Avoid Scams By Using Common Sense

One blog I read regularly that many of you have probably heard of is Shoemoney.  Last Sunday, he posted a letter from what he claimed (or was told) was a former Cash4Gold employee.  You know: the commercials with Ed McMahon, MC Hammer, and other broke celebrities telling you to mail them your gold in exchange for cash.  According to the former employee, the entire operation is one huge scam (you can read the letter here).

Use Cash4Gold If You Hate Money

While I’m not willing to call it a scam myself (libel), the Cash4Gold system as I understand it leaves a lot to be desired and certainly has certain characteristics common to most scams.  Here’s how it works:

1. You send your old gold, precious gyms, and other valuables in the mail (red flag #1).
2. They appraise the value of your items behind closed doors without any input from you (red flag #2).  For all you know, they didn’t even look at your valuables before cutting a check.
3. They cut you a check for what they believe your items are worth and mail it back to you, so you can’t haggle over the price.
4. If you disagree with their valuation and want your items back, you only have 10 days to request it.  Of course, by all accounts they make that very difficult.

The above letter alleges several more severe and outright illegal abuses, but we’ll assume for the sake of argument they aren’t true.

Common Characteristics Of A Scam

Even if Cash4Gold isn’t an out-right scam, it has several characteristics of one.

• Appeal To Greed – Cash4Gold promises to pay you top dollar for your old, unused jewelry.  The commercials make it seem as though that old 14 carat gold necklace you haven’t worn in years is worth hundreds of dollars when in reality, they’re probably pay you $5.
• Appeal To Urgency – The company makes it seem as though you must act now to take advantage of unusually high gold prices.  If you don’t, the implication is that you’ll lose out.
• Appeal To Desperation – Obviously, few would choose to hock their jewelry unless they were in dire straights.  Desperation + Greed = a cash cow for scammers.
• Appeal To Trust – Ed McMahon is a trusted household name and few would associate him with anything unethical.  Little do they know, Ed McMahon has his own bills to pay.
• They Ask You To Send Valuables In The Mail – I mean seriously people, never send anything of value in the mail!  It could be lost, stolen, or worse.

As for Cash4Gold, I’d advise you to take a trip to your local pawn shop if you really need to raise cash by selling your valuables.  You’ll be able to haggle over price and if you don’t come to an agreement, you can walk away with your valuables and not have to bother calling a 1-800 number and sitting on hold for hours.