Sunday, 21st December 2014

Counterfeit Silver Dollar Alert

Posted on 20. Apr, 2013 by in Spring 2013

Counterfeit Silver Dollar Alert

A duo of con men is selling common-date counterfeit silver dollars of excellent quality to pawnbrokers and others. So far as is known, the con operation has been limited to Massachusetts, but no one knows if and when the thieves, a Hispanic male and an African-American male, both probably in their early 20s, may move on.

According to the United States Residency Card he uses for identification, the Hispanic man is Juan Carlos Mendez. He has used the same name and ID in all cases; the card number is 095-637-431 (the last digit might possibly be a 7 rather than a 1). A residency card doesn’t include an address, but when asked for it he frequently uses the house number 224, varying the street and town names.

In March Edward Kalp, owner of Eldorado Pawn Shop in Haverhill, Mass., who has extensive experience with coins, purchased 102 silver dollars from the two men. The coins turned out to be counterfeits. Kalp says they are of excellent quality, and pawnbrokers should weigh each one and look for coins that are heavier than they should be. However, even if all the weights are correct, that’s no guarantee the coins are the real thing. Pawnbrokers should carefully compare each coin to the others of the same date. If they are phonies, you will see that all the wear is identical: The nicks and marks are the same. “Say, there’s the same scratch over the ear,” Kalp explains.

Except for four 1928 Peace Dollars all the coins were common dates. “I never thought someone would bother to counterfeit coins that sell for $10 to $15,” Kalp says. When he weighed several, the weights were correct. Kalp says he doesn’t perform destructive tests.

The coins had eight different dates, and all were from the Philadelphia Mint. There were five Morgan silver dollars among them.

The Hispanic man did most of the talking, Kalp says. “They had a good story. He said they did clean-ups. They found the silver dollars and first took them to a bank. The bank teller offered them $1 each. They figured they were worth more than that, so they brought them to me.” Kalp paid $1,200 for the coins.

The man also said that they had some stamps and some baseball cards they had accumulated during their work, and they would bring them in the next day.

After the men left, Kalp decided to take a closer look at the Peace Dollars, the only ones that might have any significant value. He wasn’t happy with what he saw. “They looked too much the same,” he says. Kalp weighed one and found it was heavier than it should have been. Slightly lighter might have been possible, but he knew that they couldn’t be heavier and be real.

Kalp called a friend who owns a coin shop and asked him to come by. He agreed that they looked too similar to each other. Kalp’s friend took the coins to a mutual friend who performed non-destructive tests. All the coins were phonies.

Kalp considered overnight whether to call the local authorities or the Treasury Department. He decided on the latter, but before he could make the call, he was contacted by a local detective. (Kalp sends the Haverhill police department daily emails of all his purchases, as well as later making more formal filings.) The detective said he’d been notified by someone in a different jurisdiction of sales of counterfeit silver dollars by a man named Juan Carlos Mendez.

Kalp and his partner were notified that a Treasury agent would be coming to their shop to investigate on April 16. With the horrific bombing at the Boston Marathon taking place the day before that, Kalp isn’t surprised that he has yet to be contacted by any agency.

Meanwhile, Kalp has checked the Internet and discovered that in October 2012 a shop in Webster, Mass., had purchased some of the counterfeits. The same ID was used as in Kalp’s store. In the article the investigating detective said he would put the word out to other pawn shops. However, Kalp has spoken to several other shops and no one was contacted.

Under the present circumstances in Massachusetts, Kalp is concerned about more than fellow pawnbrokers and other merchants being ripped off. “What is this money funding?” he wonders. “If the authorities had notified me I could have had the thief arrested on the spot. This information needs to get out so that these individuals can be brought to justice.”

Timing Is Crucial on EMV ‘Chip’ Cards

Posted on 08. Apr, 2013 by in Spring 2013

Timing Is Crucial on EMV ‘Chip’ Cards


Think about the first magician to try to convince audiences he could saw his assistant in half. He may have known he had to do the trick to keep his fans from turning to other performers who might offer more excitement. He may have considered every possibility, perfected every move, and felt confident of a safe outcome that would please and thrill his audience. But he still may have been afraid to look in the box when he was through.

