31 January 2009

How the Cash4Gold ripoff works

Anyone who has watched late-nite television has seen these advertisements. There's a detailed explanation, with example, at this link. Excerpt:
With these prices, Brent's booty was worth $198. He had $110 worth of 14 K gold plus $88 worth of 10 K gold.

Brent had initially noted prices on the Cash4Gold site as:
$15 per DWT for 14K gold.
$13 per DWT for 10K gold...

The offer check from Cash4Gold arrived, for $60!

Brent called Cash4Gold and immediately and asked for his stuff back. They made a new offer on the phone: $178!
Additional comments from the Reddit thread:

The other thing you need to realize is that the "offer" is not on the table for long. I believe it was 10 days from the time they print the offer check. No response means they just keep your gold, melt it down, and you're SOL. That means from the time they print the check until the time they receive your returned check rejecting their payment must be less than 10 days. When my check arrived in the mail, it was 7 days old (which meant I had to mail the check and have it back to their mailbox in 3 days).

Cash4Gold (and also GoldPaq, for that matter) make a very specific offer, and they deliver on it. It's an offer ridiculously tilted in their favor, designed to take advantage of ignorance, but none the less, they deliver exactly what they promise. And that makes it not a scam. Very probably unethical, but not actually fraudulent. And that is, I think, an important distinction to keep in mind.

They take advantage of ignorant people and convince them to sell a valuable commodity for a fraction of what it's really worth. But the fact is, a valid, 100% legal trade transaction is conducted with no false representations. The offer is made, the customers are free to take it or leave it, and the company honors their wishes.

The real scam here is they are not required to keep records of the gold - like a pawn shop is required to do. The net result has been a huge spike in home break-ins that are quick and dangerous if someone is home, with the thieves targeting gold that can now be converted quickly to cash - without having to fence it to a pawn...one group of that they caught confessed to police that this is the new way to fence stolen gold.

Addendum: The J-Walk blog has a better write-up on this subject, with additional links.


  1. Why in the name of Christ would anyone package up their gold in an envelope and mail it to someone who was advertising on late night TV? It's hard to feel sorry for people gullible enough to do such a thing.

  2. people have always had the option to cash in their gold if it's worth more then the jewelry. But they better do their homework and find the older reliable dealers, or their local jeweler, but keep checking online for the current price and find out what % they are paying up front.

  3. Those of us who are sophisticated and well-informed sometimes do have difficulty empathizing with the idiots of the world, but one has to remember that the "gullible" population also includes a lot of elderly people who are ruthlessly taken advantage of by lots of heartless jackals.

    Some of them who live off fixed income instruments have seen their income plummet and are desperate. They may also remember buying the gold jewelry in a time when gold was $35/ounce and the price they are offered now may seem high compared to when they bought it.

    I do feel sorry for these people.

  4. Mr. Webster - About what you said did you know that the word "gullible" is not in any dictionary?

  5. Well, they managed to scrape enough gold together to get a superbowl ad this year:/

  6. http://www.merriam-webster.com/dictionary/gullible

    Main Entry: gull·ible
    Variant(s): also gull·able \ˈgə-lə-bəl\
    Function: adjective
    Date: 1818
    : easily duped or cheated

    — gull·ibil·i·ty \ˌgə-lə-ˈbi-lə-tē\ noun

    — gull·ibly \ˈgə-lə-blē\ adverb


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