GOLD Alert! BBB Says Tricks of the Trade can Mislead Consumers

July 02, 2009

The advertising can be seen and heard – give us your gold and we'll give you cash. Sounds like a good trade – but is it a good deal? The Better Business Bureau (BBB) warns that selling gold for cash may leave consumers with much less than their item is worth. "Soaring prices and cash-strapped people have created a perfect storm - for good guys and the bad ones too," said David Polino, Better Business Bureau spokesperson.

The economy slump and gold rates at an all time high are drawing consumers into poor deals. One company, "Cash 4 Gold," is advertising a Fourth of July special to get an extra 20% more for your gold. The internet based business has a D rating with the BBB and a high complaint volume; consumers are warned to review all their options before they sell. "There's homework to be done to find someone you trust because this situation has turned local jewelry stores temporarily into pawn shops," said Polino "Those that do their research to find a reputable business stand to do better than those that don't."

Some of the complaints reported include being tricked by high-pressure sales, getting much less than expected without any recourse and fine print in the guarantee. The Better Business Bureau warns that these and other deceptive practices have cost consumers their time and money. "It's a big business with a low profit margin so appraisals can really vary," added Polino.

For consumers looking to sell, whether at a mall kiosk, through a home gold-party hosted by a jeweler, the Internet, or a local jeweler, the BBB offers the following advice:

  • Find a jeweler that you can trust in your community and check out their business report with the Better Business Bureau (BBB), .
  • Educate yourself about the current gold rates and get an appraisal from someone locally. The BBB suggests obtaining two or three appraisals to compare prices, prior to any sale.
  • Your jewelry may be stamped "14-Karat," but that does not mean it is pure gold. Some necklaces can have catches stamped as such, but the number alone means little and the remaining chain could be coated or another metal altogether.
  • Use a search engine to see what other consumers are saying about their experiences with companies selling online. Look to see if others have reported issues with a particular business, jeweler or jewelry store.
  • If gold is worth $930 per ounce, you most likely will not be paid $930 for every ounce of gold you have. Ask what you will be paid (if an online company, make sure you ask for specifics and give details on items you'll be sending). The ounce quote is for pure gold only and 14-Karat gold is composed of just 58.5 percent gold. Ask how much the company's going rate is for each ounce of each karat you are sending. The lower the karat, the less the gold content.
  • Don't let anyone steal your diamonds from gold pieces. Single gold stud earrings might be worth $5 or $10, yet diamonds in the earrings can be saved. Some are too small, and the labor to remove them might exceed their value, but engagement ring diamonds, for example, should be given a value separate from the gold.
  • Gold pieces with less color, or fewer stones, are generally worth more. A jeweler must spend time to break the stones out before the item goes to the refinery.
  • Make sure your items are insured when being shipped, so if they are lost you can recover the value. Obtain appraisals prior to mailing items, so if they are lost you have proof of their value.
  • Check the company's policy as to what they will reimburse if they lose your product. Many limit their liability. Make a list of the items included in the package, keep a copy for yourself, and put a copy in the envelope.
  • Take pictures of the items you are sending, including any identifying marks.
  • Ask about the company's guarantee if you are not satisfied with the price offered. Can you get your product back if you've been issued a check? (many companies melt down items in 10 – 14 days). If you send the check back, send it "return receipt requested," so you have proof when it arrived at the company.