CGC & Conflict of Interest

[short_box-migration]

well, if tht conflict causes them to bump up more books then it is likely going to be a wash in the medium and long term as supply will tend to lower the premium pricing those books receive (and lower the value of the 9.6ses while they're at it).

 

in the short-term yes, but eventually thr market will adjust.

 

in theory.

 

what about the theoretical conflict in heritage selling their own CGC books, which have been slabbed by their subsidiary? of course, it's only hypothetical, as the fine folks at CGC would not factor that into their grading, but if we were talking about another company.....

 

 

of course, the whole pricing scheme doesn't make any sense to me. if value is an issue because they're taking more risks with an expensive book, charge a flat fee for grading the book and a separate insurance fee at cost (or roughly cost -- i guess they need to cover their overhead for the person handling the insuranc documentation). they shouldn't charge more because the owner might make more money on the book. when i got my home inspected it was based on the size of the home and how much work the guy had to do to inspect it, not what neighborhood I was buying in, which might make the home worth 3X as much as the same home 2 miles away. so yeah, a 64 pager should cost more to grade than the 24 pager..i got no problem with that.

 

What are you talking about?

CGC is not a subsidiary of Heritage.

 

OR did I read your post wrong?

 

Correct.

 

Heritage...specifically Halperin...is a large shareholder in CGC. (thumbs u

 

I'm sorry... I'm not trying to ruffle anyone's feathers, but how could this not be a huge conflict of interest?

 

 

Steve and Jim didn't think it was much of a big deal.

 

"Heritage Auction's Jim Halperin owns stock in CGC. This has been confirmed by Halperin on the CGC message board http://boards.collectors-society.com/ubbthreads.php?ubb=showflat&Main=34395&Number=625815#Post625815 and by Steve Borock http://stlcomics.com/columns/ironslab/IV/

[Hedge Collector]

Tell you what. Go submit hundreds of books on the Economy and Value tiers and get back to us on what your experiences are. (thumbs u

 

 

Economy and Value isn't where most of the conflict of interest lies.

 

You're totally missing what I'm telling you. Submit your $150-$5000 books through economy and tell me how many get upgraded.

 

 

I didn't realize that you could submit as high as $3000-5000 books using economy.

[cd4ever]

Basing slabbing fees on the grade of the book is absolutely a conflict of interest and I have never been happy with that policy.

 

However, as Dice and others have said here, there is NO evidence that CGC exploits this by giving higher grades to undeserving books. I think they are smart enough to know that their reputation and well-earned goodwill in the hobby is worth more than the difference between a 9.4 and a 9.6.

[whisp]

This alleged "conflict of interest" is bogus. The only way that they get more bread based upon the service that they provide is if they look up GPA and charge a fee based on the 9.8 v. 9.6 or 9.6 v. 9.4 or whatever. I have never seen any evidence that they do this. But I have seen a ton of evidence that they do not upcharge in a lot of situations where they otherwise could have.

 

That is good to know.

 

However, I called CGC and asked them how they would go about determining FMV and the lady specifically told me GPA. Is this not the case?

 

Can you give examples of your evidence?

 

In the end, I'm definitely glad CGC is able to be as upstanding "as possible." Good for our hobby no doubt.

 

I was told by Dena that CGC uses GPA for FMV.

 

Regardless if they used GPA vs OVERTSREET it would balance out for CGC themselves. Only people that would get hit hard possibly for grading price is those submitting key books that are popular while using GPA.

[whisp]

Basing slabbing fees on the grade of the book is absolutely a conflict of interest and I have never been happy with that policy.

 

However, as Dice and others have said here, there is NO evidence that CGC exploits this by giving higher grades to undeserving books. I think they are smart enough to know that their reputation and well-earned goodwill in the hobby is worth more than the difference between a 9.4 and a 9.6.

 

I have always thought that too since they are doing the same service hopefully to every book regardless if its $1 or $10million.

 

The reason I keep hearing pop up is that it has to do with insurance and I am pretty sure everyone knows what insurance is about but we all sit here and pay house insurance and such in which something may not happen and basically all you get is a piece of mind unless of course the inusrance company screws you over like it has happen to some when something does happen. And of course they get their premiums.