Pawnbrokers — along with financial institutions and other players in the credit and debit card game – find themselves in a similar position as they decide when to start accepting the EMV-compliant credit and debit cards that are the standard in Europe and other parts of the world. Rather than simply relying on an information-storing magnetic stripe, these cards include a microprocessor chip protected by various security measures. The cards are further protected by use of either a PIN or a signature.

The move to EMV cards must be made, both to retain customers and to benefit from the carrots that are being dangled by the card giants. But if the timing isn’t right, it may create a costly mess.

EMV, in a nutshell, is an open, industry-wide specification developed by Europay, MasterCard and Visa, owners of EMVCo — the first letters of each company make up the name — which supports smart card, terminal and processing interoperability. An EMV-compliant card has a microprocessor, or “chip,” embedded. Since the microchip is encrypted, it’s tough to counterfeit.

The rest of the world — especially European countries — have moved more rapidly to EMV for a number of reasons, prominently their use of offline processing. Today there are more than 1.5 billion EMV-compliant chip cards and 18.7 million point-of-sale devices in use worldwide.

In the United States, online processing of transactions meant there has been little interest in chip cards. That changed as fraudsters from all over the world, stymied in other countries, began to concentrate on the U.S.

Aite Group says card fraud cost the U.S. card payments industry approximately $8.6 billion in 2010. As financial institutions have seen many sources of income dry up, the cost of fraud became more difficult to absorb, and they looked for new solutions.

At the same time, demand for chip cards began to develop among international travelers. That may seem like a minor concern, but as long ago as 2008, the payment card industry lost out on nearly $4 billion in charge volume and $78.8 million in interchange fees from travelers who couldn’t use their U.S.-issued cards abroad, according to the Aite Group.

Not An Option

Whether fraud and member demand are major or minor concerns, embracing chip cards is no longer truly an option. That decision effectively was made for pawnbrokers and other merchants when Visa announced EMV timelines on Oct. 1, 2012.

Although the card giants use the term “roadmap,” as some merchants and financial institutions move toward EMV, it seems inevitable all others will, eventually, follow. The question is whether to act sooner or later. And if later, how much later?

The card giants are gently pushing the U.S. industry toward EMV. As of Oct. 1, 2012, Visa declared merchants exempt from payment card industry reporting if they process 75 percent of their Visa transactions on EMV-enabled terminals. It also issued other deadlines:
• By April 13, 2012, merchant acquirer processors (banks that provide card services to retailers) must certify for and accept Visa EMV chip contact and contactless transactions.
• By Oct. 1, 2015, liability for counterfeit POS fraud will shift to the party that didn’t enable a possible EMV transaction (automated fuel dispensers get an additional two years added to the deadline).

MasterCard, American Express and Discover quickly jumped on board with Visa.

There’s other moves that don’t directly affect merchants, but play an overall role. For instance, MasterCard, unlike Visa, also addressed ATMs: It set April 19, 2013, as the deadline for a liability shift for inter-regional ATM Maestro transactions at U.S.

ATMs. ATM acquirers — in ATM networks, the financial institution that dispenses the cash, collecting a transaction fee from the card-issuing bank — will assume counterfeit fraud-related liability if a non-U.S.-issued EMV card is used at a non-EMV-enabled ATM. This won’t apply to U.S.-issued cards accepted at U.S. ATMs.

October 2016 will see the liability shift applied to all MasterCard-branded products across all transactions initiated at U.S. ATMs.

Why Wait?

With all this persuasion going on, why not jump right in? It’s not that simple.

Do You Warranty Your Work?

Posted on 08. Apr, 2013 by in Spring 2013

Do You Warranty Your Work?


Warranty is a cost of business, and customers expect you to stand behind your work.

A jeweler will go out and buy a cell phone or other electronics and expect it to work flawlessly for one full year. If it has any problem you take it back to the retailer and let them know:
• It doesn’t work
• The lid doesn’t snap tight
• It didn’t have this scratch on it when I bought it
The store doesn’t quiz you to the nth degree:
• “Did you wear it in the shower?”
• “Did you bang it in a door?”
• “We only worked on the keyboard, we had nothing to do with the scratch on the bottom”

Nope, they just exchange or repair and keep the customer happy.

But nooooooo, size a ring for a customer and a month or so later a small diamond falls out and the typical jeweler’s hair is straight up on his back:
• “We only sized the ring and the diamonds were tight when it left the store.”
• “You must have pulled the prong back”
• “We only do fine work here. Be my guest; take it to the guy down the street!”

