Cruise ship Art Auctions - Scams, Frauds or bargains?
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Cruise ship Art Auctions - Scams, Fraud or bargains?

Donald K. Burleson

2009 Updates:  Please see these updates on class action lawsuits filed against cruise ship art auctions, and new cruise ship auction houses stepping-in to fill the void.

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.

Art Auction Cruises
The fine art registry does not have a opinion of cruise ship art auctions

After getting my North Carolina auctioneer license I learned that the state has strict auction regulations that prevent unscrupulous auctioneers from taking advantage of people, and North Carolina is a very safe place to but things at an auction because of these strict regulations and ethical standards for auctioneers.

Sadly, it's not the same on the high seas and I hope that Congress will soon pass a Bill to regulate cruise auctions that serve US passengers.  The Department of Justice has already ruled that cruise ships that serve Americans must comply with the Americans with Disabilities Act (the ADA).

I decided to do some web research to see why so many people have issues with cruise ship art auctions.  This is what I found:

  • Fine art Registry - In this article David Phillips notes that art auctions at sea are 21st century pirates:

    "If you read this article and still attend one of the cruise line auctions and get ripped off, then you deserve it. You will have been warned. . .

Today’s pirates wear suits, speak enthusiastically and persuasively, promise the earth, work in collusion with the “highly respected and reputable” cruise lines and credit companies AND ROB YOU BLIND."
 

  • Rip off report - Over 50 complaints against cruise ship art auctions
     
  • No Credit card reversals - According to this complaint, some cruise ship art galleries charge exorbitant restocking fees of over $800, and a credit card reversal will not help you get a refund.

  • Class action lawsuits - This web page reports that there are currently six class action lawsuits against 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.

Cruise ship art auctions – Scams at sea or buyers remorse?

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?

Janet and I 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. 

Preying on elderly art investors?

I just attended an auction at-sea and I became sick to my stomach.  I observed that the art auction area was cluttered with wheelchairs and walkers and I noticed that the auctioneer was working a group of nice, trusting old folks, many of whom I suspect suffered from mild senile dementia. 

I saw one old woman bid thousands of dollars on a reproduction lithograph which I suspected to be worth only a small fraction of the payment, and it appeared to me that she was completely brainwashed by the persuasive auctioneer, as he called bids out of thin air (I stood behind him and watched) and praised the elderly woman on her good judgment after every purchase.  On the other hand, it may be possible that this woman was one of their shillers, receiving free art for pretending to place real bids.

There were several Filipino helpers who called loudly every time someone bought a piece and it seemed to me that many of the old folks on the cruise were enraptured by the special attention.

Cruise auctions shilling (false bidding)

At every auction I 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. 

This publication in rip-off report contains unverified allegations of shill bidding by cruise ship auctioneers:

“Pure criminal fraud!

Park West Galleries, a crooked art dealer, has a branch on the Royal Caribbean cruise ships called Park West at Sea. (I can only assume that Royal Caribbean as a partner is making so much money from this scam that they tolerate the fraudulent behaviors since they have not responded to my complaints either)

This so called "fine art auction" is a spider’s web of deceit and treachery for those who are not indoctrinated into the art world.

 These con artists masquerade as auctioneers and acknowledge fake bidding in the audience by moving their heads to where people are sitting and arbitrarily raising the prices on art work they are selling. . .

I was embarrassed to be lied to over and over in this way and am seeking satisfaction from many avenues including the FBI, Local Police FTC, The Miami Herald, Royal Caribbean Cruise Line, both civil and criminal charges and the public domain. I also want to warn others not to buy any art on a cruise ship and to avoid, like poison, Park West Galleries.”

This newspaper article titled “The Art of Piracy” in the Broward Palm Beach New Times notes a class-action lawsuit for shill bidding:

“But Park West is fighting its own legal battle with former Carnival Cruise Line passengers.

In 2001, a group of passengers filed a class action lawsuit against Park West and Carnival Cruise Lines alleging, among other wrongdoings, driving up prices by using phantom bidders.”

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. 

Auctioneer James Shlosser, who claims to be a disgruntled former art auction employee, offers his story "losing everything for Park West Gallery" noting his experience working as an auctioneer at a cruise ship art auction:

"We were taught how to sell high dollar framing, how to run the bid to ridiculously high levels and then tell the audience that the piece was really worth that much"

Cruise ship art buying tips

If you don’t know art, make sure to check competing prices and examine the frame on the art before you place a bid.

