Lots of negative feedback from our post the other day on Cash4Gold’s amazing growth and profitability. This year, their third year of operations, they are on track to make $160 million in revenue and $50 million or so in profits. All from encouraging people to send in gold jewelry in exchange for cash.
A handful of comments pointed out the very funny Onion spoof on the company where the U.S. government uses Cash4Gold to pay down the national debt. But many of the rest say the company is a scam.
Example: “They offer people significantly less money than their gold is worth and prey on people’s ignorance and desperation. If those profit margins are right, they’re basically stealing from the uninformed. Search online and you’ll find a ton of scam stories about them. It is a very, very shady business…”
Another: “There must be a difference between doing business and stealing from people. I can not believe that this company is still in business. goverment should bring some regulations and monitoring to this industry. due to the recession people are desperate and this company is taking advantage from people. how the owners can sleep at nights. they are taking advantage of people in need of money.”
And: “It appears they are litigious scammers. Running scams is a great way to rake in money.”
Etc.
The chief complaint is that the company offers customers too little money for their gold compared to the spot price at any given time. My understanding is the company aims to pay no more than 50% of the spot price to sellers. The rest, after operational and substantial marketing expense, is profit.
And there is certainly nothing wrong with a company making a profit. They are offering a convenient service to consumers (they send you the prepaid envelope to ship your gold, pay insurance, and ship the gold back to you if you don’t take their offer). If you don’t like what they offer to pay you, use another service. The site even tells you that pawn shops, local jewelers and online services like eBay and Craigslist may fetch you a higher price.
Overall I don’t see any serious ethical issues at all with Cash4Gold, with one exception. If the company is in fact not sending back jewelry promptly to customers who have declined the offer, that needs to be fixed. But hard bargaining and lowballing offers to consumers isn’t evil. It’s just a business decision.
There are no ethical issues here that you don’t see with Google’s business model that generates obscene profits. Or the Windows/Office franchise. Or the exorbitantly priced hot dog vendor at the baseball stadium. Or $30 wifi in a hotel.
I’d personally like to see them make a flat out promise to pay some percentage of the spot price of gold – say 50% or 66%. That way people can have a better idea of what they’ll be offered. Given how many competitors there are in this market, I wouldn’t be surprised for something like that to happen eventually anyway.
But let’s save the “this is evil” comments for the really insidious stuff. Like Jigsaw, who continues to make a killing of the sale of our personal information. Or the Intelius scam we reported on last year where consumers were being automatically signed up to useless credit card subscriptions.
Making obscene profits may make you jealous, but it isn’t evil. There’s a reason so many people are using the Cash4Gold service – it’s easy and convenient. They don’t make promises on their website that they don’t keep, and they aren’t tricking or scamming people. They are simply buying low and selling high, and that’s capitalism at its finest.
Your last sentence “They are simply buying low and selling high, and that’s capitalism at its finest.” sums it up perfectly. Sure some consumers may think there offers are too little, though that’s why they pay for postage and handling. I personally don’t have an issue with Cash4Gold and I must congratulate them on finding the perfect niche.
But the bigger question is…who can possibly replace Ed McMahon?
Alex Trebek, Drew Carey, or Andy Richter.
+1
“Capitalism at its finest”
find a better price, go there
Cash America International FTW
http://www.cashamerica.com/
Absolutely.
One also wonders how many of those bleeding hearts are horrified that C4G take half the value whilst being quite happy to fund Apple’s 34% mark ups.
It’s a funny old world.
Apple marks up its computers 34% from the spot price? What is the going commodity rate for Apple computers?
Desperation is not a new niche.
Sushant, come on! organ traders are just people who found a way to make a little money. It’s the fault of those immigrant people trying to feed their family for not thinking about what will happen when they don’t have their liver.
Perhaps we can expect a Cash4Gold ad in the TechCrunch side bar soon? Before anyone seriously thinks about sending anything to that business, read “10 Confessions Of A Cash4Gold Employee”
LINK: http://consumer...h4gold-employee
Drew, the point is that all this faux angst is pointless. Sure, some people are going to be desperate and pawn their goods – and that doesn’t just apply to gold – most just want to get rid of it, make a few bucks and can’t be arsed doing it themselves.
My point was the “Oh my god! They’re making a profit!” cries of outrage are probably coming from people typing on a Macbook or iPhone made by labourers in China earning a few bucks a day and instead of saying to Apple that, you know, rather than making a 34% margin you could actually give some more cash to your hideously exploited manufacturing workforce.