Bye-Bye Customer

Boy, that sure is a good way to win friends and influence people! Think they’ll be back?

Why do jewelers treat customers this way? Because they take their work personally. They think it says they did a bad job.

The answer to this is this:
“It is what it is and you must do almost everything to make a customer happy.” It costs about $25-$50 to advertise and obtain a new customer. Repeat customers are almost free.

Keep ‘em!

What if I personally paid you to make customers happy who came back with lost stones from work done in your store, and you’d make a profit on doing those repairs without any additional charge to the customer?

Do what everyone else does who warranties their work. Charge for it!

In April of 2000 I bought a new Lincoln LS car. Loved it. But every now and then it would just stop running. Luckily it didn’t happen on the highway, just city streets.

Three visits to the dealership and they just couldn’t fix it. Sent a letter to Detroit. They flew down a specialist; he looked at it and said, “Give the man a new engine! No charge.”

They did. It works and I didn’t pay a cent.

Maybe Not

Or did I? It was included in the selling price. I have also paid up front when buying a laptop for the extended warranty. Two years later a $300 hard drive was at no charge and a friend who also paid $300 for his warranty got an $1800 cracked monitor on his laptop replaced. No charge.

We bought the warranty.

You should too. Here’s the place to start. Charge to check and tighten stones in jewelry you repair, especially ring sizing.

We don’t charge for checking/tightening and warranting stones loss if the ring has four or fewer stones.

But if the ring has five to 20 stones, we charge an additional $25 on top of the $39 to size the ring smaller.

The $25 charge is to
• Check each stone to see if they are loose when we finish the work.
• If they are loose, we charge to tighten them. If they aren’t loose, we still charge.
• In addition, guarantee that if they get loose in a year we’ll tighten them at no charge and if they fall out, replace them at no charge. There are some exceptions but for the most part this is covering all small stones (under 1/2 ct).

Let’s say you take in an anniversary band with seven 5-point round diamonds. You size the ring smaller and charge $39. Charge an additional $25 to check and tighten.

The speech to the customer goes like this:
“Mrs. Jones, for $39 our jeweler is going to size you ring to a 6½. He’ll make sure its round and you won’t see where it’s been sized. Our $25 ‘check and tighten’ gets the jewelers to make sure every stone is tight; if they get loose in a year we’ll tighten them at no charge, and if any of them fall out we’ll replace them at no charge. You don’t have to speak to the president; anyone here can have that done for you. Then our jeweler will refinish your ring like when it was new. We’ll have it ready next Thursday.”

That’s now a $64 charge.

Here are the numbers:
• If you take in 10 repairs, a day that’s 2,600 a year.
• Most stores tell me 50 percent to 75 percent of jewelry taken in has at least five stones in it. Out of 2,600 jobs, 1,300 to 1,950 jobs can have the sales speak given that I typed above.
• After telling the customer, easily 70 percent of them will say “Sure, go ahead, I want that service”.
• That means between 791 and 1,365 jobs will have the added $25 to it. That adds up to an additional $19,777 to $28,412 taken in without any effort. We collect the warranty money not because the stones are loose! We charge the customer even if the stones are tight because of our liability.

Cost of a Customer

So what’s it cost to replace two 5-point diamonds? Sixty dollars?

Don’t tick off a customer for $60. Make them happy and keep $19,777 to $28,412!

In addition to the repair charge, we charge to check, tighten and warranty stone loss based upon total stones:
0-4 stones No Charge
5-20 stones $25
21-35 stones $35
36-50 stones $50

What if the customer doesn’t want to pay the additional amount? On the envelope write “No guarantee on stone loss, customer didn’t want the service.” Charge without it, don’t tighten and don’t warranty. Seventy percent-plus of the customer will pay.

Two months later, two 5 point-diamonds fall out.

David Geller is the author of Geller’s Blue Book to Jewelry Repair & Design (a pricing book for making money in repairs and custom design for jewelers and pawnbrokers) and a consultant to jewelers on store management.

You may reach him at, 888.255.9848 or 404.255.9565, or through his website
Our repair pricing book is made for the counter at take-in. It’s put together to make it easy for the staff to use but we also have some free video training on our Web site you should use. There is training for each chapter of our book and I also train your staff how to sell repairs. Just go to our Web site: The password is geller.