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.


 
Fine art has a fine frame, and staples are a sure sign of a cheap frame

 

Investment Quality Art or Worthless Crap?

The spiel of some auctioneers is designed to appeal to lower-middle blue collar folks, a masterful work of persuasion and brainwashing worthy of P. T. Barnum.  They talk of the inheritance value (a real motivator to grandpa who wants to leave his kids a legacy), and they toss out true facts about art collection, without mentioning that many of their works have limited collector values and would fetch practically nothing if offered in a public action forum like eBay.

It’s just like the Holland tulip bulb investment rage a few centuries ago, when prized bulbs would sell for a fortune.  One day, someone said “hey, there are just tulips”, the market fell-out and investors lost a fortune.  The same thing could happen someday to the current rage for Thomas Kinkade works.

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 descendents inheritance with free abandon, thinking that they are “investing”.  This page from Rip-Off Report  notes

“My husband and I attended one of the Art Auctions and felt that the auctioneer was employing high pressure tactics and also being condescending to the audience.”

One recent “investment quality” sales scam is the sales of lithographs by Thomas Kinkade, Salvador Dali, Picasso and Andy Warhol. 

Rembrandt woodcuts

The greatest rips are the offerings of “authentic” Rembrandt woodcuts, modern prints made from the original wooden masters, allegedly of a limited edition.  I see them on every cruise line and they must be thousands of them floating around.

Salvador Dali Lithographs

Dali forgeries are so problematic in the market today, that a real Dali is virtually un-sellable because the cost of authentication often exceeds the value of the piece.  This report from USA Today notes that Dali prints may not be a bargain:

“Still, the Salvador Dali Gallery in Pacific Palisades, Calif., reports 50 calls a week from cruisers who question the value of what they bought once back on dry land and able to do research on the Internet and with galleries.

''These people (auctioneers) are blatantly overcharging'' people who are unsophisticated about art and have no way to check out the legitimacy of prices while at sea, says Salvador Dali Gallery director Bruce Hochman.

''People get caught up in the excitement'' and overbid, agrees Coffman. She thinks cruise companies turn a blind eye because ''they're interested in on-board revenue enhancements. I've been told those art auctions are beaucoup big-time moneymakers.''

Overpriced Chagall?

I saw a cruise where they advertised a contest to "guess the price of a signed Chagall lithograph.  A quick Google search reveals the offering prices from this Chagall dealer, ranging from $16k to $58k.  I also noted that it was in a very cheap frame, no. 2 pine with no dovetailing, just metal staples.  Now I ask you, who puts a $100k art work on a cheap frame?

Signed Norman Rockwell prints

These are a very bad deal since the "signature" is not an autograph.  It is the standard Rockwell name that is in all Rockwell prints.  Rockwell has licensed prints for decades.

Caveat Emptor

Don’t get me wrong, I’ve bought a few pieces of cruise ship art, and I'm a satisfied customer.  One art piece has even appreciated.  However, it’s the test-of-time that determines the value of a limited-edition litho, and many of the pieces I've seen sold at cruise ship art auctions sold may not be a good investment.  Who knows? 

I collect vintage prints, and I know that the appreciation rate is not nearly as high as an auctioneer may suggest, especially for their over-hyped artists, many of whom have arranged bulk sales with the auctioneering house.  This publication on Painters Key notes the core issue:

“These tourists are the ideal target--they are captive, often poorly informed, and Park West has the advantage of repetition.

That is, potential customers are constantly walking by works that catch their eye--on the way to and from the bar, theatre, dance hall, swimming pool, casino or the restaurant.”

Auction – Complaint summaries

Note: The art auction houses claim  that they are the victim of a cybersmear campaign.  Please note that the following web pages discussing alleged art auction scams and fraud below HAVE NOT been verified.

This publication from the Bad Business Bureau notes several customer complaints about an art auction purchase:

“When we received the prints, much to our surprise, they were not original Norman Rockwell prints but something called a “Norman Rockwell Authorized Estate blind-stamp gold seal From the edition of 315 Estate stamped facsimile signature examples”. This is a quote from the appraisals sent by Park West. The Norman Rockwell Museum in Stockdale MA has never heard of such.

