By James Limbach
ConsumerAffairs.com
May 27, 2010
For many consumers, money is tighter than it's ever been and a lot of folks scrambling for immediate avenues to ease the strain on their monthly budgets. With the price of gold reaching record highs of well over $1,000, ads have prompted millions to sift through their valuables for rings, chains, and coins they are willing to part with.
However, Washington state Attorney General Rob Mckenna cautions the allure of the promised "fast cash" has many hastily submitting items they may know little about to companies they haven't researched. This has created an industry tailor-made for a recession and a hotbed of opportunity for consumer scams.
By far the most frequent consumer complaint regarding these services involves a low payout. In fact, there are widespread reports of people sending in hundreds of dollars worth of items only to receive a check for a paltry amount -- sometimes even less than $1.
While these companies guarantee satisfaction, some are reported to have practices in place to make the process as difficult as possible for the seller in hope they simply give up trying to recoup the submitted items.
When seeking to trade valuables in for cash, it is important for consumers to be equipped with as much information as possible to safeguard yourself in the transaction.
McKenna offers these tips for selling gold:
Understand what you have
Have the item(s) appraised. While not required by law, reputable U.S. jewelry makers stamp pieces to designate karat level and include the name or trademark of the company endorsing the mark. However, misleading or fraudulent jewelry markings are not unheard of.
Going to a jeweler for an appraisal will yield the most accurate results. Scrap values don't reflect the craftsmanship or antique value. You can find credentialed appraisers at the websites of the National Association of Jewelry Appraisers and the American Society of Appraisers .
Shop around
Payouts will vary, but it is important to remember that with more middlemen involved, you'll receive less. A study by Consumer Reports found that mail-in companies offered 11-29 percent of market value for 18-karat jewelry, while jewelers and pawn shops paid upwards of 70 percent for the same pieces.
Because the price of gold fluctuates, call businesses on the same day to ask what they pay for gold. As nice as it would be, you will not be compensated $1,000 for every ounce of gold you have. That figure applies to quantities of pure gold only.
Mary of Danville, IN, believes she got "ripped off" by Cash4Gold. "I sent them two gold rings, a watch, two bracelets and a necklace and only got $35.00 back," she tells ConsumerAffairs.com. "I sent the very same identical items to Thingswebuy.com and got 135.00 back. We certainly know who the thieves are". Mary acknowledges she'd have been better off had she researched Cash4Gold before sending her jewelry to them.
'A bird in the hand...'
Once you send in your gold to a company, you have surrendered a fair amount of power in the transaction. If you decide to mail your jewelry, choose a reputable company that offers free insured shipping that you can track online.
Provide a detailed description of what you're sending. Keep a copy of the paperwork, along with photographs of the items. Some consumers have complained that they sent 14-karat gold items that were falsely appraised as 10-karat and quoted accordingly. Unfortunately, once the items are in the company's hands, there is little for a consumer to do to overcome this information asymmetry other than request the items back.
Beware of superlatives
Claims such as, "We pay the highest prices!" or "America's #1 Gold Refiner!" are red flags because they are nearly impossible to substantiate. The most reputable companies will generally steer clear from these misrepresentations and quote a price upfront with values updated daily. Transparency is always worth more than images of fanned currency.
At the end of the day, doing your homework is the best way to protect yourself and your valuables. But in these tenuous economic times, it is important to remember that selling old jewelry or scrap gold is not a long-term financial solution. While you may be compensated enough to cover a month's worth of bills, you will not get rich.
Approaching the transaction with this understanding and conducting an adequate amount of due diligence will help ensure a fair deal.
Help from Uncle Sam may be in the offing. Congress is considering legislation designed to make sure that consumers who decide to sell their gold get a fair shake.