Tips For Pawnbrokers

Posted on 08. Apr, 2013 by in Spring 2013

Tips For Pawnbrokers


It’s January, 2013 and the beginning of a new year (I think ‘13’ is going to be my lucky number). But Christmas is over and the shelves are still too full for my liking. And, once again, I vow to do something about it. (No, not have a birthday party for my inventory.)

Unfortunately, everything in my showroom is not precious metal and can’t be scrapped to make room for recently bought and forfeited merchandise.

Like the man in the red suit, I’m making a list and checking it twice.

I understand the concept of “turn” as in turnover and turning your inventory. Your turn ratio, or inventory turnover, is based on cost of goods sold divided by average inventory levels.

Average inventory can quickly be calculated by adding your inventory at the beginning of the period to your inventory at the end of the period, then dividing by 2.

It’s always calculated with one year’s numbers. You go back 365 days. It can be January through December or March 1 through February 29. It doesn’t matter, as long as you are using a 12 month period.

For example, an inventory turn ratio of 4 indicates that your company sells through its stock of inventory each quarter. Wal-Mart, which turns its inventory quickly, has a ratio of 8, while a higher margin retailer like Tiffany has a ratio closer to 1.

There are sometimes exceptions to selling every item within a certain time frame. Antiques and collectables would be one. Their turn is usually a little slower, while their profit margin may be a little higher. But we’re generally talking overall sales figures when calculating turn rather than individual items. Of course, you may do the same thing for each inventory category.

Definition of Inventory Turnover — A ratio showing how many times a company’s inventory is sold and replaced over a period.

But I’m not really interested in getting too technical here. I’m just concerned with moving some dead merchandise in my lucky 13 year and having a positive cash flow.

So I bought some new, blank price tags, something different from the ones I regularly use (a different color, and they say “Special” — I hate using the word “Sale”). This way, my employees will have little difficulty figuring out which items I have decided we should set free this year (hopefully, this quarter).

Next, I’m slashing prices on aged inventory. Depending upon the item, prices will be reduced by 1/3 to 1/2 or even more (if I really want to see it gone).

Now, I’m not saying my prices were too high to begin with; it is just for some reason, no one has opted to buy these items. Maybe it’s the economy. Maybe it’s my local market.

Maybe the tremendous price reduction is what they need to move them out the door. Maybe not. But I’m trying to move some dead inventory this year.

Tip No. 195

According to some estimates, 20 percent of all American small businesses are still using Windows XP, which was released in 2001. But the rest of us have upgraded to a newer version, the most recent of which is Windows 8.

My first encounter with Windows was back in 1989 with Version 2.something. Before that, I started my computer experiences with Microsoft DOS, Version 2.1 on 5¼ inch floppy disks in 1984 or 1985 with an IBM PCjr. I’ve dealt with a lot of versions of DOS and Windows since then. I’ve even learned to speak a little Mac.

From my understanding (and recent experiences at the pawn counter), Windows 8 has many new and improved features. However, to me, it appears more “touchy feely” and consumer oriented, rather than a solid business operating environment. But who am I to argue with Microsoft?

Many of the new features of Windows 8 are designed for touchscreen hardware. Also, the password feature has new enhancements that may make it almost impossible to “write down” a password to unlock touchscreen computers and tablets.

Windows 8 includes a feature called picture password that allow you to login to your account by using gestures on an image with your finger or your mouse. This is especially useful for tablets where you want to avoid typing if you can. Instead of typing in a password, you select a picture and then create three gestures to act as your password. They can consist of taps, circles or lines.

Once the picture password is created, you can login to your Windows accounts by performing these gestures in the same direction as when you created them. That means if you circled an object counterclockwise, you would need to circle it counterclockwise to login. Circling it clockwise would not count as a successful gesture.

This method allows for tremendous variation in possible passwords on a given picture and allows you to avoid having to use the virtual keyboard.

As a result, we are changing our policy for making computer loans. The pawner must remove all passwords before we will take a computer in pawn. I’ve got a great password removal program, but I don’t know yet if it’s Windows 8 compatible. I’ve also got better things to do than remove passwords from forfeited computers.

Picture password to this point can only be solved by removal, but you may still have a textual password to deal with.

