July 29, 2026  ·  Complaint filed July 28, 2026  ·  mdd, No. 1:26-cv-02933

Newman News, By David Brunk

Read the filing

Funk v. Collectors Universe Alleges PSA Built $15 Billion Grading Market on Fraud

PSA Graded Altered Honus Wagner Card in 1991 Despite Published Standards

The complaint alleges that Professional Sports Authenticator, known as PSA, launched the modern trading-card grading industry by grading an altered T206 Honus Wagner card in July 1991, despite its published standards prohibiting the grading of trimmed cards. The card, assigned certificate #00000001, was later sold for $2.8 million in 2007. In 2013, the card’s owner pleaded guilty to mail fraud, admitting to trimming the card prior to PSA’s grading. The filing contends that PSA’s failure to disclose the card’s alteration at the time of grading undermines its claims of neutrality and expertise, which the company markets as the foundation of its grading services (Compl. ¶2, ¶3, ¶4, ¶67). The complaint further alleges that PSA graded approximately 1 million cards between 1991 and 1998, establishing its market dominance early in the industry’s history (Compl. ¶67).

The filing argues that PSA’s grading of the card, despite its published standards, demonstrates that the company’s grading process was financially conflicted from its inception. PSA’s assigned grade determines how a card is perceived, priced, insured, marketed, financed, and sold (Compl. ¶9). In 2021, PSA’s parent company, Collectors Universe, Inc., was acquired by an investor group including Nat Turner for approximately $853 million, a transaction that took the company private and further consolidated its market position (Compl. ¶67). The tender offer price for the acquisition was $92.00 per share (Compl. ¶42). The complaint alleges that this acquisition was part of a broader strategy to control the grading market and its downstream monetization channels, including pricing, custody, resale, and lending.

PSA’s Grading Process Allegedly Driven by Production Quotas, Not Expertise

The complaint alleges that PSA’s grading process is throughput-driven rather than expert-driven, with graders spending less than one minute per card under production quotas (Compl. ¶167). A former grader estimated that PSA graders process between 500 and 700 cards per shift, while PSA’s 2025 volume reached 19.2 million cards (19.2 million of ~26.6 million total graded by major services) (Compl. ¶10). The complaint contends that PSA’s grading is affected by undisclosed criteria changes, such as front-centering tolerances for top grades, and subjective overrides that are not disclosed in the company’s marketing materials. "PSA’s process is structured as throughput-driven production rather than the careful, objective, individualized expert review marketed to consumers," the complaint alleges (Compl. ¶151).

In a February 2026 interview, PSA President Ryan Hoge admitted that grading is "opinion-based" and can "change" between graders. "The opinion can change... one grader may view a flaw as more detrimental," Hoge stated (Compl. ¶157). The complaint alleges that many graders lacked professional experience, with backgrounds including restaurant work, sports-stadium roles, and songwriting (Compl. ¶17, ¶147). The complaint quotes PSA’s 2020 Form 10-K, which reported 77 total experts across all authentication and grading operations but identified only 33 trading-card experts, highlighting the discrepancy between PSA’s marketing and its actual grader qualifications (Compl. ¶71).

The complaint also alleges that PSA’s grading is influenced by production pressure and financial conflicts. PSA’s parent company, Collectors Holdings, Inc., controls not only grading but also pricing (via Card Ladder, LLC), custody (via PSA Vault), resale, lending (via Collectors Financial Services, LLC), and liquidity (via PSA Partner Offers). "Defendants’ vertically integrated system controls grading, scarcity disclosure, price discovery, benchmarking, custody, execution, liquidity, and financing," the complaint alleges (Compl. ¶118). The filing contends that PSA’s grading decisions are shaped by its downstream financial interests, including the need to maintain high volumes of graded cards to support its pricing, custody, and lending businesses. In May 2026, PSA announced a $200 million infrastructure investment to expand its grading capacity and further entrench its market dominance (Compl. ¶149).

The complaint details PSA’s rapid expansion following its 2021 acquisition. In March 2021, PSA suspended four lower-cost service tiers due to a backlog of 10 to 12 million cards, which the company described as "very healthy" for its business model. "It’s very healthy for us to have a backlog. We like to have that," Hoge stated in a February 2026 interview, adding that a "two months’ worth of backlog" was ideal for PSA’s operations (Compl. ¶24). By April 2021, PSA’s grading throughput was approximately 20,000 cards per day, or 500,000 to 600,000 cards per month (Compl. ¶67). The company’s daily intake volume reached 150,000 cards per day, while its shipping capacity was only 90,000 cards per day, resulting in a daily deficit of 40% (Compl. ¶23). The complaint alleges that this backlog was not an unintended consequence but a deliberate strategy to create artificial scarcity and drive demand for PSA’s expedited grading services.