That’s what’s so funny – this is visible and affects people in the US so you care, your shiny toy on the other hand is OK because you don’t see the exploitation.
That’s what makes it comedy gold.
I get that. I don’t know that just because a product comes from China the workers are exploited. Yes there are exploited workers in China. There are illegal sweatshops in the US as well. Yes people produce things and then sell them over the cost of production to create an income. But when the actual exploitation is spelled out, as it has been elswhere with C4G, I think we can stop and say, this isn’t right, or beyond the pale wrong.
If you are wearing clothes right now, it’s a good chance that something you’ve got on came from some place where people make less money than you do. This in and of itself is not exploitation. 12 year olds forced to work all day for below poverty subsistence is exploitation.
There are a billion or so people in China. I don’t think you can honestly suggest that all of them are part of an exploited workforce.
Exploitation, as it’s applied to the C4G case has to do with benefiting unfairly, an act C4G may be guilty of according to evidence gathered by many consumer groups. Evil is a subjective label. I would look at evil as indifference to the taking advantage of people in a bad situation and it seems that C4G does do this as do those creapy cash advance shops that seem to be in every low-income neighborhood in the world.
Other people don’t see this indifference as evil. That’s their deal.
Drew, I know that the clothes I wear and the goods I use are made by exploited workforces but, bluntly, I don’t really care.
At least I’m honest about it and don’t selectively pick topics which insult my particular moral sensibilities to evangelise.
Criticise them all or not at all.
And this in a nutshell is what is wrong with the world: “bluntly, I don’t really care” [who gets exploited as long as the selfish benefit].
Why do so many feel entitled to live off the efforts of others? Do we really want to claim THAT as “the American way”? If you answer yes all I ask is that you realize you are selfish and all those who favor exploitation will themselves be exploited.
Totally.
Cash4Gold not listed in Mangrove VC’s portfolio of investments? http://www.mang.../investing.html
There is a company in Austin that does something similar and they are sleazy. They call old people and talk about how the government isn’t stable that they need to sell everything and put it in gold.
These guys make millions driving around porsches and Ferrari’s taking advantage of all the old people. Its pretty sick.
Too bad for old people, aren’t you supposed to get wise with age???
Let’s see how sharp you are at deducing the latest scams when you’re 70 or 80…
Fox News channel isn’t in Austin, they’re headquartered in New York.
(Seriously though, half the commercials on Fox News are scams to steal money from idiots.)
Is that a commentary on the demographic makeup of Fox News viewers?
HA!
Fox and News should not even be in the same sentence. Fox, right wing cryer and conspiracy nut club, that would be more appropriate!
Hey I’ve heard payday loans are a good business as well. Anyone figured out how to do that Web2.0? Ditto cigarettes.
TC actually covered a payday loans 2.0 usery play.
I agree with you…but unfortunately, not everyone thinks about morals and ethics when it comes to making money.
There are a lot of opportunities to take advantage of people in a time of desperation – doesn’t make it O.K.
The real issue, clearly visible with two minutes of googling, are their shady business practices.
Their internal practices of defrauding consumers are well documented and the company sued the employees who leaked their internal practices and The Consumerist who provided an expose.
I would also take issue at Cash4Gold not paying for the gemstones mounted in their gold jewelry. They have been quoted as saying “the stones have no value” when in fact the samples sent in had considerable monetary value.
“Buy low sell high” is only honorable when the more educated buyer is negotiating in good faith. Cash4Gold’s practices are illegal in many states which is why they are located in the safe haven of Florida.
I don’t have an issue of a company making a ton of money if they are not lying to consumers. However, Cash4Gold lies. They offer a 10 day return on your jewelry if you don’t like their offer and all their commercials state that they will let you know the offer in 24 hours, however they don’t actually release the check (which is the offer) for 3-4 days – and if you add in weekends and USPS transport time you would be lucky to have 2 days to check your mail, and send your check back to them within the 10 day period. Basically, if you send them your jewelry and you don’t like their offer you are screwed. Their profit margins aren’t evil but their business practices are.
I did not realize there were so many supporters here. I am glad that everyone supports profit seeking at all cost.
I will be right over with my shotgun and crew, and we’ll just enslave you as you sleep real quick. I love it! It’s capitalism at its best! I can already taste the profits. I promise; It’s gonna be bangin’! You are going to be put to work in a code-monkey farm. That code’s not going to get coded on its own, monkey! I can’t wait! What’s your address?