Bonus Tip No. 1

Manufacturers of tablet computers, with other, non-Windows operating systems also allow for a graphical password. You can’t write these down.

Have your customer, after unlocking their tablet (they can do this, can’t they?) remove the password.

Shut down the tablet and then restart it to be sure it will boot without a password.

Bonus Tip No. 2

One more thing: When you turn on the computer presented to you, check on the bottom right-hand corner of the screen. If the computer displays a message “This copy of Windows is not genuine” you should probably not accept that computer for a loan or purchase.

Immediately after you log on, you see the following Windows Activation window:
Windows is not genuine
Your computer might be running a counterfeit copy of Windows.

You may also notice the following symptoms:

The computer desktop background is black, and you receive the following error message on the bottom right corner of the screen:
“This copy of Windows is not genuine”

Yes, you might be able to restore the computer back to its original factory settings, but quite often, when the actual Windows software has been changed, the hidden restore partition has also been erased.

Now there are ways to get around this, like re-install the correct version of Windows and enter the license number affixed to the label on the computer. (Windows software is licensed to the motherboard of the computer, not the computer itself or the hard drive.)

You may change anything you like except the motherboard and still have a legal copy of Windows. Unfortunately, I find on many used computers, the license number on the label is worn or otherwise illegible. It is nice that on some newer notebook models, they are placing the license label in the battery compartment where it is protected from wear and tear.

The point of this Tip is that it certainly doesn’t look good for you to be selling a computer that says it’s running software that may not be quite legal. And often the Windows software will not run after 30 days without activation (that is where a legal license number comes back into play). While there are workarounds for computer specialists, it is not always worth the time and effort involved.

Not to mention you may have to manually install many Windows drivers and all of the pretty stuff (software) that originally came with the computer, including a restore partition, which is probably gone.

Tip No. 196

Being the owner, manager or responsible party for a pawnshop incurs many additional duties, even after the pawnshop is closed. You know, those little things, like buying toilet paper, light bulbs, coffee and responding to burglar alarm calls.

Another one of those additional responsibilities is the need to have access to reliable transportation in order to respond to an alarm call in a timely manner. This also means you are responsible for ensuring you have an adequate amount of gas in your car to enable you to respond to that alarm call at 3 a.m. for a store that is 10 or 20 miles away from your home and get back home.

Parking your car in the garage with the gas gauge on ‘E’, thinking you’ll stop in the morning on the way into work to fill it up, is not being very responsible.

It might not be easy to find a gas station open at three in the morning, not to mention the additional time needed to respond to that alarm call.

My new rule, if your gas gauge reads less than a quarter tank, fill it up. Just one new responsibility to add to your growing list.

My gas tank warning light was blinking on my dash on the way home the other night. I figured I could wait until morning. I pass a half dozen gas stations on the way in to work.

But I didn’t. I took the time and stopped to fill it up. You can probably figure out what happened at 3 a.m.

Bonus Tip No. 3

I’ve said this before and I’m going to repeat it — never respond to an alarm alone. Always take someone with you or arrange to meet them a block or two away.

Tip No. 197

I get lots of emails from others which have been forwarded around the world a few millions of times. Some I have seen before, others are new. Some are cute, some risqué, and others a waste of cyberspace.

But every now and then, I find one that actually contains some important information. This is one that I received recently and I thought I would include it in my Tips column — in case we’re not all on the same email list.

Put your car keys beside your bed at night.

Tell your spouse, your children, your neighbors, your parents, your doctor’s office, the check-out girl at the market, everyone you run across. Put your car keys beside your bed at night.

If you hear a noise outside your home or someone trying to get in your house, just press the panic button for your car. The alarm will be set off and the horn will continue to sound until either you turn it off or the car battery dies.

This tip came from a neighborhood watch coordinator. Next time you come home for the night and you start to put your keys away, think of this: It’s a security alarm system that you probably already have and requires no installation.

Test it. It will go off from most everywhere inside your house and will keep honking until your battery runs down or until you reset it with the button on the key fob chain. It works if you park in your driveway or garage.

If your car alarm goes off when someone is trying to break into your house, odds are the burglar/rapist won’t stick around. After a few seconds, all the neighbors will be looking out their windows to see who is out there and sure enough the criminal won’t want that.

