

[Snowman]

Originally Posted by Peter_Spaeth

I assume you would have an expert witness try to do all this. Who would that be? If so, here are the applicable standards at least in a federal court:

Rule 702. Testimony by Expert Witnesses

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:

(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts of the case.

One issue I see right away is (c), because comparison with prior photos is not how anyone in the industry authenticates cards. So you would have an initial substantial hurdle of trying to persuade a judge that this new method was reliable.

I think you'd have a much more difficult time convincing a jury that even the act of trimming->regrading->reselling a card is a crime.

I've had multiple people tell me that even cleaning cards is "wrong" and/or criminal behavior. I honestly just laugh and roll my eyes whenever I hear that. They come across to me as completely delusional. And I'm certainly in the majority viewpoint in this hobby today. But as soon as you step outside this hobby, the distribution of opinions immediately sways *much* more heavily in the direction of "who cares?" than it does "that's fraud!". I strongly suspect that any jury you'd ever encounter would view card doctoring of all stripes the exact same way. Even with the most egregious of acts like trimming.

Inside this hobby, we hear things like "fraudster!", "card molester!", "scum of the hobby!", etc. But outside the hobby, all you hear is, "clever!", "haha, sounds like he found a loophole!", and "smart!". Nobody else thinks this is fraud. Just us. And a (likely small) subset of us at that.

[Snowman]

Originally Posted by Peter_Spaeth

Let's say we could buy 100 random PSA 10s from 4SC fairly spanning their price range, with other people's money. What's your guess as to the distribution of what would come back if we resubmitted them all raw? I would guess something like 20 10s, 50 9s, 10 AUTH, and the rest 8s and 7s. That might be high on the 10s.

It would depend quite a bit on the type of cards we selected.

If they were ultra-modern shiny cards, I suspect it might be something like:
60% 10s
30% 9s
7% 8s
1% 7s or lower
2% Authentic/rejected

If 80s junk wax with older certs
10% 10s
30% 9s
20% 8s
10% 7s or lower
30% Authentic/rejected

If vintage with older certs:
<1% 10s
15% 9s
10% 8s or lower
75% Authentic/rejected

[Peter_Spaeth]

Originally Posted by Snowman

I think you'd have a much more difficult time convincing a jury that even the act of trimming->regrading->reselling a card is a crime.

I've had multiple people tell me that even cleaning cards is "wrong" and/or criminal behavior. I honestly just laugh and roll my eyes whenever I hear that. They come across to me as completely delusional. And I'm certainly in the majority viewpoint in this hobby today. But as soon as you step outside this hobby, the distribution of opinions immediately sways *much* more heavily in the direction of "who cares?" than it does "that's fraud!". I strongly suspect that any jury you'd ever encounter would view card doctoring of all stripes the exact same way. Even with the most egregious of acts like trimming.

Inside this hobby, we hear things like "fraudster!", "card molester!", "scum of the hobby!", etc. But outside the hobby, all you hear is, "clever!", "haha, sounds like he found a loophole!", and "smart!". Nobody else thinks this is fraud. Just us. And a (likely small) subset of us at that.

We're talking here though about a civil case against PSA on its guarantee, not a criminal trial for card doctoring.