PSA’s Hidden Fee Structure Allegedly Designed to Extract Maximum Fees

The complaint alleges that PSA employs a hidden fee structure designed to extract maximum fees from consumers through deceptive practices. PSA’s pricing model is built around tactics including bait-and-switch pricing, incremental pricing disclosures, and coercive pricing based on possession. For example, PSA markets its grading services with estimated turnaround times, which the complaint alleges are used to sell speed premiums despite the company’s admission that turnaround times are unreliable. In October 2020, PSA declared that "services defined by turnaround times are a thing of the past," yet the company continued to sell grading services based on estimated turnaround times (Compl. ¶154). In November 2025, PSA revised its turnaround estimates, increasing the estimated time for one service level from 40 to 45 business days, but the complaint alleges that these revisions were largely illusory because they accounted for previously undisclosed processing time (Compl. ¶158).

The complaint also alleges that PSA’s declared-value upcharge forces consumers to guess a card’s post-grading value to avoid additional fees. "Consumers must guess the company’s grade, timing, and post-grading market value to avoid upcharges, rendering service-level choices illusory," the complaint states (Compl. ¶194). PSA imposes these upcharges after grading is complete, eliminating the consumer’s ability to withdraw or refuse payment. The upcharge can result in significant financial losses, such as the $2,200 value loss from PSA downgrading a Ken Griffey Jr. card from PSA 10 to PSA 9 (Compl. ¶163). "The upcharge does not correspond to additional grading work or insurance protection," the complaint alleges (Compl. ¶197). Plaintiff Nicholas Funk, a Maryland citizen, paid $300 in grading-related charges for a March 2025 submission, including fees reimbursed to an intermediary (Compl. ¶38.d, ¶19d). The complaint further alleges that PSA’s Maximum Insured Value (MIV) is a liability cap, not insurance, and that PSA reserves sole discretion to determine fair-market value in the event of loss or damage. PSA may impose aggregate service-level adjustments of up to $500 without further notice (Compl. ¶165).

The filing contends that PSA’s fee structure is designed to exploit consumers’ reliance on the company’s grading credential, which PSA markets as a universal market standard and value-enhancing credential. The complaint states, "PSA sells a market credential whose value depends on consumers and the market believing that the grade is impartial, expert-driven, standardized, objective, verifiable, and worthy of reliance" (Compl. ¶132).

The complaint highlights PSA’s use of "dark patterns" in its pricing model, including bait-and-switch pricing, drip pricing, partitioned pricing, and illusory speed pricing. "PSA’s fee architecture employs drip pricing, bait-and-switch pricing, partitioned pricing, illusory speed pricing, and possession-based coercion," the complaint alleges (Compl. ¶26). For example, PSA’s turnaround-time disclaimer is hidden behind an asterisk and requires scrolling or clicking to reveal that turnaround times are "not guaranteed" (Compl. ¶23, ¶134, ¶188). The complaint cites PSA’s admission in March 2021 that "continued submissions under the old model are disingenuous," yet the company continued to solicit submissions under the same pricing structure (Compl. ¶192). The complaint further alleges that PSA’s pricing model constitutes a "documented, multi-year pattern in which PSA knowingly represented a delivery timeline it could not meet" (Compl. ¶192).

PSA’s Population Reports Allegedly Distort Scarcity Signals

The complaint alleges that PSA’s population reports, which are marketed as scarcity disclosures, distort scarcity signals by including resubmissions and outdated certifications. "Inaccurate or managed population reports exacerbate the company’s fraud by converting distorted counts into public scarcity signals," the complaint states (Compl. ¶181). The filing contends that PSA’s population reports create a feedback loop that benefits the company’s downstream monetization, including its pricing, custody, and lending businesses. "PSA’s population reports are material to consumers because they drive price and demand for graded cards," the complaint alleges (Compl. ¶12).

The complaint cites the example of PSA’s regrading of certain trading cards, which was justified by the submitter’s ratio of submissions without top grades. The filing alleges that recurring disparities in top-grade outcomes for commercially important cards suggest that the company’s grading outputs are managed rather than neutral. The complaint notes that PSA’s grading of the same Ken Griffey Jr. card as both a 6 and later an 8 contradicts the company’s claims of standardization (Compl. ¶160). The complaint alleges that PSA unilaterally alters, revokes, or downgrades grades post-issuance without disclosure, further undermining the reliability of its population reports (Compl. ¶161).

