Thursday, January 28, 2010

Seller Beware: Wide Range in Prices Offered for Gold

Sellers Must Shop Around Before Parting with Jewelry

By Conor Greene

With the economy down and the price of gold up, many residents are turning to their old and broken jewelry for a source of some quick cash. However, if you’re not careful and don’t take certain steps, there is a good chance of being ripped off in the process.

In light of this trend, a local elected official is warning would-be gold sellers about one particular scam, in which a company called Cash4Gold often pays between just 11 percent and 29 percent of the current market price for gold. Local pawn shops are only marginally better, generally offering between 35 percent and 70 percent of the value.

On a recent afternoon, The Forum took a first hand look at the market residents face in order to get a better idea of how close local pawnshops and jewelry stores come to offering full market value for an assortment of old gold bracelets and pendants. To do this, a reporter took the items to Marlowe Jewelers in Howard Beach, where owner Dennis Croce determined that the jewelry was worth about $1,995.

While the reporter knew exactly how much the items were worth, he set out to six local buyers, playing dumb in order to see what kind of offers would be made. First up was Gold Rush, located at 105-14 Crossbay Boulevard in Ozone Park, just south of Liberty Avenue. After checking each piece of gold, the clerk offered just $1,125 for the jewelry. Likely based upon the expression on the reporter’s face, he quickly said he could make a much better price and punched some numbers into the calculator before offering $1,350.

Next up was Village Cash for Gold at 80-10 Jamaica Avenue in Woodhaven. The clerk immediately boasted that he doesn’t “play around” and makes fair offers. He came pretty close to the gold’s actual value, offering $1,700. However, the clerk looked like he expected a deal to be made, and it took a minor amount of insisting that the offer needed to be mulled over before the clerk handed the gold back to the reporter.

A few blocks down at Metropolitan Pawnbrokers, 92-16A Jamaica Avenue, the reporter encountered what would ultimately turn out to be the fairest offer of the day. The clerk, who was one of just two who asked where the male reporter had gotten the women’s jewelry, urged him to shop around and then come back with the highest offer, and said the gold was worth at least $1,900. He also advised not to tell other buyers what offers had been made prior in order to get the best price possible.

The fourth store visited was The Gold Standard on Austin Street in Forest Hills, where the clerk first offered $1,500 before upping the price to $1,650 – at least in the ballpark of the gold’s value. However, the reporter noticed that the scale there only read 85.5 pennyweight, while the jewelry actually weighted 86.7 pennyweight.

From there, The Forum headed to Ridgewood, stopping first at Gemelli Jeweler’s Fresh Pond Road store. Despite being a jewelry store that carries many expensive items, the girl behind the counter there offered just $1,385 before saying she could pay $1,400 at most. The last stop was Liberty Pawn Brokers on Weirfield Street, which offered $1,400.

The Forum’s look at the local gold buying industry comes after Rep. Anthony Weiner (D-Forest Hills) released a study showing that Cash4Gold, which advertises on late-night television, is preying on cash-strapped New Yorkers through deceptive marketing, low payment policies and misleading return policies. Residents mail the gold in an envelope, and the company assesses it and sends a check in return.

According to Weiner’s study, Cash4Gold intentionally low-balls offers to customers and then, if a customer complains, increases the offer. Customer service agents are reported to receive a commission for keeping the payout low, the congressman added. As a result, Weiner has asked the Federal Trade commission to investigate the misleading practices and plans to introduce the GOLD Act, which would seek protect consumers.

“It’s time for the government to take a stand against predatory companies like Cash4Gold,” said Weiner. “There’s no reason to allow Cash4Gold to continue their policy of kicking struggling consumers while they are already down… Cash4Gold is using these tough times as a golden opportunity to fleece customers. These deceptive practices must end.”

On the local level, there are simple steps sellers should take to ensure they receive a fair deal, according to Marlowe Jeweler’s Croce, who says his store has seen more people getting rid of old jewelry in recent years. “It seems to me like every time there is a spike in gold on the up side, you get a rush of people,” he said. “I guess people are definitely following that trend, we get a lot more people paying attention to the price than a few years ago.”

He says the typical sellers are either older folks who need the money to squeeze by in these tough times, or younger people who don’t necessarily need the money but just want to get rid of old jewelry while the price of gold is still high. “Some older people tell me they can use the money to pay bills,” said Croce. “The older people are more sentimental, but have to pay the bills, while the younger generation, once they’re tired of it they don’t care [about holding onto old jewelry].”

Croce’s advice is to simply shop around and only go to reputable stores that are licensed. While there is no law regulating how much a store has to offer, there are other regulations that licensed brokers must follow. “If you don’t feel comfortable with the place, don’t use them,” he added.

Other tips include getting an offer without revealing the amount other stores suggested, and to try to sell plain gold that doesn’t include stones in order to get a clearer idea of what the jewelry is worth. “Shopping is the most important thing. If they shop around, they are usually going to come back to me, since I give them a fair number,” said Croce.

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