[Silver Surfer]

well, if tht conflict causes them to bump up more books then it is likely going to be a wash in the medium and long term as supply will tend to lower the premium pricing those books receive (and lower the value of the 9.6ses while they're at it).

 

in the short-term yes, but eventually thr market will adjust.

 

in theory.

 

what about the theoretical conflict in heritage selling their own CGC books, which have been slabbed by their subsidiary? of course, it's only hypothetical, as the fine folks at CGC would not factor that into their grading, but if we were talking about another company.....

 

 

of course, the whole pricing scheme doesn't make any sense to me. if value is an issue because they're taking more risks with an expensive book, charge a flat fee for grading the book and a separate insurance fee at cost (or roughly cost -- i guess they need to cover their overhead for the person handling the insuranc documentation). they shouldn't charge more because the owner might make more money on the book. when i got my home inspected it was based on the size of the home and how much work the guy had to do to inspect it, not what neighborhood I was buying in, which might make the home worth 3X as much as the same home 2 miles away. so yeah, a 64 pager should cost more to grade than the 24 pager..i got no problem with that.

 

What are you talking about?

CGC is not a subsidiary of Heritage.

 

OR did I read your post wrong?

 

Correct.

 

Heritage...specifically Halperin...is a large shareholder in CGC. (thumbs u

 

I'm sorry... I'm not trying to ruffle anyone's feathers, but how could this not be a huge conflict of interest?

 

 

Steve and Jim didn't think it was much of a big deal.

 

"Heritage Auction's Jim Halperin owns stock in CGC. This has been confirmed by Halperin on the CGC message board http://boards.collectors-society.com/ubbthreads.php?ubb=showflat&Main=34395&Number=625815#Post625815 and by Steve Borock http://stlcomics.com/columns/ironslab/IV/

 

That was so long ago I had forgotten that thread. Very interesting comment by Comicwiz on page #8 of that thread.

[conditionfreak]

If you submit a book as, in your opinion and assessment is a 9.0 and it is a high value book. Then CGC grades it as a 9.6, which would have a much higher value than your initial paperwork and submittal form indicated (and what you would have pre-paid), then CGC will bill you for the difference. Correct?

 

That is what has happened to me (yea, apparently my grading sucks).

 

But, on the other hand. I submitted books that I had way overgraded (according to CGC later), and paid higher fees based on my grading (pre-paid), and did not get back any money. When I asked about it, I was told they would give me consideration on my next batch.

 

They did not.

 

Just an oversight I'm sure, and I could have been more proactive and got a refund I am sure. But why is it with business that if I make a money mistake, I have to take care of it pronto (or I don't get my books back), but if they make a money mistake, they will only take care of it when and if they "remember" or feel like it?

 

Oh yea. I forgot another situation. Ever submit a book that could not be slabbed due to overhang or brittle pages, so it is returned ungraded and unslabbed, and there is no automatic refund of even a portion of my already paid fees? I have.

[whisp]

If you submit a book as, in your opinion and assessment is a 9.0 and it is a high value book. Then CGC grades it as a 9.6, which would have a much higher value than your initial paperwork and submittal form indicated (and what you would have pre-paid), then CGC will bill you for the difference. Correct?

 

That is what has happened to me (yea, apparently my grading sucks).

 

But, on the other hand. I submitted books that I had way overgraded (according to CGC later), and paid higher fees based on my grading (pre-paid), and did not get back any money. When I asked about it, I was told they would give me consideration on my next batch.

 

They did not.

 

Just an oversight I'm sure, and I could have been more proactive and got a refund I am sure. But why is it with business that if I make a money mistake, I have to take care of it pronto (or I don't get my books back), but if they make a money mistake, they will only take care of it when and if they "remember" or feel like it?

 

Oh yea. I forgot another situation. Ever submit a book that could not be slabbed due to overhang or brittle pages, so it is returned ungraded and unslabbed, and there is no automatic refund of even a portion of my already paid fees? I have.

 

Because they have the money, resources (such as collection agencies) and maybe even the lawyers to prosecute while the individual most likely wont have those resources.

