The Wayback Machine - https://web.archive.org/all/20050206131850/http://www.bbbsilicon.org:80/topic006.html
Note: When based in any part upon state law, BBB Aware Reports are based upon California law.
Consumers in states other than California should refer to the laws of their state.
PUBLICATION NO. 006                                                                                                                                REVISED 7/94

 

ART FRAUD

The scam is old, but the twist is new: peddling fraudulent art as an investment -- often using the telephone.

Every year, American consumers lose hundreds of millions of dollars in phony investments. The Federal Trade Commission prosecutes many of these scam artists -- people who ask consumers to spend money on schemes involving oil and gas leases, gemstones, travel packages, and other investment opportunities. Now some con artists are selling counterfeit art prints, like lithographs and etchings, of the works of famous artists. Some of the most popular are fake "prints" of artists such as Salvadore Dali, Pablo Picasso, Marc Chagall, and Joan Miro.

Consumers from all segments of life--doctors, farmers, stockbrokers, housewives, and even other artists--are targeted for these phony sales pitches.

If you are taken in by a false art sales pitch, what you get is often much less than promised. After paying anywhere from $500 to $3500, you may get art work valued at no more than $50 -- or, the equivalent of a poster you might buy at a museum.

Many of these bogus pieces are simply copies of lithographs produced without the artists' knowledge or authorization. Other examples are counterfeit art pieces produced in the styles of well-known artists. In each case, a consumer has bought a counterfeit "work of art," which is worth, at best, a fraction of its sales price.

How The Scam Works

The scenario for trapping consumers into paying inflated prices for counterfeit art works varies. A common tactic, however, is to send you a letter describing a contest or drawing giving away a free lithograph by a famous artist. You are asked to return the postcard with your name, address, and phone number. Once your postcard is received, you are called on the phone for more information -- usually your credit card number. At some point, the caller will talk with you about buying art, usually using such glowing terms as "fabulous opportunity," "one-time offer," "limited-edition," and "excellent investment." You may be told that now, since the value of art work will increase after the artists' death. You also may be told that, if this happens, the company will gladly buy back the print or painting at two to three times what you paid for it, or that you can always resell the art work elsewhere at a substantial profit. You are assured of getting a "certificate of authenticity" for the work. And, often you are promised a trial examination period with a 30-day money-back guarantee.

There are many variations to this basic sales pitch. Some salespeople will send you specially-created slick promotional brochures and news clippings touting the credibility of their firm and the authenticity of their art work. Others may fake Dun and Bradstreet reports to impress you with the financial stability of their company. Some may offer you "limited editions," which are really printed for as many people as will buy them. And, some operations have opened art galleries - displaying phony art alongside authentic pieces.

How To Protect Yourself

Although there may be no foolproof way to protect yourself if you decide to invest in art, the following suggestions may be helpful:

GET PROFESSIONAL ADVICE - The technology for reproducing and imitating art is so sophisticated today that even experts may have trouble detecting fraudulent work without careful study. Most people cannot tell the real thing from a fake. Therefore, it is very important to consult a reputable local authority on the subject, such as an art appraiser or museum curator, before purchasing any work of art attributed to a well-known artist. In addition, ask the seller for specific information about the art, such as the edition size, the type of print (such as lithograph, etching, silk screen, or woodcut), the year of publication, and the printer/publisher--all of which will help an expert evaluate the work. California law requires the dealer to give you such information.

BE EXTREMELY CAREFUL ABOUT BUYING ART WORK OVER THE TELEPHONE - It is very difficult for consumers to gauge the value and authenticity of a work of art or the credentials of an art firm by telephone. Even a trial examination period or a money-back guarantee may not protect you. Many consumers have found that once they agree to examine a piece of art and give out their credit card number, it is nearly impossible to get their money back. In addition, you may want to check with the Better Business Bureau and State Attorney General to determine whether complaints have been lodged against the company contacting you. Be aware, however, that many fraudulent telemarketing companies frequently change their names, so there may be no complaints registered against them.

BE SKEPTICAL OF AUTHENTICITY CLAIMS - Fraudulent companies typically distribute "certificates of authenticity" and other documentation that are meaningless. Authenticating documents or certificates are only as reliable as the firm that backs them. And some companies may refer you to "art appraisers" who are being paid by the firm peddling the fraudulent art.

BE SUSPICIOUS OF PROMISES OF GREAT INVESTMENT RETURNS AND HIGH-PRESSURE SALES TACTICS - Fraudulent offers typically revolve around the idea that, unless you act now, you will be passing up a terrific investment opportunity. But remember - no offer is so good that it cannot wait for a cool professional examination. Ask yourself: if this offer is so good, why is a total stranger making the effort to sell me this investment?

DO NOT GIVE OUT YOUR CREDIT CARD NUMBER OVER THE PHONE OR BY MAIL - Without your credit card number, fraudulent salespeople have minimal access to your money. They may say they need your card number for "verification purposes" and not for payment. Be careful. You risk big losses when you give your credit or charge card numbers or other personal information (such as bank account numbers) to unfamiliar salespeople who make unsolicited calls.

What to Do if You Have Problems

If you buy a work of art and discover fraud, first try to resolve your dispute with the company that sold you the art piece. If you are not satisfied, contact the Better Business Bureau, State consumer protection agency, or State Attorney General to report the company.

In addition, you may want to write or call the Federal Trade Commission, Washington, D.C. 20580, (202) 326-3277. Although the FTC does not generally intervene in individual disputes, the information you provide may indicate a pattern of possible law violations by one company requiring action by the Commission.

HOME PAGE |  MEMBERSHIP SERVICES |  FIND A MEMBER |  TOPICS OF INTEREST
FILE A COMPLAINT |  WHAT'S NEW |  COMPANY REPORTS |  ARBITRATION SERVICES
BBB ON-LINE NEWSLETTER |  OTHER INFORMATION SOURCES |  E-MAIL THE BBB