And remember to carry your keys while walking to your car in a parking lot. The alarm can work the same way there. This is something that should really be shared with everyone. Maybe it could save a life or a sexual abuse crime.

I am sending this to everyone I know because I think it is fantastic. Would also be useful for any emergency, such as a heart attack, where you can’t reach a phone. My Mom has suggested to my Dad that he carry his car keys with him in case he falls outside and she doesn’t hear him. He can activate the car alarm and then she’ll know there’s a problem.

Tip No. 198

In today’s security-conscious business environment, I just can’t see how someone would be so naive as to think they could leave jewelry in their showcases.

But all too frequently I have seen jewelry cases covered with sheets. Even if you have removed the valuables, this gives the public the impression there is still jewelry left in the showcases at night, rather than removed and locked in a safe or vault. You are just asking for someone to break-in.

Unless you have sheets made from the same fabric as Superman’s cape, I would think it might be better to remove your jewelry from your showcases at night.

I first noticed the sheets over the showcases in a small jewelry store a few months back, on my way home from a restaurant down the street from its location. I couldn’t believe what I thought I saw. I stopped, turned around and went back for a better look.

But then again, I often read in trade publications, electronic media and newspapers, accounts of pawnshops, jewelry stores and firearms stores where a large quantity of merchandise was taken from the showcases during a break-in.

This is not new. Break-ins of businesses have been going on for thousands of years. You would think by now most business owners would have received the memo — REMOVE YOUR VALUABLES FROM YOUR SHOW-CASES AT NIGHT!

Yes, it takes time to remove your merchandise and displays. And it takes even more time to put them back. It also causes more wear and tear to your displays requiring you to replace them more often. This is just another cost of doing business: man-hours, fixtures and displays.

But as I have seen many times before, until you experience first-hand the loss and damages from an “after-hours shopper,” you may have blinders on.

Now of course we can’t remove all of our merchandise from all of our showcases every night. But we need to pick and choose and prioritize. The iPods and iPads can stay. But jewelry of any considerable value needs to be secured.

Typically, jewelry is displayed in trays or on other displays. You need to decide whether to remove it as individual pieces, trays or displays, or possibly removing the entire floorboard from your showcase with the jewelry intact.

Next, your overnight storage facility (a safe) needs to be set up to handle your storage needs. It should be outfitted with shelves spaced out accordingly to accommodate your displays, floorboards or storage containers.

Large rolling jewelry transport carts are available with many shelves for holding jewelry that can be stored in a walk-in vault. Even a back room with a locked door will slow down an intruder and keep the jewelry out of sight.

You may even opt to fabricate your own rolling cart from wire shelving available from most industrial supply houses and home centers. A wide variety of shelf sizes are available. You can even chose the height of the shelving unit and add wheels for mobility.

Don’t have a dedicated safe or storage area for night-time jewelry storage? Hide it. Put your jewelry in a box or boxes on a shelf (or shelves) in your backroom. Spread it out so it is in multiple locations.

This will still give you the appearance of removing your jewelry and securing it for the night and make it harder for someone to find.

Bonus Tip No. 4

Some business owners practice the cleaning of showcase glass at night, before going home. This way, if the unthinkable did happen, there would be fresh fingerprints on the showcases. Of course if the bad guys wore gloves, this effort would be futile. But on the positive side, it saves time cleaning the showcase glass in the morning.

Many of the tips I offer will be of more benefit to newer pawnbrokers, but some more experienced pawnbrokers may find something ‘new’ and interesting, also.

If you are new to this column, I share three or four tips per issue that you can use in your pawnshops to help sales, security, merchandising, or make life a little easier. Since we all run our pawnshops differently, I try to cover a broad range of subject areas to appeal to a wide scope of interests.

Many of these tips come from personal experience (that translates into trial and error). Others come from fellow pawnbrokers kind enough to share something that has worked well for them.

You may even want to contribute a tip or two for future columns.


Ric Blum is a vice-president of Dayton’s Ohio Loan Co. He has served as president of the Ohio Pawnbrokers Association, secretary/treasurer of the National Pawnbrokers Association and as a member of the board of directors and the board of governors of the National Pawnbrokers Association. Please feel free to e-mail your comments or tips that you would like to see included in this column to or mail them to Ric Blum, Ohio Loan Co., 3028 Salem Ave., Dayton, OH 45406.