Customers Complain of Gold-Buying Scams

As a growing number of Americans seek to trade their valuables for cash, many say they’re getting swindled. The Better Business Bureau has received hundreds of complaints about companies that ask customers to mail in their gold, then offer to pay what the company decides the gold is worth. The Federal Trade Commission is now reviewing charges of cash-for-gold scams, and the attorney general’s office in Florida—where many mail-in companies are located—is investigating. A class-action lawsuit was filed recently against the parent company of Cash4Gold, the mail-in trader that helped stoke the market with its TV ads.

Customers’ complaints range from lowball appraisals to downright theft. One man claimed he sent $200 worth of gold and received a check for 15 cents. Others claim mail-in companies melted their gold before waiting to hear if the offer prices were accepted. And some say they asked for their gold back but were told it was lost in the mail and were not reimbursed.

Mail-in companies are “getting away with what looks like fraud,” according to Rep. Anthony Weiner (D., N.Y.). Weiner has introduced legislation that would make it illegal for companies to melt down jewelry without customer authorization and would require those companies to insure jewelry for the same amount the customer did when returning it through the mail.

A Cash4Gold spokesman says his company provides a “safe, secure, and easy way for people to collect money for items that otherwise would collect dust,” and that the class-action lawsuit is “ without merit.” But he adds that national regulations could help shut down unscrupulous dealers.

Meanwhile, customers may do better selling their gold in person. When Consumer Reports shopped identical 18-karat jewelry, mail-in companies offered 11% to 29% of market value. Jewelers and pawn shops, by contrast, paid up to 70%.

— Drew Jubera