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Cash4Gold Accused of Extreme Villainy

This amusing Cash4Gold Super Bowl ad made a splash when it first aired.

Come on, it’s tough not to laugh when MC Hammer claims to be selling a medallion of himself wearing a medallion, or when Ed McMahon gently pats a golden toilet and says, “Goodbye old friend” in the most wistful of tones.

Unfortunately, the company that they were representing is being accused by former employees and blogs of being fiendish in the extreme.

There’s obviously something questionable about a company with the sales pitch, “send us your gold…we will melt it down and pay you later, we swear.”

But to trade on the soul of a dying Ed McMahon to loot the olds of their gold…that is reprehensible.

If true.

The LA Times published an expose on the shady gold melters not long ago…

Cash4Gold.com, the Florida metal refinery that offers fast money to those who mail in baggies full of jewelry, has hit on a formula that would make 13th-century alchemists weep: It’s found a way to turn desperation into gold.

And in this economy, that’s a growth business. Last week, the 8-year-old company ponied up enough bullion to buy 30 seconds of famously expensive Super Bowl airtime, capping an ascent from the basement of late-night “As seen on TV” marketing.

A rising tide might lift all boats, but an ebbing tide draws buzzards. The airwaves and netways are filling up with quick-money schemes, not just Cash4Gold and its competitors — Dollars4Gold, GoldKit and GoldPaq — but simple ways to make thousands a week at home, or wring a profit from the depleted housing market.

But it’s Cash4Gold, which now boasts 350 employees, that has been able to buy its way into the cultural mainstream. In a bit of clever typecasting, its ad featured Ed McMahon and MC Hammer, faded celebrities known for their financial woes…

[…]

Cash4gold said it saw traffic to its website multiply by a factor of 10 in the wake of the ad.

That the commercial focuses on gold and says little about cash is just how Cash4Gold likes it. The company’s advertising is loaded with gold bars, fistfuls of diamonds and piles of expensive-looking jewelry (even though, of course, it’s those things that the consumer is giving up. )

But beneath the shiny veneer lies a dull reality: Cash4Gold is essentially a buyer of scrap metal. And scrap doesn’t fetch much on the open market.

Now the blog Consumerist has engaged Cash4Gold in a battle royale that has escalated into lawsuits.

By publicizing the true confessions of a former employee, Consumerist drew the wrath of Jeff Aronson, the corpulent CEO.

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According to former employees and Consumerist, here’s what the Cash4Gold peeps allegedly do: they get you to describe your gold to them, and then send it to them. They then insure it for $100 or less.

Their methods for appraising the gold are said to be extremely ghetto, basically checking out the gold with a magnifying glass and pouring some stuff on it to see what happens. Meth labs are far more sophisticated than this operation.

The checks they issue are far smaller than one could reasonably expect to receive at a pawn shop.

A former employee claims that they deliberately delay delivery of checks in order to prevent customers from successfully seeking refunds within the alloted 10-day window. When enraged customers call to complain, reps are given bonuses for talking them down to a proscribed settlement number. If they happen to lose the gold – oops! – they blame the post office and the customer, and present the insurance settlement of $100 or less. To hear this employee tell it, it’s just a big scam.

Cash4Gold, through their representatives, have vehemently denied all these charges, asserting that their appraisal methods are “state of the art,” that there is no such thing as a Cash4Gold “scam,” and that the claims of the outspoken employees are completely false.

These denials are generally accompanied by threats of a lawsuit, if compliance is not obtained in deleting those charges from a particular web site.

Consumerist said “meet me at the court…it’s going down” and then issued a full barrage, “The Article Cash4Gold Doesn’t Want You To Read,” taking the issue apart point by point and blasting Aaronson & Co. for purportedly shameful behavior:

Less than two weeks after we ran Liberis’ anonymous “10 Confessions,” we received our first letter from the company’s lawyers. (The company also sent letters to Yahoo!, the LA Times and reportedly a number of blogs – including some that had linked to or referenced Liberis’ post.) The letter to us asserted that the post by Liberis was “false and defamatory” and that we should “immediately remove” our coverage of it, and “block further posting.”

We decided not to remove the post, and instead replied with a 2,400-word request for additional details that might back up Cash4Gold’s claims. Reason: we felt that killing a post we deemed to be both credible and newsworthy would be a disservice to our readers and a betrayal of our responsibility as consumer journalists.

In that letter, and in several follow ups, we’ve asked Cash4Gold and its lawyers for evidence to support their broad assertions of falsehood. We’ve also lauded the company for starting its own blog, and pushed it to continue to join “the public debate” about these issues.

Instead, Cash4Gold has pursued a take-no-prisoners approach against Liberis and her former colleague Nephew. The company sued both women, who, until recently, had no legal representation. Both now await the outcome of court cases that could lead to escalating fines and perhaps even jail time based on contempt charges. For our part, we’ve continued to research the story. Since Cash4Gold’s original challenge, we’ve talked to Liberis and Nephew, Cash4Gold customers, the Better Business Bureau, the Pompano Beach fire department and the U.S. Postal Service, among others. We’ve dug through numerous web sites, legal documents, complaints to the Florida Attorney General and public records. We’ve also tried to interview Cash4Gold’s Aronson, though without success. Bottom line: the available evidence from the time Liberis was working at Cash4Gold provides ample and compelling support for her 10 points.

The kicker is that Consumerist, once a Gawker Media blog under the aegis of minister of darkness Nick Denton, was recently purchased by none other than Consumers Union, the publisher of Consumer Reports.

This means that Consumerist has access to Consumer Reports’ awesome system for testing products and services – and that their credibility is backed by the superb Consumer Reports brand.

In this case, they rolled out the freakin’ Mystery Shoppers.