The complaint alleges that PSA’s population reports are part of a broader scheme to monetize the trading-card market through vertical integration. The parent company, Collectors Holdings, Inc., controls grading, pricing, custody, resale, lending, and liquidity, creating undisclosed conflicts of interest. In 2022, Collectors raised $100 million in a financing round to fuel its expansion and consolidation strategy (Compl. ¶83). "Defendants’ omissions about their integrated market role are material because they propagate harm through the financialized market stack, affecting grading demand, pricing, scarcity, liquidity, and fees," the complaint alleges (Compl. ¶119). The filing contends that PSA’s grading credential is the core value signal in its marketplace, making the integrity of its grading process material to consumers. PSA’s population reports act as prospectus-like scarcity disclosures, driving the perceived value of graded cards (Compl. ¶109). The complaint states, "If PSA’s grade is subjective, opaque, inconsistent, revisable, commercially managed, or contractually disclaimed, the harm does not remain confined to the individual slab" (Compl. ¶119).

The complaint details how Collectors’ vertical integration extends beyond grading to include pricing data through Card Ladder, LLC, which owns a database of over 100 million historical trading-card sales (Compl. ¶77). Card Ladder’s indexes, such as the CL50, are marketed as measuring market performance "similar to the S&P 500," but the complaint alleges that the platform’s valuation methods are opaque and exclude certain sales channels, giving greater weight to transactions linked to Collectors’ affiliated entities (Compl. ¶87). "Card Ladder’s software uses indexes to generate estimated values and predict card movements based on index performance," the complaint states (Compl. ¶63). The complaint further alleges that Card Ladder’s values exhibit "sharp, unexplained day-to-day changes followed by reversals," suggesting methodological issues beyond typical market fluctuations (Compl. ¶89). The complaint quotes Card Ladder’s directive to users to "gauge where the market is moving" using its CL50 index, highlighting the platform’s role in shaping market perceptions (Compl. ¶63).

PSA’s Online Terms Allegedly Presented to Obstruct Accountability

The complaint alleges that PSA’s online terms, including arbitration clauses, class waivers, and liability caps, are designed to exploit consumers’ reliance on the company’s grading credential. The filing contends that PSA’s terms are particularly problematic because they are presented to consumers after they have already committed to the grading process. "The company controls all transaction variables—timing, value, and payment—post-consumer commitment," the complaint states (Compl. ¶140). The filing contends that the terms are part of a broader pattern of deceptive practices designed to extract fees and limit liability. "The company markets its grading as impartial and expert but monetizes it through a controlled pricing structure," the complaint alleges (Compl. ¶141). The complaint seeks Declaratory Relief under 28 U.S.C. §§ 2201–2202, alleging that the plaintiff and the class did not assent to the company’s online terms or arbitration provisions (Compl. ¶d, ¶58).

The complaint further alleges that PSA’s online terms are unconscionable. The filing contends that PSA’s terms are presented in a manner that obstructs accountability, including hidden disclaimers and liability caps. For example, PSA’s turnaround-time disclaimer is not immediately visible and requires consumers to scroll or click to reveal that turnaround times are "not guaranteed" (Compl. ¶24). The complaint cites PSA’s statement that "It’s very healthy for us to have a backlog. We like to have that. We like to have two months’ worth of backlog" as evidence of the company’s prioritization of throughput over consumer expectations (Compl. ¶24).

The complaint also alleges that PSA’s online terms are part of a broader strategy to insulate the company from liability for its deceptive practices. The filing contends that PSA’s terms are designed to exploit the fact that consumers are already committed to the grading process and have no practical ability to negotiate or refuse the terms. "PSA’s clickwrap agreement attempts to limit accountability via arbitration clauses, class waivers, and liability caps, but Plaintiff and class are not bound due to lack of assent," the complaint alleges (Compl. ¶32, ¶33, ¶206–207). The complaint further alleges that PSA’s terms are unconscionable because they are presented in a take-it-or-leave-it manner and contain one-sided provisions that favor the company at the expense of consumers. The complaint states, "PSA’s online terms are designed to obstruct accountability and exploit consumers’ reliance on the company’s grading credential" (Compl. ¶206).