And, yes, deceiving people into thinking they will get a fair price for their gold is fundamentally the same thing as slavery; it’s all about profit.
This is very clearly not evil, unethical, or whatever else people may have claimed. That said, this seems like an odd story for TC. Other than a shared investor, it doesn’t seem like there’s much connection to tech here. What caught your interest?
If you were going to explore tech-related possible evil scams that could rake in boatloads of money, my bet would have been on a follow up Swoopo story.
I love capitalism.
But there is still an ethical issue with this company, simply because it looks like a fairly large percentage of people who use it feel scammed afterward.
Whether something is a scam or not has nothing to do with whether it’s legal – if people feel scammed, it’s a scam. Google/Microsoft/Apple don’t have the same percentage of consumers who feel that way.
Capitalism’s only defense against this type of thing (if you can’t win against them in court because they got the fine print right) is to publicize the scam – educating consumers – through various media (like TechCrunch). Given the feedback from the first article I don’t think you’ve done a service to TechCrunch readers by defending them Michael.
” it looks like a fairly large percentage of people who use it feel scammed afterward.”
what evidence have you found of that? There are a few complaints online, but far less than you’d expect given the volume we’re talking about here.
That’s because the old people who get ripped off probably think a messageboard is the pushpin board outside their bingo hall.
I didn’t realize that it was so hard to figure out that the old and poor, who are going to be the desperate who fall for the deception that is C4G, are not going to be the ones who are particularly active online. I guess I was wrong; some people seem to not have the capacity to think beyond their socio-economic circle. So sad, so simple minded.
+1
How much were you paid by cash4gold to write this article?
oh please. say something original.
Actually, they just sent him one of these: http://www.wire...necasethumb.jpg
LOL.
investigative journalism?
Michael, maybe the original commenter asked because of this: http://www.cock...eputation.shtml
Arrington, there are a lot of companies you have neot covered yet. They usually sell garbage on TV.
Mike,
I’ve defended you plenty of times in the past, but you wrote a classic straw man: “The chief complaint is that the company offers customers too little money for their gold.”
That wasn’t the chief complaint from your readers. I think it was more about why you are even covering this business, which isn’t even a little bit technical.
If it was a scam, I think readers would give you latitude on that issue because you are exposing them, but you are defending a kind of business that has been around forever and does well in bad economies.
This is out of character for you… You are, as Mencken might say, comforting the afflicters.
People that say that it’s a scam are idiots. What happens when you buy a car? You don’t get the same deal I get if we were to buy the same car. It’s all subjective. Besides, they tell you how much they’ll pay you for your stuff. You can always say no and walk away just like at a car lot.
Also isn’t this the same kind of practice that Gazelle does? Hasn’t stopped me from getting $300+ for selling my iPhone 3gs. Sure I could probably get more on Ebay but I don’t want the hassle…had enough of that with dropped calls and failed voicemail deliveries.
yeah! they’re idiots. Let’s steal money from the because they are stupid. Screw them all for being uneducated.
And let’s praise Cash4Gold for their efficiency and efficacy in screwing over these damned idiots.
All hail the mighty scammers. Let them run free and clear this planet of those born into unfortunate circumstances and make more room for the well educated.
wow. some of you guys amaze me with your complete lack of compassion and ethics. Predatory businesses may be legal, but that doesn’t make them worthy of praise.
Sounds like you want C4G to ‘edumicate’ the idiots on the finer points of spot price and fair market value. This standard should apply to all pawn shops, swap meets, flea markets, trade shops, consignment stores, and those who hold garage sales. Hey! They paid $20 for that lamp, why only sell it for $5? The person at the garage sale trying to buy it for $5 is ripping them off!
In fact, if it has anything to do with haggling over price, it should be law that we call a 5 minute time out so both parties can educate themselves. And while we’re at it, should we really keep score? Aren’t we teaching our children that there are winners and losers in life?? Shouldn’t everyone be a winner? Let’s eliminate grades while we’re at it – grades aren’t fair at all!! I mean, who cares if the other kid studied harder and worked longer? On that note – let’s have equal pay for all! Not based on the job you perform – I don’t care if you’re a pro ball player or a janitor — there’s no reason, NO REASON!, you shouldn’t make exactly the same as someone else.
You sir, are an idiot. And it sounds like you’re the one that needs an education.
Yes. Buyer beware. Have you ever bought a used car?
You are spot on, Mike.
