State Of The Hobby – Can We Trust The Card Graders?
I’m sure by now you’ve heard of the scandal that has rocked the sports card hobby. If not, the quick and dirty is that a notorious card doctor and trimmer was buying lower graded cards, trimming them, and then resubmitting to PSA.
All of this was done with the help of PWCC, the big eBay auction house, although to date, the company has denied any wrongdoing.
Let’s face it; PSA, SGC and Beckett are just third party authenticators. There is no guarantee, whether intentional or not, that the graders will get it right. It’s now on us, to be a ‘fourth party grader’ of sorts to ensure that we are not getting scammed.
Yet the graders provide a level of ‘certainty’ in what used to be a very uncertain marketplace. But with the recent events, should we still trust the third party graders? Is there any sort of indication that PSA or any other graders have knowingly graded altered cards?
In this piece I review the history of the grading companies, what has transpired in recent years, and whether we as collectors should continue to rely on the graders in providing this consistency to our beloved hobby.
I’ve also surveyed All Vintage Cards followers for their own feedback and will present the results at the conclusion of this article.
A Look Back at PSA’s Checkered History
Card grading (or ‘slabbing’ as some call it) is a big business. PSA, the hobby’s largest card grader and a part of publicly-traded company Collector’s Universe (CLCT) saw a 33% increase in card grading revenues last quarter. There is absolutely no lack of demand for card grading services.
PSA got its start back in July of 1991 when David Hall, owner of the biggest coin grading company PCCG, decided to launch a separate card grading service. PSA wasn’t the first, however, as ASA was founded by Alan Hager prior to the formation of PSA.
Hager actually patented the card grading holder and the grading system (1-10) and licensed it to PSA and other card grading companies. Notably, from what I’ve learned, Hager was doctoring many of his own cards and encapsulating them in ASA holders. Thus if you find an ASA graded card, tread carefully.
PSA’s first graded card was the controversial T206 Honus Wagner owned at the time by Wayne Gretzky. Gretzky and partner Bruce McNall (former owner of the LA Kings) sent it into PSA to be authenticated. The Wagner card helped fuel the growth of PSA, as so intricately described over at HaulsOfShame.com.
The Wagner card however was later found to be trimmed and still resides in the PSA 8 graded slab that it was first encapsulated in. Peter Nash at Hauls of Shame notes that Bill Hughes, the PSA grader responsible for grading the Wagner card knowingly knew that it was trimmed at the time. In Nash’s own words:
PSA grader Bill Hughes (who had graded the card with Hall in 1991) told O’Keeffe he knew the card had been trimmed and altered when he graded and authenticated it in 1991. In a 2005 interview Hughes told O’Keeffe, “I was aware it was part of a strip. We (PSA) were aware of that when the card came to PSA and I graded the card. This card was obviously cut, but if it had been a disgusting card that was cut, of course we would have graded it trimmed.”
The trimming of the Wagner card was somewhat common knowledge at the time and left some wondering about the legitimacy of PSA, despite PSA seeing a big ramp in demand for its services. Grantland put together a great documentary on the trimming scandal which can be found here. This CNBC video from its series American Greed also details the acts of Bill Mastro, who was responsible for trimming the Wagner and pleaded guilty to initially trimming the Wagner card, but not until 2013.
Amazingly, PSA founder David Hall (as shown in the Grantland doc) still to this day denies that the Wagner is trimmed. I’m assuming this is to cover his you know what, since many experts, including the ever knowledgeable Keith Olbermann (no fan of the card graders), have boldly voiced their beliefs that it is a trimmed card.
“"The expertise is the fraud. If you turn down a lot of baseball cards of prominence and fame as inauthentic you are not going to be approached very often to grade baseball cards. It has been in every one's vested interest that none of this skulduggery be true because
the rising tide does lift all boats."”
Trimming Scandal of 2019 – Enter The Card Doctors
PSA had gone more than 25+ years without any significant issues until 2019 when the mother of all card grading scandals hit the hobby.
It all started when some seriously astute collectors at Blowout Forums started to pick up on several cards that appeared to be trimmed.
What they noticed is at these suspect cards had at one time been encapsulated by one of the graders and later trimmed and re-submitted, receiving a higher grade.
And the majority of these trimmed cards were graded by PSA and BGS, ultimately sold by prominent eBay seller PWCC.
PWCC apparently had a good relationship with one of the bigger card timmers–Gary Moser, who is now, along with PSA and PWCC is under investigation by the FBI. From the Washington Post:
"Investigators are asking questions about one such alleged doctor, Gary Moser, who is implicated by the online research, according to the four collectors who have talked to the FBI. Investigators are also asking about other smaller-scale doctors, along with PSA’s grading practices and an Oregon-based auction house, PWCC, according to those four collectors."
Brent Hugiens, the owner of PWCC released a statement online saying that they were aware of the trimmed cards from Moser saying that they were "working with both PSA and law enforcement" to unearth all of the trimmed cards in question. He also accepted responsibility for the trimmed and that they weren't selling any more Moser related cards.