RICO Claim Alleges Pattern of Racketeering Activity

The complaint alleges that PSA and its parent company, Collectors Holdings, Inc., engaged in a pattern of racketeering activity under the Civil RICO statute (18 U.S.C. §§ 1961–1968). The filing contends that the defendants used mail and wire fraud to obtain grading fees through deceptive practices, including the grading of the altered T206 Honus Wagner card, the use of throughput-driven grading, and the employment of hidden fee structures. "Defendants’ conduct constitutes a continuous pattern of racketeering activity," the complaint alleges (Compl. ¶35). The aggregate amount in controversy exceeds $5,000,000, satisfying the Class Action Fairness Act (CAFA) jurisdictional threshold (Compl. ¶60). Over the relevant limitations period, PSA generated over $1 billion in fees from its alleged fraudulent grading practices (Compl. ¶37).

The complaint identifies two associated enterprises: one including the defendants and card grading intermediaries, and another including those entities plus additional companies involved in pricing, custody, resale, and lending. The complaint alleges that the defendants directed and controlled these enterprises through standardized programs, fee structures, and integrations with major marketplaces. "Each enterprise has an existence, structure, common purpose, and continuity of relationships separate and apart from the alleged racketeering activity," the complaint states (Compl. ¶55). "Card Grading Intermediaries are independent businesses that maintain their own premises, staff, business records, accounts..." (Compl. ¶56c). "Defendants caused all enterprise participants to function as a coordinated, continuing unit rather than as isolated, parallel actors" (Compl. ¶56d). The complaint alleges that these enterprises were used to perpetuate the defendants’ fraudulent scheme and extract fees from consumers.

The parent company acquired multiple businesses in the industry, including auction houses (Goldin Auctions), pricing platforms (Card Ladder), and competing grading services (Sportscard Guaranty ("SGC") and Beckett Grading Services ("BGS")). The filing contends that these acquisitions placed the defendants on both sides of the grading-dependent market, creating conflicts of interest. "The acquisitions were designed to consolidate grading brands and market infrastructure under the parent company’s control," the complaint alleges (Compl. ¶43). Collectors acquired SGC in February 2024 and announced an agreement to acquire BGS in December 2025 (Compl. ¶43). The complaint seeks treble damages and injunctive relief under RICO, as well as damages for unconscionability, breach of implied warranty, and violations of state consumer protection laws.

The modern trading-card grading market is estimated to be worth $15 billion, with PSA grading 19.2 million of the approximately 26.6 million cards graded by major services in 2025 (Compl. ¶4, ¶10). PSA’s annual card volume exceeded 19 million in 2025, and the company was on pace to grade 24 million cards in 2026 alone (Compl. ¶49). The global collectibles industry is valued at over $600 billion, with annual transactions exceeding $400 billion (Compl. ¶83, ¶84). The trading-card market alone is estimated to be worth between $10 billion and $20 billion in 2026 (Compl. ¶82). Routine trading-card transactions involve seven-figure sales, while occasional transactions reach eight figures (Compl. ¶107).

The complaint highlights the financialization of the trading-card market, which has evolved into an asset market with six interdependent components: grading, pricing, custody, execution, liquidity, and financing. PSA’s grading is described as the "connective component" that enables sight-unseen trading and enhances marketability (Compl. ¶76, ¶110). PSA markets its grade as a "universal market standard" and "value-enhancing market credential," with the company’s 2019 Annual Report stating that graded cards achieve "increased liquidity" and "enhancing their marketability" (Compl. ¶81, ¶110). The complaint quotes PSA’s marketing materials, which state, "Cards authenticated and graded by PSA achieve amazing prices at auction" and "PSA-certified items tend to sell for more — sometimes significantly more — than those that are not" (Compl. ¶81).

The complaint also references related proceedings, including Rasmussen v. Collectors Holdings Inc. in the Central District of California, where the defendants filed a motion to dismiss on June 8, 2026, acknowledging PSA’s market dominance (Compl. ¶Related Proceedings). In December 2025, Congressman Pat Ryan requested an FTC investigation into Collectors’ consolidation strategy, citing concerns about the company’s vertical integration and market power (Compl. ¶Related Proceedings). The complaint alleges that these developments underscore the need for regulatory scrutiny of PSA’s business practices and the broader trading-card grading industry.

The allegations in the complaint are unproven, and no defendant has yet responded.

The allegations described here are taken from the filing and remain unproven; no responsive pleading is reflected in the source document.

David Brunk is a civil litigation attorney. He can be reached at david@newmanbrunk.com.