Cash for gold craze concerns officials
Record-high gold prices have Americans rushing to sell their gold for cash.
The trend is spreading like wildfire, said Randall Hoth, president and CEO of the Wisconsin Better Business Bureau, Milwaukee.
"It's almost an epidemic," he said.
Advertising that was practically nonexistent two years ago regarding this latest get-money-quick trend has become prevalent in communities nationwide today through billboards and TV infomercials, Hoth said.
With growing concerns at the BBB, he answered these questions:
Q: Why are people selling their gold for cash?
A: "It's been a tough economy, and it's an easy way to convert an asset that maybe they're not using and turn it into cash," he said.
It also mirrors issues of people losing their jobs, Hoth said.
"People's incomes have gone down substantially," he said.
Ease of service also appeals to people, Hoth said.
All they have to do is make a phone call, request a mailing packet, mail off the gold items and get a check, he said.
Q: Are cash for gold ads too good to be true?
A: "It depends on the company. It doesn't mean every company is performing unsatisfactorily. But there definitely is a big concern," Hoth said.
Ads are very appealing, he said.
So the concern is this: Is there any trust behind promises of the company's ad?
BBBs worldwide are working to rate these gold-for-cash companies and whether they are trustworthy. So it's very important anyone considering doing business with these companies do significant research on them, Hoth said.
Q: How can one do that?
A: The easiest way is to visit the BBB's Web site at www.bbb.org or call 1-800-273-1002, he said.
Q: Where can people safely sell their gold?
A: The BBB suggests you first start with a local, established, reputable jewelry house because the jewelry store will make you aware of some of the pitfalls of selling jewelry over the phone or by dropping it in an envelope, Hoth said.
Check with the BBB to see if the company has been in business a long time, he said.
"We don't want you going to a dealer that is renting a room and doesn't have a storefront or long-term reputation in your area. We want you to deal with somebody you can trust," Hoth said.
Q: How do you know if you're getting a fair price?
A: Get two or three offers from different jewelers or cash dealers to get an idea of what price you're looking at before you trust someone and put valuables in an envelope and mail them off, Hoth said.
"The gold value people are getting for their valuables are very low compared to the appraised value or the purchase price," he said.
Q: What other tips can you share?
A: Some ads promise your accessories will be safe and they'll send you a mailer for your precious metals. Although they appear to be secure, the business might be sending you only a first-class postage mailer, which is not insured and can't protect you or be tracked, Hoth said.
"So if you are bound and determined to mail your gold for cash, make sure you send it by certified mail and insure the pieces you're mailing," he said.
Also, Hoth said, it is common practice for gold-for-cash companies to send you a check quickly for an amount less than the gold's value.
The approach is that someone who is looking for extra cash will accept a check for lesser value. And they do. But if you think the amount of the check is unacceptable, don't wait, he said.
"Immediately try to work with that company," Hoth said. "And if they don't work with you, go online at bbb.org and file a complaint."