And to those who disagree, have you taken an microeconomics course and gotten an A? If so, I’ll take your comments seriously. Otherwise, you are out of your league.
I have, and let me just say that microeconomics is more about Mobile Money in East Africa (Kenya) or loans to women in South East Asia (Bangladesh) than targeting the gold of the poor, lower middle class of the United States of America.
Have a nice day.
I think you’re confusing micro-finance and microeconomics which is the study of how firms and individuals maximize utility/profit.
Wow, he asked for people who had managed an A in microeconomics, not an F in reading comprehension. The icing on the cake was your smarmy delivery though. Nothing funnier than an idiot attempting to look smart.
I think I got a C in economics. That’s all I needed to know he didn’t know anything.
I think the main reason they have a perception as being scammers is because that is what their commercials make them seem like.
Yeah, I agree with that. Their commercials seem very suspect. They don’t explain that you can turn down an offer, or that they’ll pay to ship it back.
They could do a MUCH better job explaining how the process works… I think that would alleviate fears and the negative association with scammers.
Why bother doing a better job? Arrington basically layed out to everyone how their model works and since Tech Crunch reported on the company it just gave them added legitimacy. I’d also hesitate in changing anything they’re doing business model wise as far as commercials. Did you miss the part about 160 million in revenue and around 50 million in profit? Seriously, how many of us would change what we were doing is we were taking home 50 million dollars a year in profit. Score!
hugely successful business model. score.
hugely misleading and predatory business model making a few people rich through misleading marketing tactics. “We have our own refinery so we cut out the middle man…” Sounds like consumers should be getting a better deal, right? No, they get 50% of the value of their gold or less…
Nothing to respect here unless you respect shisters making a quick buck and providing zero value.
What do you mean zero value? Consumers get a price for their gold, if you don’t like it, get it back. Nuff said. If you want, you can try to sell your crappy ring to some schmuck on eBay for 30% more, or you can take what they offer. It’s all about the convenience…
Shane: I’ve gotten email recently from a couple scammers noticing that I have a domain of the form “foobar.net” and offering to sell me “foobar.com,” which “has recently become available,” for the low price of $100. These guys don’t own foobar.com: if you buy from them, they go out and register it with a real registrar, transfer the registration to you and pocket the difference. By your logic, they’re not adding zero value: after all, I’d give them $100 and get a domain name in return. So is what they’re doing ethical?
Sure, there is a crucial difference — they’re offering to sell something they don’t have, and making a false claim. But one could argue that they’re just adding a convenience fee, right? If I paid $100, then obviously it was worth it to me to not spend an extra 10 minutes to go pay $7.95 at PimpDaddy.
I think people often confuse “legal” with “ethical.” Making a business model of lowballing estimates of worth so you can pocket the difference between your knowingly low estimate and the real value is (in most cases) legal. But that doesn’t make it ethical. And people are at the least well within their rights to call a sleazy operation a sleazy operation.
I’ll agree with above.
Why the hell is TechCrunch writing about Cash4Gold? Their business model may be “not evil” (where I see their advertising campaign as being predatory) but their web presence is no different then any other company (ie. nothing revolutionary).
+1
I totally disagree still. I think this is something that should be taken off the internet.
The point is, you don’t send your car in an envelope and expect to get a fair payment; you bargain at the spot.
Yes, it is stupid of people to send their gold blind folded and hope to get good payment, but on the other hand, if C4G company makes it difficult for people to get their gold back, when they are not happy with the price, it is truly a scam.
I think true capitalism can do better than this.
Well… Nice definition off ethical.. Glad I don’t live in America where scamming people out of money seems te be synonymous with “kapitalism”.. Having regulation on financial products (Like CC’s,Mortgages, etc) isn’t socialism it’s protecting the less fortunate from big co’s trying to “steal” the last pennies they have..
we won. get over it – they even did a song about it:
http://www.yout...h?v=WXCEaeqZDnA
You won? For now maybe. China is completely financing US right now while still maintaining a growth in double digits themselves.. It is just waiting till the day the dollar collapses..
http://www.yout...h?v=AuPgdZeAFjA
Btw.. I’m also glad I didn’t grow up in a communist country
nice theory, except a country that holds as money dollars as China does is the last country that would like to see the dollar collapse. Also, to what country would they then export all of their stuff? If America goes so would china
I’m not saying they want it to happen, but who do you think is most likely to recoup after such a disastrous depression? Hint: it’s not the US..
