Gold Digger: How to Avoid Cash for Gold Scams

I'm sure you've heard that the price of gold has been setting record highs since 2008. Maybe you've even been tempted to pick up the phone upon seeing the ads for Dollars4Gold featuring the late Billy Mays's former business partner, Anthony Sullivan. The ad promises more cash for your gold than any other national TV advertiser guaranteed and if you find a higher price anywhere -- they'll double it. Plus, you'll get an extra $20 just for trying their service.

You don't even have to leave your house. Just stick your old scrap gold or jewelery in the pre-paid and insured (for up to $500) envelope after you request it from the website or by phone and you will receive a cheque within a week for the appraised value of your gold on the day it is received by the company. Your gold will be processed within 48 hours of its receipt. If that's not enough for you, you can even track your package and make sure it arrives safely.

But how many dollars can you really expect to receive?

CTV News featured a man who sent in a diamond ring he had appraised for over $4,000 and though he wasn't expecting to get the full value, he did assume he'd get at least between $400 and $500, but what he got was a drop in the bucket -- $98.44. Dollars4Gold promises the return of your wares if you are at all unsatisfied with the amount you receive, as long as you send the money back within ten days of the date on the cheque. When Jacob Alder followed the rules for his ring, he was informed that his property had been put in the smelter and it was already too late.

Turns out it takes 11 days to get the cheque from Burnaby B.C. to the Dollars4Gold Canadian headquarters, which means, unless he was mailing it express, he'd have no chance of getting the cheque back to Ontario in time to get his jewelery. Though Alder told CTV he complained and received an additional $190, he still suspects this is less than what he would've got from a reputable pawn shop or bullion dealer.

"I was a fool to trust them," Alder told the news team.

But how can you avoid ending up like Jacob and maximize your return on a gold appraisal? All will be revealed, after the jump.
1. Find Out How Much Your Gold is Actually Worth

Alder did do one thing right because the first step is always finding out how much your gold is already worth. Never rely on the company's assessment, always give your gold to a professional appraiser with an excellent reputation. The easiest way to do this is to take it to a jeweler and get a ballpark figure. I say ballpark because gold prices can and do change daily. The value is based on pennyweights with 20 pennyweights being the equivalent of one troy ounce of gold. If you want to figure out the value ahead of time, divide the 24 hr. spot price (in troy ounces) by 20 and that will give you the approximate value in pennyweights. Put all the 18 karat gold in one pile and all the 24 karat gold in the other. Use any gram scale for the piles and then convert the grams into pennyweights. (1.5 grams = 1 pennyweight and 1 kitchen ounce = 18.23 pennyweights) and put the figures into this scrap gold calculator Keep in mind that the appraiser will want to keep between 10% and 30% for his or herself and the price will depend on how much you're actually selling. To find out if they're reputable, ask if they are a member of the Canadian Jewelers Association.

2. Research Your Cash for Gold Company

First you need to establish how long the company has been in business. The longer they've been around, the more established their reputation, and generally the more inclined they are to guard their reputation like a pitbull. Those types of companies don't generally last for five to 10 years if they're ripping off their customers. Of course, it's easy enough to find out if they are. Take a trip over to the Better Business Bureau or Google to expose them rather quickly. Make sure the organization you're dealing with is BBB rated and they don't have a grade lower than B -minus. Less than a B-minus means complaints have not been rectified. Dollars4Gold's parent company Money4Gold Holdings, LLC has received an F based on 56 complaints and is not BBB accredited.

3. Take Them to Task

Now it's time to look a little closer and go over their gold brokering policies with a fine tooth comb. What does their insurance coverage look like? Now would also be a good time to peruse customer review sites and find out what their average payout is beyond the claims on their website. Go to the parent company phone number and ask them how they go about handling your gold. When it comes to the customer service line, don't fall for the hard sell that always seems to come right away. Write down your questions if you need to and don't be afraid to ask. This is also a good time to get the first speculative offer based on the weight and karats of your gold. If they hesitate to give you one and say you must send it in first, that's an instant red flag. They should be able to give you at least an average based on the 24 hr. Spot Price. Don't accept an offer that's less than 80% of the spot price because plenty of competitors are willing to pay up to 90%. (You just might have to leave the couch to find them) Plus, don't forget to copy down their address. Better yet, make sure they actually have an address and not a P.O. Box.

4. Only Deal with Appraisers Who Own their Own Refinery

Make sure the appraiser you deal with owns the refinery because that's the only way you will get top dollar for your gold. Those that don't have immediate access to a refinery act as a middleman and must give a cut of the gold's value to the refiner, leaving you with even less of a payout because the appraiser still has to turn a profit.

5. You Don't Have to Take the First Offer

You are never obligated to take the first cheque that you are offered. Most of these places will do anything to keep your business. A former employee of Cash4Gold in the U.S. revealed that representatives are instructed to give away 3X the amount you initially received as soon as you complain. However, the cheques are kept deliberately low, so that the company doesn't have to part with much money when and if you call back. I wouldn't doubt it's the same for Dollars4Gold and even the second offer is well below your gold's value, factoring in the 10% to 30% cut to the appraiser. Due to Dollars4Gold's "cheque received within 10 days caveat" that has proven virtually impossible to meet, I wouldn't deal with Dollars4Gold because of the high chance you will never get your jewelery back, despite their 100% satisfaction guarantee. However, that claim, combined with such opposing results, is enough to request a Canadian Competition Bureau investigation.

All in all, it doesn't seem to matter how charming Anthony Sullivan sounds on television with his British accent. "Why haggle with jewelers or pawn brokers?" he says in the infomercial and the answer seems to be, "Because then you're less likely to get scammed."

Source: http://howtosellgoldforcash.com/avoiding-cash-gold-scams/