The TV commercials promise quick money for your unwanted jewelry—a tempting offer, what with the rising price of gold in recent years. But mounting allegations of pitiful payments, ignored return guarantees and other deceptive and unfair practices mean that your attempts to sell those old necklaces and rings could subject you to a golden fleece.
Many mail-in gold companies are legitimate, with some earning “A” ratings from the Better Business Bureau. However, officials charge that it’s not always the case with industry leader Cash4Gold, which has generated more than 300 complaints to the BBB in the past three years and has resolved most of them.
Florida Attorney General Bill McCollum recently launched an investigation into Cash4Gold after receiving at least 72 complaints from customers about the Pompano Beach-based company. A few weeks earlier, Rep. Anthony Weiner, D-N.Y., called for the Federal Trade Commission to look into practices by Cash4Gold and other companies, and said he intended to introduce legislation to regulate mail-in gold buyers that use the U.S. mail. And in October 2009, a class action lawsuit was filed against Cash4Gold and its parent company, Green Bullion Financial Services.
McCollum, Weiner and past customers level two main allegations against Cash4Gold:
(1) They say the company pays only a fraction of the true value of customers’ gold, issuing checks as low as seven cents for individual items. An investigation by Consumer Reports found that Cash4Gold and similar companies paid only 11 to 29 percent of the day’s market value for jewelry it submitted. By comparison, pawnshops and other venues paid up to 70 percent of value for the same merchandise.
(2) Some customers say that when they are dissatisfied with Cash4Gold’s payment and try to get their merchandise returned, they are told it already had been melted down—even when they have contacted the company within its 12-day window for returns. Others allege that when they send back the check for their gold’s return, they receive nothing in return—or sometimes, an empty envelope.
In the past two years, the U.S. Postal Service has received numerous complaints about items lost in the mail going to or from Cash4Gold. A spokesman for the U.S. Postal Inspection Service tells Scam Alert that his agency has found that in the overwhelming majority of those cases, incoming mail with jewelry was properly delivered to Cash4Gold, but raises the possibility of “delay tactics on the company’s part” in replying.
Richard Santamaria of the Office of the Inspector General for the USPS in Miami, who has also investigated these cases, says the missing mail represents less than 1 percent of Cash4Gold’s total mail volume.
Cash4Gold CEO Jeff Aronson insists that his company is not a “scam business” and that dissatisfied customers often “have unrealistic expectations of what that material is really worth.”
Aronson says that after items are accepted, they are melted into bricks of metal that are either refined or sold to other vendors. He says customers are paid between 20 and 80 percent of their gold’s melt value—not its appraised value as jewelry. “When somebody buys a ring for $500 and then finds out there is only $50 worth of gold in it—and they’re offered only 25 percent of that amount—well, that would upset me, too,” he tells Scam Alert.
Aronson adds that Cash4Gold promptly returns merchandise to people who are dissatisfied with their payments. “Considering we have done [nearly] a million transactions, it’s a ludicrously low number of people who did not get back their jewelry,” he adds. “Most of the complaints made are not even from our customers. I created this industry and we do massive amounts of value. Don’t you think that has hurt [the business of] pawnbrokers and jewelers?”
What you need to know
If you want to cash in your old gold or other precious metals, you need to do your homework and know how the business works.
- When a mail-in gold buyer offers a set number of days to return its check, the clock starts ticking the day the check is issued—not when you receive it. That provides a shorter decision time, possibly several days less than what you might think.
- The price of gold fluctuates daily, so before mailing old pieces, check that day’s price of pure gold at Kitco, a reference site used by most jewelers. You can also calculate a piece’s worth yourself. Weigh the item on a quality kitchen scale, and note any stamped karat mark that gives the metal’s purity. (Pure gold is 24K; most jewelry ranges between 10K and 18K.) An online calculator provided by the scale maker Dendritics will translate commonly used avoirdupois ounces into the pennyweights or troy ounces used by jewelers.
- Call several jewelry stores and pawnshops, which may offer a percentage of an item’s appraised value for resale, as opposed to the lower melt value.
- If you’re selling to a buyer that pays a percentage of the melt value, Consumer Reports suggests you should aim for at least 50 percent of that value.
- If you’re sending your gold to a buyer by mail, use registered mail to verify the time of receipt.
- Before doing any business, always check the reputation of a gold buyer with the Better Business Bureau—whether it’s Internet-based, a vendor at a trade show or a brick-and-mortar jeweler.
- If you believe you were scammed in trying to sell your jewelry, report it to your state attorney general, the BBB or the Federal Trade Commission. For more advice on safely cashing in your gold jewelry, visit the BBB.
Sid Kirchheimer is the author of Scam-Proof Your Life (AARP Books/Sterling).