Free Quarter? Don't Bank On It

(CBS)  This week it was California's turn to get its own state quarter from the U.S. Mint.

"Who wants a quarter?" said Gov. Arnold Schwarzenegger as he gave away the new coins to some school kids this week.

But across the country millions have received official looking notifications that they too are entitled to a free state quarter just send in three stamps.

"Big article in the paper said, 'Be the first to get a free quarter,'" says Ken Koslowski of Michigan.

Koslowski sent in three first class stamps worth $1.11 plus another stamp on the envelope. His free quarter cost him $1.48.

"They're paying $1.48 to get a quarter and the privilege of being inundated with junk mail for the rest of their lives," says Joe Ridout of Consumer Action.

"They get you hooked and then they want to sell you other stuff too," says Koslowski.

The free quarters come from Ohio where a company called The U.S. Monetary Exchange has built free money into a big business. Company director, John White admits he's creating a direct mail list of those collecting state quarters.

"You could say that is the key asset for our company," says White.

White says the stamps cover only part of his costs, so to make money he immediately tries to sell people display cases for their "free" coins.

"If they want to send just $7 for this, we'll send them both the Denver and Philadelphia mint coin for free," says White. "That's a pretty nice deal."

But the state of Wisconsin is investigating whether the deal is deceptive. The company says it has more than a million satisfied customers.

Experienced coin collectors recommend buying directly from the U.S. Mint.

"You know that it's the genuine product," says Henrietta Holsman Fore, Director for the U.S. Mint.

But the mint gives nothing away. A proof set of five state quarters costs $16.

And, Fore says, the U.S. Mint makes a lot of money from it.

"It does. Last year we made more than $665 million,'' said Fore.

For the millions collecting the state coins there remains one place where it is still possible to find a state quarter for just a quarter: in your own pocket.