I had an art professor friend look at these pieces. They are essentially worthless as he said the frames are worth more than the prints and even the matting is sub-standard. . .

I have offered to send the prints back to Park West, insured at my expense but they refuse to allow this. It seems another recent buyer in Pacoima, California in a similar situation, was offered a refund and a 20% bid credit on future works. This is all I ask so as to put this unfortunate mess behind us. In fact they can keep their 20% bid credit. This will be my only offer.”

This article from USA Today notes several unhappy “investors”, situations that would have redress if the cruise lines were governed by US law:

“Not thrilled is Debra Erickson of Bedford, Pa., who spent about $57,000 at auctions run by Park West Gallery on a July sailing of Carnival's Triumph. When she and her husband got home, they found that some of the Chagall and Dali prints and animation frames from popular cartoons they bought could be purchased for far less on land.

''It's a scam,'' she says of the auctions. ''We were naive novices. We thought we were getting a good price.''

The couple refused to accept Park West Gallery's all-sales-final policy, and ''we sent back most of the art,'' Erickson says. Getting a refund took more than six months and required the intervention of her credit-card issuers. She still hasn't seen all her money, she says. . .

Fakes and Forgeries at cruise auctions?

While all anonymous complaints about cruise ship art auctions are completely unverifiable, this newspaper article titled “The Art of Piracy” in the Broward Palm Beach New Times notes that some cruise ship art auction fraud has been well-documented:

“Mitchell couldn't believe so many forged copies of her work had been sold. "I certainly didn't sign 1,100 prints," she says.

She sued both Eubanks and Princess in January, eventually attracting the attention of the Federal Bureau of Investigation, which had also begun looking into Eubanks after being contacted by one of Eubanks' former employees.

In September, the FBI made its investigation into Eubanks' dealings public and called on victims to come forward. Mitchell says she's the FBI's star witness.”

This collecting tips forum has an interesting collection of complaint about cruise art auctions (Note:  I have not verified these complaints, and they could be a cybersmear):

“My name is Jordan Hillin and I went on the Carnival Pride about a month ago. From the sound of it we made a bad mistake on going to that art auction. Is all this true about Park West screwing people and if so what should I do with the art that I purchased? I bought a Peter Max that I was told appraised at 4,700 and I just saw the same one on E-bay for $1,000 . . .”

“I'm saddened to see those who support Park West and/or their sales tactics. Since when are patent lies about a product acceptable? Especially when they cannot be verified. With every expensive piece of artwork, the auctioneer would state "I just got off the internet and this is the lowest price". Of course, his price was 2 or more times the price I found once I landed.

“Just want to let everyone know that the value of seriolithoghraphs purchased while on RC's The Mariner Of the Seas from Park West Galleries-15 months ago have not appreciated as informed while on the cruise. We have sent back $8,000 worth to Park west and are demanding total refund for framing shipping and appraisals that were supplied by the owner of the company- who has no appraising credentials. Buyer beware- Cruise auctions are a scam.  Patsy McDonald”

I purchased a Dali from Park West Gallery as an investment while on a cruise ship. I made this investment based on the authorship of the piece and the announcements about the same and their Park West appraised values made during the auction on board that ship. I decided to get them reappraised. Based on the new appraisals I have found that I, like many others, was misled and lied to at the auction and in the appraisals. One is a Salvador Dali worth $17,000 according to Park West Gallery, but paid $11,000.  . .The appraisal of these works was represented as being from Bernard Ewell, a certified appraiser, when in fact they are from the owner of the gallery, Albert Scaglione. Sotheby’s stated that the piece would not be suitable for sale because it would not reach their consignment minimum of $5000”.”

“Park West appraisals were misleading and incorrect. February 8, 2001 USA today articles warn of the practices of these shipboard auctions and the expert Mr. Ewell is quoted as saying “This is not a serious art auction, not an investment opportunity”.

“Park West is a scam indeed. I am in the art business and I sell legitimate Salvador Dali woodcut etchings on my website. They typically sell for $400 and the better ones for as much as $1400. Park west sells the same exact woodcuts for 5 times the price on drunk cruise ship goers who don’t know any better. Not to mention their prints are uncertified Dali works (they have warehouses full of questionable prints)”

“The park west guys basically have a whole crapload of uncertified prints that they probably bought a long time ago... and they are unloading it on champagne filled naive people just trying to get some sort of investment. art dealers are like used car salesmen.”

