Thursday, February 5, 2009

Response to Cockeyed Article

The purpose of this blog is to lay out critical arguments of Cash4Gold and provide informative responses. Due to the immense attention the company has received since the airing of its Super Bowl ad, there is need to more clearly articulate the purpose and processes of the company, and to clarify any misconceptions. recently posted an article with the title "Cash4Gold Will Offer One-Third of the Actual Value for your Gold" that was highly critical of the company's operations. We invite all prospective customers to investigate before they send in their jewelry, so in the interests of full disclosure following are a few of their findings and claims, along with a response. "Brent K. was also interested in doing a little Gold kit price evaluation, so he gathered up his family fortune of gold scraps and prepared to do some comparison shopping. He had some 14K gold and some 10 karat gold... First, he took the pile of gold to a local pawn shop... Brent's booty was worth $198... The offer check from Cash4Gold arrived, for $60!"

The Truth: This scenario is not in dispute. While it cannot be confirmed that this is indeed what happened, I will trust that it did. However, it is very important to remember that Cash4Gold is not a pawn shop; it is a refinery. Whereas a pawn shop will take your jewelry and sell it in its current form (value dependent not only on gold content but craftsmanship), Cash4Gold melts down your gold and sells the gold itself. It doesn't matter what your gold looks like. Moreover, it is entirely possible that the pawn shop overvalued the gold in question.

CEO Jeff Aronson also discussed this in a more recent LA Times article. He made it clear that melting your jewelry is "not always the right way for somebody to monetize," and that "there are ways for them to make more money sometimes by reselling to pawnshops and jewelers." Moreover, the company's website takes the unprecedented step of telling its prospective customers that they may be able to get more elsewhere.

According to a recent study, 92% of Cash4Gold's customers would never use a pawn shop. The demand for their services are there because the process is quick, easy and confidential. In particular, customers can sell broken jewelry that pawn shops may otherwise have little interest in. The company's management openly acknowledges that gold owners may be able to get more if they put in the work to go to a pawn shop or jeweler. Many people simply don't want that hassle.

This explains the discrepancy. Cash4Gold was valuing the jewelry entirely on the content of the gold. Workmanship was not a consideration. Moreover, it is not a surprise that a pawn shop would pay more. They are not responsible for the cost of melting the gold down, providing shipping, executing the transactions, etc.

Even so, the point made by the Cockeyed article here is well taken. Cash4Gold does need to be clear about the process with prospective customers, educate them and set reasonable expectations. "He also noticed that Cash4Gold offers a 'fast cash' scheme to forego the paper check and deposit their payment directly into your checking account within 24 hours. This setup would be faster, but gold sellers would give up their chance to examine and renegotiate their offer."

The Truth: has several meanings of the word "scheme," but it's pretty clear that their intended usage here is "A secret or devious plan; a plot." There is nothing secret or devious about the FastCash option. On the website where this option is promoted, it indicates that "By using the Cash4Gold FastCash program, you agree that you waive the 10-day return policy for all material." This isn't fine print at the bottom of the page or legal mumbo jumbo that's included in some terms and conditions that you will not read. It is right there in the middle of the page in regular sized print.

Also, to accept the FastCash option, you must send a canceled check along with a form that clearly indicates you are waiving the 10-day return policy. If a customer chooses this method, they indicate that they want the cash immediately -- time is of the essence.

This is not a scheme. That said, it cannot be denied that there is enough uncertainty that Cockeyed would claim it to be a scheme. This is another item that the company is reviewing to ensure that there is no misunderstanding when a customer selects this option that they are waiving the 10-day return policy.

In Conclusion: The article is based on the assumption that Cash4Gold -- a full service refinery -- should offer customers the same amount of money for their jewelry as would a pawn shop -- which resells the whole piece without the additional overhead. This article is evidence that further education of prospective customers is necessary to prevent any confusion and set proper expectations. Cash4Gold is most often used by people either selling broken gold jewelry or those preferring a quick,easy and confidential transaction to the hassle of dealing with a pawn shop.

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