Cruise ship Art Auctions - Scams, Fraud or bargains?

by Donald K. Burleson

Anyone who has ever been on a cruise knows that the cruise lines make most of their money from your on-ship purchases, and they sell everything from designer clothes to fines wines. Most lucratively, many ships now offer �fine investment� art, sold by many auction houses, all geared for the cruising public. We did some research to see why so many people have issues with cruise ship art auctions. Let's take a closer look at this issue and she why so many people are concerned about cruise ship art auctions.

All cruise ship art auctions are conducted in international waters and they are insulated from US consumer protection and fraud laws:

The auctioneers are not regulated by any USA state or jurisdiction.

US consumer fraud laws and deceptive business practice laws do not always apply on the high seas.

The cruise ship auctioneers would like you to think that their art is a good investments, but many web publications state otherwise, many suggesting that they are a scam, or at least a very bad investment. Some people go as far as to suggest that cruise ship art auctions use deceptive business practices.
Deceptive business practices by art auctioneers?

We attended one cruise auction to watch their carnival barker act, a wonderful exercise in Machiavellianism. But we were taken aback when we were asked by a auction employee to help them "start the bidding", stating that we would be given free art in consideration for our help in driving-up prices.

Before you rush to judgment, please note that auctioneer-bidding and "shill bidding" (undisclosed owner bidding) is legal in some places. For example, some people argue that the owner of something being auctioned should have the right to buy it back if the auctioned item might be sold at a huge loss.

In some jurisdictions, the auctioneer is allowed to pretend-bid up to a non-disclosed reserve price without notifying the bidders, while in other jurisdictions the auctioneer must explicitly state that he will be calling false bids to to a reserve price. I consider auctioneer-bidding to be immoral and unethical.

No consumer protections laws at-sea

I hope that this page will serve as a warning to anyone who thinks that US consumer protection law extends to the high seas. This collecting tips forum notes a successful lawsuit against a cruise auctioneer, citing deceptive business practices and inflated prices:

�A court case (Erickson vs. PWG, 2000) and several individuals have pressed and won refunds on grounds of deceptive practices and inflated prices when dealing with Park West Gallery. I feel pretty stupid!

Park West hides amongst legal structures and international waters' law, that Park West Gallery misrepresents the value of artwork in its cruise auctions and that this misrepresentation is deliberate and knowing.

I just want to return these pieces and get my money back! This is a scam that has been going on for years. Americans taking advantage of Americans�it�s pretty sad.�

Auctions praying on the elderly and infirm?

How would you feel if your working-class 75 year-old Grandma returned from a cruise with $70k in "investment quality" art, thinking that she was wisely spending her entire life savings? Many older people remember the days before 1960 when cruising was the bastion of the rich. Today, cruising is cheaper than staying at a Holiday Inn, and many lower-class people are taking to the high-seas in record numbers.

At every auction we witnessed, the art auctioneer's disclose that they will be pulling fake bids. This practice is called �shilling�, and it's legal in most States, so long as it is announced in advance. However, almost all of the attendees I spoke with did not understand that the auctioneer has the right to �pretend� that someone is bidding against them.

Is cruise ship art represented as an investment?

During the initial �suck-in�, potential bidders are given free champagne and a sales pitch where the benefits of art collection are touted, suggesting that the upper-middle class collectors (to which most attendees aspire) invest in art for-profit. Of course, it�s all true, some art pieces do appreciate.

The next gimmick I saw was where a piece of art is �sacrificed�, right at the start of the first day's auction. In this cruise ship ritual, the auctioneer, offers-up a obscure piece from an unknown artists and solicits a bid (usually $50), and drops the hammer instantly, giving attendees the idea that they are about to get some great bargains. It�s an amazingly well-done marketing tactic, masterfully designed to build trust and open-up pocketbooks.

If you are considering purchasing a work by any cruise ship art auctions, remember that cruise ship art is not unique, it�s a commodity, and you can look-up the prices on the web.

Use due diligence and spend $30 on the ship internet to see what the same piece sales for on eBay or other auction houses.

A smart buyer will take care to examine the frames. Obviously, a real $8,000 art work will not be displayed in a cheap $300 frame, especially when it is being offered for sale at an auction. One way to tell a cheap frame is to examine the corners of the back of the frame. But in this case, the British American auctions claim to have the pieces custom framed fro their warehouse, so you do not buy the piece that you see on the cruise ship.

The greatest art auction rip-offs

The other rip-off is the �hand-touched� lithographs, where the artist will run a litho of 3,000 copies and quickly apply a few quick highlights in their own hand and sign them. They are still considered reproductions, but because they are hand-signed, I�ve seen people squander incredible sums on this semi-worthless crap, spending their descendants inheritance with free abandon, thinking that they are �investing�. One recent �investment quality� sales scam is the sales of lithographs by Thomas Kinkade, Salvador Dali, Picasso and Andy Warhol.

Misrepresentation - It�s not just one company

In the interest of fairness, it�s not any specific auction house that has been accused from criminal fraud. This newspaper articled titled �The Art of Piracy� in the Broward Palm Beach New Times notes that it�s not just any specific company, as other cruise ship art auctioneers at sea may misrepresent their works:

"Our appraiser told us: 'You ladies have been raped,'" Kifer says. "He told us we needed to call the police."

In summation, I don�t feel sorry for gullible suckers because there are auction houses in the USA with similar scams, but it�s not right for these companies to prey on the elderly, who have false confidence in the practice. Our goal is to regulate all cruises that serve US passengers, so all cruise ship auctioneers will be forced to adhere to US ethical and moral standards.

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