In recent years, the cash-for-gold mail-order industry has taken off as the price of the precious metal skyrocketed and Americans’ wealth plummeted.
At the same time, an increasing number of consumers shipping off their Rolexes or class rings say they are getting pennies on the dollar or nothing at all from companies that claim they never received the goods.
The complaints have prompted lawsuits and investigations. Proposed federal legislation would regulate the industry, making it illegal for companies to melt down jewelry without customer authorization and require companies to give consumers ample time to request a refund.
Typically, the cash-for-gold mail-order business is supposed to work like this: A customer drops unwanted gold jewelry in a postage-paid envelope and a few days later receives a check in the mail. The amount is based on gold content (karats) and the daily price of gold, currently about $1,200 an ounce. If a customer thinks the amount is too low, he or she can send the check back and the jewelry is returned at no charge.
The question is: How could anyone blindly mail their valuables to some business they’ve never dealt with and expect a good result?
“People make foolish decisions when they are under the pressure of hard economic times,” said Michael Galvin with the Better Business Bureau in southeast Florida, where several big cash-for-gold mail-order companies are headquartered.
He recommends that consumers who want to sell their gold approach jewelers in their communities.
“I surely would recommend going to them instead of putting your valuables in an envelope without any insurance and sending it to someone you don’t know,” he said. “I can’t overemphasize the importance of an individual looking in their own community for this service.”
Parkway Gold, with offices in Alpharetta and Cumming, advertises that it pays top dollar for gold. But Bob Weinberg, an owner of the family business, said consumers should not take his word for it.
“Comparison shop, just like you would for tires and shoes,” said Weinberg, who says he’s been dealing with precious metals for 50 years. He happily will provide customers with the names and numbers of his competitors.
If a company won’t quote you a price over the telephone, hang up, he said.
“There are people who will take advantage of those who are not informed,” Weinberg said. “There are a lot of good, legitimate people in Atlanta. We are not the only ones.”
But many people with money problems might be embarrassed to be seen in a local pawnshop or jeweler, said Evan Nierman, a representative of Cash4Gold, one of the largest players in the industry. Many consumers like the convenience that his company offers, he said.
“It is discreet. It is easy and fast. You can do the whole transaction without leaving the couch,” Nierman said.
Cash4Gold, headquartered in Pompano Beach, Fla., aggressively advertises on TV and online. The business took off after a popular 2009 Super Bowl commercial featuring rapper MC Hammer and former “Tonight Show” sidekick, the late Ed McMahon.
The company has done nearly one million transactions since its startup in 2007, Nierman says.
Cash4Gold also has taken a lot of heat. Florida’s attorney general has opened a civil investigation of the company in response to complaints from consumers. The attorney general’s Web site cites complaints from consumers who allege they were paid far too little for their gold, with checks as small as 7 cents; others allege Cash4Gold said it never received the valuables or that when consumers asked for the return of their gold, they were told it had been melted already.
The company said it is cooperating with the Florida attorney general’s office and is “confident that all outstanding issues will be resolved amicably.”
In January, the company upgraded its system so customers can more easily track receipt of their shipments, Nierman says.
“People have a lot of misconceptions about what their items are worth,” he says. “We make an offer. No one has to accept it.”
Cash4Gold sometimes gets mistaken for unscrupulous players with similar sounding names, Nierman says.
The company supports federal legislation to regulate the industry to increase transparency and openness, Nierman said. “We think it is a good idea.”
As gold continues to be so lucrative, financially strapped consumers will continue to look for fast and easy ways to cash in on it.
The BBB’s Galvin emphasizes that consumers need to take time to research the companies they might deal with, paying special attention to a company’s terms and conditions. Some don’t give consumers the opportunity to reject the offered payment.
“People go to these Web sites and they see how great they look, but they forget to go to the bottom of the page and click on the terms and conditions,” Galvin said. “The key is the terms and conditions.”
Tips for Selling Gold
• Calculate an item's worth yourself. Note any stamped karat mark and weigh the piece on a good kitchen scale. Use this online calculator, enter karats and weight to learn the value based on the current gold price: www.dendritics.com/scales/metal-calc.asp
• Have valuables appraised by a reputable jeweler who will factor in workmanship and stones, not just gold.
• Verify the current price of gold: check with a local jeweler or online source such as Goldprice or Kitco Metals. Remember, any purchaser will likely offer less than full value to accommodate a profit.
• Consider dealing with local jewelers and pawnshops. When Consumer Reports shopped identical 18-karat jewelry, mail-in companies offered 11 percent to 29 percent of market value while jewelers and pawnshops offered 35 percent to 70 percent.
• Be wary of Internet gold buying deals. Some consumers have lost jewelry and money on fraudulent offers.
• If you use a cash-for-gold mail-in company, insure your valuables for appraised value. Use certified mail or a shipping method that provides proof of receipt.
• Research any company you deal with. Read the terms and conditions. Some companies don't give consumers the option of rejecting an offer. Check the reimbursement policy for lost items – many limit their liability.
Sources: Better Business Bureau, Consumer Reports
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