PSA Hit With RICO Class Action Lawsuit: What Card Collectors Need to Know in 2026

Lawsuit Overview: Who, What, When

On July 28, 2026, Baltimore collector Nicholas Funk filed a 188-page proposed class action lawsuit against Professional Sports Authenticator (PSA) and its parent company Collectors Holdings, Inc. in the U.S. District Court for the District of Maryland. The case is Funk v. Collectors Universe, Inc. et al.

The lawsuit alleges that PSA, the world's largest card grading company, engaged in fraudulent grading practices and deceptive fee models that generated more than $1 billion in fees over the relevant period. Because the complaint includes claims under the federal Racketeer Influenced and Corrupt Organizations Act (RICO), actual damages could theoretically triple to $3 billion if the court accepts both the damages figure and the RICO trebling argument.

The plaintiff is represented by Eldridge Crandell LLC and Thomas R. Bundy III of Zealous Advocates. PSA has not yet filed a response to the complaint, and the allegations have not been proven in court.

Who Is in the Proposed Class?

The class as described in the complaint covers anyone in the United States who, during the four years before filing, beneficially owned one or more cards submitted to PSA through a card grading intermediary — meaning a local card shop, dealer, or group submitter rather than a personal PSA account.

This is a significant caveat. Collectors who submitted cards directly through their own PSA accounts may be excluded from this particular class because they agreed to PSA's arbitration clause and class action waiver. The intermediary route is what Funk argues exempts him and similarly situated collectors from those contractual barriers.

Key Allegations Against PSA

The complaint makes several major allegations about PSA's grading practices:

1. Subjective Grading Marketed as Objective

PSA markets its grading as criteria-based, standardized, and reliable. The lawsuit argues the real process relies on a subjective "eye appeal" override that is neither fixed, measurable, nor properly disclosed. Rather than defining "eye appeal" through objective condition criteria, PSA allegedly defines it by asking: "What will the market accept for this particular issue?" — which the complaint calls a guess about market tolerance, not a grading standard.

2. Inconsistent Grades and Production Pressure

The complaint alleges grading outcomes are affected by production quotas, short review windows, and undisclosed changes in criteria. It claims PSA has resorted to using trainees and contractors with little to no grading experience, particularly during periods of high volume. The lawsuit cites "undisclosed error rates, inconsistent grades, and distorted population reports."

3. Gem Mint Population Manipulation

One of the most striking allegations: PSA allegedly manages Gem Mint 10 populations through ratio-based practices and heightened scrutiny of premium players or characters. Rather than grading solely on condition, the complaint suggests PSA intentionally limits the number of 10s issued for certain cards to preserve scarcity and market value.

4. Deceptive Upcharge Practices

PSA charges upcharges when a card's post-grading value exceeds the maximum insured value selected by the customer. Funk argues the higher value does not increase PSA's grading cost and describes the charge as another grading fee rather than a legitimate insurance expense.

5. Financial Conflicts of Interest

Collectors Holdings does not just grade cards. It also owns Card Ladder (pricing platform), PSA Vault (storage and resale), PSA Partner Offers, and Collectors Financial Services (lending using graded cards as collateral). The lawsuit argues this creates a direct financial stake in the value and scarcity of the very cards PSA grades — directly contradicting PSA's marketing that it has "no financial stake" in the cards it evaluates.

Why RICO: The Vertical Integration Argument

The RICO claims are what elevate this case from a consumer protection dispute to a potentially industry-defining lawsuit. RICO, originally designed to prosecute organized crime, allows plaintiffs to seek treble damages when a pattern of racketeering activity is connected to an enterprise.

Funk's argument rests on the structure of Collectors Holdings:

• PSA grades cards and assigns values
• Card Ladder tracks pricing data for those same graded cards
• PSA Vault custodies graded cards
• Collectors Financial Services lends against graded card value
• PSA Partner Offers provides instant cash offers for graded cards
• Collectors Marketplace facilitates resale of graded cards

The complaint alleges this vertical integration allows Collectors to profit from every stage of a graded card's lifecycle — from grading to pricing to custody to financing to sale. Funk argues this organized activity, combined with allegedly fraudulent grading practices, constitutes a RICO violation.

The lawsuit states: "On the one hand, PSA authenticates cards, assigns grades, issues certification numbers, and publishes population data. On the other hand, [PSA] participates in the pricing, custody, resale, offers, lending, insurance, financing, liquidity, and marketplace pathways tied to those same cards."

The T206 Honus Wagner Precedent

One of the most compelling details in the complaint involves PSA's very first certification. Certificate number 00000001 was assigned to a T206 Honus Wagner — the most famous baseball card in the world.

According to the lawsuit, that card had been secretly trimmed years earlier to improve its appearance before PSA graded it. PSA's own published standards state: "Cards that bear evidence of trimming, re-coloring, restoration, or any other forms of tampering will not be graded."

Despite this standard, the complaint alleges:

• PSA's grader knew the card had been trimmed when it was graded
• PSA assigned it a Near Mint-Mint 8 — the highest grade a T206 Wagner has ever received
• PSA did not disclose the trimming on the holder
• PSA has never withdrawn the certification, even after the trimming became public knowledge
• That card later sold for $2.8 million while still in its original PSA 8 holder

The complaint uses this example to argue that PSA's own standards are not consistently applied and that the company has a history of grading altered cards when it serves business interests.