To understand the basic deal that Cash4Gold offers, we turned to Consumer Reports’ “mystery shoppers” – the nationwide team of anonymous consumers who help buy the gear that our parent company tests. The mystery shoppers sent 24 identical gold pendants and chains to Cash4Gold and some of its national competitors. The necklaces were purchased for $175 each. We calculated their “melt value” – meaning how much the raw gold was worth – as about $70 each, based on the market price for gold when the necklaces were received by the companies (during the test period, the price of gold fluctuated, but never dropped below $900 an ounce).

Our tests – which lasted from May through early July – found that Cash4Gold and its competitors offered simple and relatively transparent service. Online tracking systems were updated promptly, the companies generally mailed out checks within a day or two, and customer service reps were courteous and professional. The actual offers, however, were miserly. Cash4Gold sent back checks ranging from $7.60 to $12.72 (or 11% to 18% of melt value), the lowest amounts of any firm. But others weren’t far behind: GoldKit offered $7.81 to $20.59, and GoldPaq $8.22 to $13.11. Each of those deals was worse than what our mystery shoppers could get at local jewelers and pawn shops, which offered anywhere from $25 to $50. The results reinforce advice we’ve offered before, which is that consumers should not use these highly marketed services because the payments they offer are too low. No matter how nice the person is who gives it to you, a bad deal is still a bad deal.

Cash4Gold declined to discuss the test results, but other news reports suggest lowball checks are typical. CEO Aronson has said the company pays from as little as 20% to as much as 80% of the gold’s value. And in an interview with Good Morning America, he suggested that customers who want more money should take their business elsewhere. “If all you care about is the net dollar, and you’re willing to go to the seedy part of town, and you’re willing to travel around … I want you to go there,” Aronson said.

All this stands in contrast to Cash4Gold’s advertising claims. While its website acknowledges that a jeweler or a pawn shop might offer more, one TV ad boasts “With gold, silver and platinum at their highest value in decades, Cash4Gold.com is able to give you top dollar for your unwanted jewelry.” The same ad goes on: “Because we own our refinery, we can cut out the middleman, which means more cash in your pocket.” But we have trouble squaring that “top dollar” claim with the offers we got…

Again, Cash4Gold staunchly denies the claims of their disgruntled former employees. They have a blog post up dissecting the charges point by point. They concede that, yeah, the deals they are offering are not what you could expect at a pawn shop. But what homebound elderly wants to venture out across the tracks to haggle with creepy Jerome at King Pawn?

However, Cash4Gold’s scorched earth strategy of threatening lawsuits against anyone who besmirches their reputation seems to be backfiring. Consumerist has doubled down and they aren’t afraid of the legal posturing.

The story is now rippling out into the greater media realm…here’s a Reuters wrapup that sees Consumers Union extending a hearty middle finger to Aaronson and his posse.

A new investigative report from Consumerist.com shines a spotlight on the business practices of Cash4Gold, which bills itself as the “World’s #1 Gold Buyer,” and on the company’s efforts to silence Internet criticism through litigation and financial incentives.

The report adds that the gold-buying company recently sued Consumerist.com by appending the consumer-focused website to existing lawsuits against two former employees…

[…]

“We follow-up on such challenges conscientiously,” says Marc Perton, Executive Editor for Online Media at Consumers Union, “and so we immediately set out to learn whether the company’s allegations had merit, both through our own research and through requests to Cash4Gold for more information.” The company has declined to cooperate, though, and just this week canceled a scheduled interview with Cash4Gold CEO Jeff Aronson.

The investigation provided support to Consumerist.com’s decision to publish the “10 Confessions” post in the first place, and also turned up evidence that supports Liberis’ account of certain business practices and working conditions at the firm. But the Consumerist.com also found that Cash4Gold may have made improvements in the time since Liberis worked there last year. For example, Liberis said the firm was shut down temporarily for “health and code violations,” a statement the company disputed. Fire department records show that the Cash4Gold location was indeed shut down after a number of violations last year, but that Cash4Gold has accumulated no new violations since moving to a different address earlier this year.

“We’re proud of the work that Ben and Meg have done, and we only regret that their report could not include a response from Cash4Gold CEO Jeff Aronson beyond his earlier public comments,” Perton said. “We also hope today’s post will help lay to rest the idea that blogs don’t do investigative reporting.”

Take a look for yourself. Knowing what you know now, do the claims of this advertisement ring true to you?

I would never do business with Cash4Gold…

But I would GLADLY attend the monthly Jamaica Plain dance party of the same name.

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About Alpine McGregor
Just like you, man. I got the shotgun, you got the briefcase. All in the game, though, right?

4 Responses to Cash4Gold Accused of Extreme Villainy

  1. Jason Banton says:

    I’ve been doing some research on these online gold buying companies, and bad stuff about the above mentioned company keeps coming up. For those who are interested, though, I did find one company who seems to be in business because of the failings of these other companies, and that company is Augustus Gold. They took the liberty of explaining their position about these kinds of business ethics in an article I found Here.

    J Banton

    • Mimi says:

      Do not use Augustus Gold. They are a scam. Never answer phone,promise response in 24 hours and I have been waiting for a month. Go local do not send your gold and get taken

      • Anonymous says:

        Yes I have had the same problem with Augustus Gold and Silver. And their phones are now disconnected and they do not reply to e-mails. I have complained to the better business bureau and the fbi, I hope they get prosecuted for taking advantage of trusting people.

  2. Bill says:

    Send nothing to Augustus Gold and Silver or there new name Precious Metals Exchange. They have owed me money for over a year.. The co-owners Ray Holley and Jerry Nelson should be jailed for theft. There business address is a mail drop, they are hiding there actual location. There Better Business raging is “F”. Send them nothing for you will get nothing.

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