Yet, PWCC hasn't halted any operations; it still remains one of the biggest card sellers on eBay. How did PWCC not know that it was selling altered cards? Or did it? Note that Moser had a bad reputation in the hobby, so PWCC should had some sort of suspicion that the pristine cards Moser was consigning had to have been trimmed.
Steve Sloan, President of PSA issued a statement claiming that they were 'aware of the recent hobby message board activity and conducting its own investigation into the matter' while blaming the events on 'a few dishonest actors'.
Now, who do we believe? Was PSA in cahoots with PWCC or was this just a simple error on the part of some PSA graders? If they just plain missed the trims, shouldn't we question the competence of PSA (and other graders)?
Joe Orlando CEO of Collector's Universe (which owns PSA) spoke at an investor conference last year and noted that in many cases, cards are graded in around 30 seconds. That to me was a little bit of a shock.
In addition, Orlando spoke about how there are different experts for different types of sets, which makes me wonder how it could be that PSA got duped so many different times with the submissions from Moser and other scammers. Note as shown on many of the Blowout forum posts, there were all different years and types of cards being trimmed--some vintage and some new.
And one point to make there is that we also have different experts. So, for example, we're not going to put our most expensive senior expert on a Pokémon card versus a 1933 Goudey Babe Ruth or a high-end coin versus a coin from the mint. So, we have different experts at different levels. They're compensated at different levels which can help keep our costs in line, so we could stay profitable. As a matter of fact, because of the speed element, there are certain segments of our business on, what we refer to as, modern bulk that are actually as profitable or more profitable than the vintage services because of that efficiency.
-Joe Orlando, CEO Collector's Universe speaking at Needham Growth Conference - Jan 15, 2019
What Safeguards Exist To Prevent This From Happening Again?
In all reality, none. We still don’t know what’s happening with the FBI Investigation. Maybe PWCC or even PSA get a slap on the wrist, or maybe they are forced to compensate the holders of all trimmed cards found in the scandal. Note that PSA provides a guarantee on any of it’s graded cards.
Q: Do you guarantee the grades for my cards?
A: PSA guarantees that all cards submitted to it shall be graded in accordance with PSA grading standards and under the procedures of PSA. If PSA, in fact, concludes that the card in question no longer merits the PSA grade assigned or fails PSA’s authenticity standards, PSA will either: 1) Buy the card from the submitter at the current market value if the card can no longer receive a numerical grade under PSA’s standards, or 2) Refund the difference in value between the original PSA grade and the current PSA grade if the grade is lowered. In this case, the card will also be returned to the customer along with the refund for the difference in value.
If PSA did not knowingly grade the altered cards, then there are some problems with it’s process. When you are part of a publicly traded company there are certain pressures and demands that other private companies don’t have to deal with. It could be the case that in it’s quest for higher profits, PSA has forced it’s graders to take on too much. While it might seem cool, the life of a card grader doesn’t all that glamorous.
Thus, PSA and other grading companies need to step up their technology investments to ensure that a situation like the Moser scandal doesn’t happen again. It all seems so archaic to me. Unfortunately, I haven’t heard any details from PSA or other graders about investing in new technologies such as artificial intelligence and/or facial recognition. How is it that I can save a Photo on Google Photos and it knows every single person in the photo, yet PSA, SGC or BGS aren’t capable of identifying cards that have obviously been trimmed?
I’m no AI expert, but it seems simple to me. Every time your grader gets a new card, there should be one first scan/check to verify if that card had been through the system before. And this would be a coordinated system between all of the grading companies, so that the shared database would inform a grader if the card in front of them was at some point graded by any of the grading companies. I haven’t heard a peep from any of the grading companies, but if they would like to contact me, I’d be happy to discuss and report back the findings if they are indeed working on advancements in the space.
Details of the Third Party Grader Feedback Survey
As noted at the start of this piece, we conducted a survey of All Vintage Cards subscribers to get their feedback on the state of the grading companies.
The results proved a few things. One, that 100% of collectors that I surveyed felt that grading companies were a needed part of the hobby. 100%.
However, collectors have lost trust in the card graders. 100% of respondents said they have some concerns with PSA.
However SCG scored higher from a trust perspective with 57% of respondents saying that SGC was 'Totally Trustworthy'.
And SGC also edged out PSA as the most 'Trustworthy Grader'. I think it's quite likely that collectors have been swayed by the latest Moser/PWCC/PSA news.
Yet while SGC is viewed at the most trustworthy, PSA is viewed as the most accurate as shown below.
Collectors most definitely have their concerns about the grading companies, yet believe that grading is a needed part and valued resource for the hobby. If there's a message for any of the grading companies it's this; tighten up your processes, invest in new technologies and put in safeguards to ensure that something like the Moser scandal never happens again.
I've personally used PSA for years, but like the collectors interviewed for this survey, I have my concerns. I also believe that the graders are a needed part of our hobby and help provide order and uniformity to grading and card pricing. I ultimately hope that PSA comes out from the Moser investigation accused of no wrongdoing, yet even so, they really need to step up their game.