The Separate Antitrust Case: Rasmussen v. Collectors

In addition to the Funk RICO lawsuit, Collectors Holdings faces a separate antitrust class action filed in April 2026 in the U.S. District Court for the Central District of California. The case is Rasmussen v. Collectors Holdings, Inc. et al. (Case #8:26-cv-00897).

The antitrust suit alleges that Collectors Holdings' acquisitions of SGC (February 2024) and Beckett (December 2025) violated Section 7 of the Clayton Act by creating an illegal monopoly controlling approximately 80% of the card grading market.

Key allegations from the antitrust case:

• After acquiring SGC, Collectors increased SGC prices by 20% and increased turnaround times by as much as 400%
• SGC's grading volume plummeted by 61% in just two months post-acquisition
• SGC leadership departed shortly after the merger despite independence assurances
• Resources were reallocated from SGC to PSA
• Collectors made similar "operate independently" promises regarding Beckett
• Congressman Pat Ryan wrote to the FTC urging investigation of the Beckett acquisition

On June 8, 2026, Collectors filed motions to dismiss the antitrust case or alternatively compel arbitration. A hearing is scheduled for September 11, 2026. The plaintiff is seeking forced divestiture of both SGC and Beckett — effectively unwinding the acquisitions.

Both cases are in early stages, and the court has not ruled on any allegations. But together, the RICO and antitrust suits represent the most significant legal challenge to the card grading industry's structure in its history.

How This Affects Your Grading Submissions

The lawsuits are in their earliest stages, and no court has ruled on any allegation. PSA continues to operate, grade cards, and accept submissions. Here is what collectors should understand about practical impact:

PSA Is Still Grading

PSA graded a record 2.5 million cards in June 2026 — up 74% year over year. The lawsuits have not interrupted operations. If you submit cards to PSA, they will be graded and returned. The question is whether the grade you receive is consistent and reliable.

Population Reports May Be Less Reliable

If the allegations about Gem Mint population manipulation are true, PSA population reports may not reflect pure condition-based grading. This affects how collectors use pop data to assess rarity and value. Treat pop reports as one data point, not gospel.

Resubmission Economics

The complaint alleges PSA benefits financially when collectors resubmit cards hoping for higher grades, generating additional fees through inconsistent results. This makes pre-grading before submission more important than ever — if you can predict your grade before paying, you avoid the resubmission trap entirely.

Grading Company Consolidation Risk

If Collectors Holdings controls 80% of grading (PSA + SGC + Beckett), collectors have fewer independent alternatives. CGC remains the only major independent grader. This consolidation is what the antitrust suit targets, and it is why having AI-based grading tools that are independent of any physical grading company matters for the hobby.

AI Grading: An Objective Alternative to Subjective Human Grading

The core allegation in the Funk lawsuit — that PSA's grading is subjective, inconsistent, and influenced by business considerations rather than pure condition assessment — is exactly the problem that AI pre-grading solves.

PreGradeCards uses computer vision and machine learning to evaluate the four grading sub-factors:

• Centering — pure geometric measurement of border ratios, not subjective "eye appeal"
• Corners — pixel-level analysis of corner sharpness and whitening
• Edges — edge detection algorithms identify chipping, whitening, and rough cuts
• Surface — surface scan detects scratches, print lines, and defects under controlled imaging

AI grading does not have production quotas. It does not have "eye appeal" overrides. It does not have a financial stake in the card's value. It measures what it measures, consistently, every time.

This does not replace professional grading — PSA, CGC, SGC, and BGS slabs still carry market premium and authentication value. But AI pre-grading gives you an objective baseline before you spend $80+ on a subjective human grade.

What Collectors Should Do Now

Regardless of the legal outcomes, the lawsuits highlight risks that collectors can mitigate today:

1. AI pre-grade before submitting. Use PreGradeCards AI grading to get an objective predicted grade before paying $80+ for a human grade. This eliminates the resubmission trap and saves money on cards that won't gem.
2. Diversify your graders. Don't send everything to PSA. CGC is a legitimate first choice for Pokemon and TCG. SGC is excellent for vintage. Diversification protects you if any single grader's reputation is damaged by litigation outcomes.
3. Check centering for free. Centering is the #1 reason cards miss PSA 10. Use our AI centering analysis to disqualify off-center cards before paying any grading fee.
4. Keep records of your submissions. If you submit through an intermediary, keep receipts and documentation. The Funk class is defined by intermediary submissions, and you may need proof of eligibility.
5. Monitor the cases. The antitrust hearing on September 11, 2026 could shape the industry's future. Follow developments through court filings and hobby news outlets.
6. Use free credits. PreGradeCards offers free credits for new users. AI-grade your collection now and make informed decisions about which cards to submit when budget tiers reopen.

Start AI Grading Free →

Frequently Asked Questions

Sources & Further Reading

• PSA and Parent Company Sued in Class Action Lawsuit — ICv2
• PSA Hit With Class Action Lawsuit — Dexerto
• PSA, Collectors Face Growing Legal Challenges — Value Added Resource
• PSA Slapped With RICO Lawsuit — Resell Calendar
• Baltimore Man Sues PSA Alleging RICO Violations — WMAR2
• Collectors Holdings Antitrust Suit — Bloomberg Law
• PSA Parent Faces Antitrust Lawsuit — Value Added Resource

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