[Reno McCoy]

If you submit a book as, in your opinion and assessment is a 9.0 and it is a high value book. Then CGC grades it as a 9.6, which would have a much higher value than your initial paperwork and submittal form indicated (and what you would have pre-paid), then CGC will bill you for the difference. Correct?

 

That is what has happened to me (yea, apparently my grading sucks).

 

But, on the other hand. I submitted books that I had way overgraded (according to CGC later), and paid higher fees based on my grading (pre-paid), and did not get back any money. When I asked about it, I was told they would give me consideration on my next batch.

 

They did not.

 

Just an oversight I'm sure, and I could have been more proactive and got a refund I am sure. But why is it with business that if I make a money mistake, I have to take care of it pronto (or I don't get my books back), but if they make a money mistake, they will only take care of it when and if they "remember" or feel like it?

 

Oh yea. I forgot another situation. Ever submit a book that could not be slabbed due to overhang or brittle pages, so it is returned ungraded and unslabbed, and there is no automatic refund of even a portion of my already paid fees? I have.

 

Ouch.

 

I've never submitted a book, so maybe this is over simplifying things, but after hearing this, I'd think it would be best to always ungrade your books on the invoice but be prepared to pay more when they do their grading. I can't imagine how frustrated I would be if I over payed and didn't get a refund.

 

I hope this was a one time mishap on their part...

[Hedge Collector]

The conflict of interest lies mainly in the FMV books but exists in all tiers albeit far less so.

 

The conflict of interest is this as an example. CGC is a for profit company. CGC can make more money when it comes to 2.5% of FMV if a book is graded higher because GPA price will be higher. Heritage has an interest in CGC, and Heritage is also a for profit company that makes more money when CGC grades are higher. GPA prices are based partially on HA closing prices. Conflict of interest abounds.

 

I'm not saying conflict of interest = unethical = bad company. CGC is a great company.

 

The rating agencies (ie. Moody's) come to mind. They are paid to rate various assets, and may not be paid if their assets come back below grade. This is a conflict of interest. Eventually after many many years it reached the point where assets were misgraded, and that misgrading took down entire companies. How did it happen? It all started with inherent conflict of interest.

 

Like dangling a carrot. Maybe not this or that rabbit will bite, but one will. Maybe not today, or tomorrow, but eventually. Better watch that carrot closely.

[hockey&comicsguy]

That is what has happened to me (yea, apparently my grading sucks).

 

But, on the other hand. I submitted books that I had way overgraded (according to CGC later), and paid higher fees based on my grading (pre-paid), and did not get back any money. When I asked about it, I was told they would give me consideration on my next batch.

 

They did not.

 

Just an oversight I'm sure, and I could have been more proactive and got a refund I am sure. But why is it with business that if I make a money mistake, I have to take care of it pronto (or I don't get my books back), but if they make a money mistake, they will only take care of it when and if they "remember" or feel like it?

 

Oh yea. I forgot another situation. Ever submit a book that could not be slabbed due to overhang or brittle pages, so it is returned ungraded and unslabbed, and there is no automatic refund of even a portion of my already paid fees? I have.

 

 

Reminds me of the Chris Rock special where he goes off on insurance. How they should just change what it's called to "in case s%&t". "And in case s%&t don't happen.......shouldn't I get my money back?"

 

 

When I do submit, I err on the side of being slightly conservative and pay accordingly. If CGC rings me up saying my book graded higher and I owe. Well, then look at the bright side, your book is nicer than you thought and worth more than you thought so no worries. Plus, this way you don't get stuck in the situation of overpaying for grading fees.

[DiceX]

When I do submit, I err on the side of being slightly conservative and pay accordingly. If CGC rings me up saying my book graded higher and I owe. Well, then look at the bright side, your book is nicer than you thought and worth more than you thought so no worries. Plus, this way you don't get stuck in the situation of overpaying for grading fees.

 

Ding! Ding! Ding!

We have a

 

 

[JiveTurkeyMoFo]

When I do submit, I err on the side of being slightly conservative and pay accordingly. If CGC rings me up saying my book graded higher and I owe. Well, then look at the bright side, your book is nicer than you thought and worth more than you thought so no worries. Plus, this way you don't get stuck in the situation of overpaying for grading fees.