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:

"We thought we were getting authentic art — we thought they had everything in order — the certificates of authenticity and appraisals," Sexton says. "The auctioneers said there was nothing they could do because they relied on the cruise line for the marketing information."  . . .

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

"We never want anyone to be put in the position that we were put in," Sexton says. "This is not a cheap piece — $71,000 something — but the piece should never have been sold again."

Princess spokeswoman Julie Benson declined to comment about the suit, citing company policy against discussing pending litigation. Benson also refused to discuss anything about the art program. Manoukian couldn't be reached for comment.

This isn't the first time the cruise line has faced legal action over its art program.

Two artists sued the cruise line earlier this year after finding out that thousands of Princess passengers bought unauthorized prints the cruise line had bought in bulk from Kristine Eubanks, a convicted felon.”

In sum, I don’t feel sorry for gullible suckers because there auction houses in the USA with similar scams, but it’s not right for these companies to prey on the elderly, old folks who have false confidence in the practice.  Please support the initiative for a Congressional Bill to regulate all cruises that serve US passengers, so all cruise ship auctioneers will be forced to adhere to US ethical and moral standards. 

NOTE: The opinions on this page are the sole opinion of Donald K. Burleson and does not reflect the opinions of Burleson Enterprises Inc. or any of its subsidiary companies.

Also see:

Updates:

September 2009 - A concerned Royal Caribbean passenger named Mark Jacobs mistakenly thought that he had the right to warn fellow passengers about six lawsuits against the cruise ship art auctions lawsuits, and claims that he was unfairly being booted off of the ship:

Jacobs says his only offense was downloading information about an art auction business run onboard the ship that has been the subject of numerous lawsuits alleging unfair business practices, and then passing around a one-page fact sheet about the company to fellow passengers.

Just hours after sharing information on Park West Gallery and its history of litigation, Jacobs said, he heard his name called over the shipboard intercom system. He was notified he was being put off the ship the next day, July 26, in Norway, and port security officers from the Oslo Police Department were on hand to ensure that he left.

"My son's playing pingpong, and the police come to take me off the ship," Jacobs said yesterday in his Cortlandt home. "And all I did was distribute information."”

There are two sides to every story, and the report shows Royal Caribbean’s response, claiming that Mr. Jacobs did far more than warn passengers, acting in a disruptive manner:

"Various guests reported to the ship's staff that Mark Jacobs was disrupting the onboard art auction by distributing a flyer to guests. The ship's Hotel Director and Staff Captain met with Mr. Jacobs and explained that his behavior was inappropriate and in violation of the guest conduct policy.

In addition, they explained that failure to act in accordance with the policy could result in removal from the ship at the next port of call. Mr. Jacobs continued to be uncooperative and difficult, which resulted in a decision to disembark him the following day in Oslo, Norway, the next port of call."

Park West has their own version of the events, claiming extortion:

"What Really Happened - Earlier during the cruise Mark Jacobs’ father had approached the onboard auctioneer and demanded $600 worth of free transfers to the airport for him and his family.

He told the auctioneer that if he did not receive the transfers he would tell auction attendees that Park West was selling fake artwork and doing fake bidding."

Who is telling the truth here?  Who knows?  I always apply the "common sense" rule.  If a story does not make sense, then is usually not true.


January 2009  - This announcement by museum-security.org indicates a lawsuit against Park West and Royal Caribbean alleging fraud and misrepresentation:

"Over the last few months, numerous people have contacted our firm with the same complaint: they purchased artwork from the Defendants who misrepresented the authenticity and/or value of the pieces they purchased.

Our clients believed they were buying an investment, when what they received was virtually worthless."

July 2008:   This New York Times article titled “Art Auctions on Cruise Ships Lead to Anger, Accusations and Lawsuits” notes that class action lawsuits have been filed in California and Florida against Park West Art Auctions:

"It was very upsetting,” Mr. Maldonado said. “I’m not mad about spending $73,000.

I’m mad about spending $73,000 for works that I was told are worth more than $100,000 and are probably worth $10,000, if they’re even real.”

 


 

 

 

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