LA City Attorney Sues Coin Dealer For Alleged Deceptive Practices

LOS ANGELES -- The office of City Attorney Mike Feuer has filed a lawsuit against Lear Capital, Inc., a Southern California-based dealer of gold and silver coins, claiming unfair and deceptive business practices, Feuer announced June 4.

The lawsuit claims these alleged practices have harmed elderly and inexperienced customers in particular, robbing them of life savings in some instances.

According to the City Attorney’s lawsuit, Lear Capital has conducted $3 billion in “trusted transactions,” primarily from selling gold and silver coins. Like other precious metals dealers, Lear Capital earns profits by charging a fee - the difference between the dealer’s wholesale cost and the retail price offered to customers. But unlike those of its competitors acting in good faith, the lawsuit asserts Lear Capital’s business model misleads customers about the amount of its fee—which can be as high as 33%, while reputable dealers often charge a fraction of this amount for the same or substantially similar precious metals.

In addition, the lawsuit alleges Lear Capital typically will only communicate with customers by phone before the purchase is final. In doing so, Lear Capital allegedly eliminates any paper trail of the false, misleading and deceptive representations it makes to customers—such as leading customers into believing they are only being charged a small fee.

The lawsuit contends that too often customers rely on Lear Capital’s misleading oral representations and only discover the fraud after it is too late—since Lear Capital typically does not provide the customer the specific terms of the purchase in writing until the customer has paid for the coins.

While experienced and sophisticated investors may not fall victim to Lear Capital’s alleged tactics, the City Attorney’s suit alleges that some unsuspecting investors – particularly, the elderly – have had their life savings and retirement funds decimated.

The lawsuit contends that when customers contact Lear Capital demanding an explanation about the actual fee they’ve been charged, or for other matters about which they believe they’ve been misled or deceived, Lear Capital often ignores the customer entirely, or promises return calls that never materialize. If customers do reach a Lear Capital representative – which occurs only by phone – Lear Capital allegedly continues its deceit.

And when customers request that the fee or transaction be reversed or canceled because they were deceived and misled, the lawsuit claims Lear Capital informs them that there are “no refunds” and that “all sales are final,” and claims it has a recording of the phone call proving the customer agreed to the transaction.

The suit also claims that Lear threatens customers with legal action if they go public with their complaint, telling them that Lear’s legal department will “eat them alive.”

The lawsuits seek an unspecified amount of injunctive relief, restitution and civil penalties.