 

Ding! Ding! Ding!

We have a

 

 

I always underestimate when submitting books. Only sensible thing to do.

 

Otherwise, its like failing to claim the maximum Witholding on your W-2, and giving the government an interest free loan for up to a year.

 

Only difference, apparently, is that you will get the money you are owed from the government.

 

[sterlingcomics]

Don't take the FMV as such a strict rule. Unless it's an *extreme* case, they let the book slide through without a mark up in the charge. They're not fleecing you out of every penny possible, and they're not marking up grades to get extra money.

 

Nice thought, but ridiculous to anyone that has experience submitting books to CGC.

 

 

(thumbs u

[500Club]

Basing slabbing fees on the grade of the book is absolutely a conflict of interest and I have never been happy with that policy.

 

However, as Dice and others have said here, there is NO evidence that CGC exploits this by giving higher grades to undeserving books. I think they are smart enough to know that their reputation and well-earned goodwill in the hobby is worth more than the difference between a 9.4 and a 9.6.

 

You beat me to it. (thumbs u

 

Tying the grading fee to the FMV when the FMV is dependent on your grade is absolutely a conflict of interest. Period.

 

Fortunately, CGC has proven their integrity over the years, but the structure of the high value fee is by definition, a conflict of interest.

[JesterSB]

This alleged "conflict of interest" is bogus. The only way that they get more bread based upon the service that they provide is if they look up GPA and charge a fee based on the 9.8 v. 9.6 or 9.6 v. 9.4 or whatever. I have never seen any evidence that they do this. But I have seen a ton of evidence that they do not upcharge in a lot of situations where they otherwise could have.

 

That is good to know.

 

However, I called CGC and asked them how they would go about determining FMV and the lady specifically told me GPA. Is this not the case?

 

Can you give examples of your evidence?

 

In the end, I'm definitely glad CGC is able to be as upstanding "as possible." Good for our hobby no doubt.

 

I don't have evidence, but I can tell you about my experiences using the Value tier. I valued the books that I subbed in my two forty book submissions using Overstreet values. I would also look at GPA on books that I knew were sharp (9.4+) to make sure that I had reasonable values. Many of these books came back 9.6 and 9.8 and there was no upcharge.

 

Now, I understand that your original post was about 2.5% FMV books. I am not tall enough to ride that ride yet. But the question you posed intimated that the grade could be artificially inflated to enjoy the arbitrage between or among various grades. I do not believe that if a big book comes in valued fairly as a 9.2 that comes back 9.4 would be assessed, even if the difference is 50 grand. If it came in valued at 8.0 and came back 9.4, I believe they would reassess.

I submitted a hulk 181 expecting a 9.2 and got back a 9.4...they reassessed, so this definitely does happen. At the time, 9.2s were about $900 and 9.4s were about $1600, putting me over the $1K and bumping me up a bracket.

[divad]

charge the lawyers double . . .

[short_box-migration]

This alleged "conflict of interest" is bogus. The only way that they get more bread based upon the service that they provide is if they look up GPA and charge a fee based on the 9.8 v. 9.6 or 9.6 v. 9.4 or whatever. I have never seen any evidence that they do this. But I have seen a ton of evidence that they do not upcharge in a lot of situations where they otherwise could have.

 

That is good to know.

 

However, I called CGC and asked them how they would go about determining FMV and the lady specifically told me GPA. Is this not the case?

 

Can you give examples of your evidence?

 

In the end, I'm definitely glad CGC is able to be as upstanding "as possible." Good for our hobby no doubt.

 

I was told by Dena that CGC uses GPA for FMV.

 

Regardless if they used GPA vs OVERTSREET it would balance out for CGC themselves. Only people that would get hit hard possibly for grading price is those submitting key books that are popular while using GPA.

 

They couldn't use Overstreet on anything over 9.2.

 

Wait, am I talking to Whisp? I feel dirty. Yuck.

[Boozad]

Careful, the thread is already a couple of posts lighter.

[lookwhoitis]

Careful, the thread is already a couple of posts lighter.

 

more like four...