“There where people stranded on an island and i believe 6 or 7 where Asian and one is American. As soon as they got stranded on the island they had to divide the jobs. One asian got a job as fisherman, one for gathering firewood, one for hunting. So they all had jobs.. The American was assigned the job of eating. At the end of the day they all gathered around and prepare this feast. And the American would sit there and eat it. He wouldn’t eat it all, he would just leave enough crumbs for the Asians so they could go on and repeat it tomorrow. Spend all day to prepare a meal for the American to eat. The way a modern economist would look at this.. They would say “Look the American is vital to this economy, without him nobody would have to fish, gather firewood or hunt.. He is creating all the employment on this island” But the reality is: Every Asian on this island. His lot in life would dramatically improved if they kicked the American of the island.. Because they now have a lot more to eat. They wouldn’t have to fish that much and maybe can lay around the beach a little..”
USA! USA! USA!
That is an interesting scenario though it does not hold water. In any economy a person whose sole purpose is consumption is essentially useless and not necessary. In fact USA is one of the few places in the world where people with no function live and thrive due to the “ethical/moral/compassionate need” to feed clothe and house (and possibly provide healthcare if things workout) them.
*you* won? Are you bank of america, or another huge corporation making billions in profit? *They* won. Not you.
C’mon Mike–I’m not gong to flat-out agree with @landon here, but how does this even qualify as journalism when you don’t even cover what Consumer Reports has broken (uh, you know, “journalism”) http://consumer...ant-you-to-read
I’m not saying you’re on the take–that is a stupid allegation and you’ve got eyes on more innovative prizes (though $30M/yr ain’t a bad innovation for what seems reminiscent of the famous Santo Gold ads).
But dear god, more objectivity and pull of the power-tools to drill just a little deeper on the story… Otherwise, stick to TwiiterFace, iAndroid, and the Valley.
Peace Bro.
the consumer reports stuff is based on a disgruntled employee who’s statements don’t match the company’s policies on their website. plus, even if the statements were true, i’m not sure i have a problem with it. lowballing an offer isn’t evil.
I do tend to dig deep on a story when i smell something off. in this case, i don’t see it.
Mike the following is from the Consumer Reports publication. You really dug deep, way to go!
Consumer Reports, using its “mystery shopper” team, sent 24 identical gold pendants and chains (purchased for $175 each) to Cash4Gold.com and its competitors. The determined melt value of the jewelry was calculated at around $70 each when gold was above $900 an ounce. In comparison with Pawn shop and Jewelry store quotes (which ranged from $25 to $50), Cash4Gold.com quoted between $7.60~$12.72 melt value for the jewelry. Similar low quotes were also given by Cash4Gold.com competitors GoldKit (around $7.81~$20.59) and GoldPaq (around $8.22~$13.11).
Exactly Mike’s point. All they’re doing is lowballing the offer they’re giving people for their gold.
So long as you can get the gold back if you don’t like the offer, I fail to see anything evil about C4G trying to get the best deal possible. Particularly when you factor in they aren’t just buying your gold, they’re also selling you convenience.
What exactly is your point?
this is EXACTLY unethical, but not illegal. It is PRECISELY this type of industry that misreppresents the value of products and prey on the uninformed that end up testifying before Congress, and has “settlements” they agree to in order to avoid legislation. See the insurance industry, the reverse mortgage industry, and the tobacco/alcohol industry, etc.
Look- we all know that if we were to sell a valuable item, we wouldn’t respond to a TV ad to send in an item and expect to get 100% of its value, but someone who is uneducated or desparate to liquidate assets would definitely take a shot. there’s plenty of money to be had with this, you don’t have to steal from folks (and offering 15% of stock value when stating you are giving an informed opinion of its liquidation value is an “unethical theft”).
Some State AG with white house aspirations will launch a siege against this stuff.
Why do you think these people are so desperate? Sometimes they just have a bunch of junk jewelry laying around from God knows where and they need to get some drawer space back.
Pet peeve – whose, not who’s
So what do you think about the consumerist.com articles regarding Cash4Gold?
Do off-shore online poker companies, too, deserve this sort of praise? Like this company, they have also discovered the “perfect niche”: they offer a service people want, and are able to rake in absurd profits despite a competitive market.
I completely disagree with the stance of this article. Cash4Gold may not call for regulation (though that’s debatable), but they *certainly* don’t deserve this odd way-to-go-capitalism high-five. It’s easy money, and it’s easy thanks to exploitation.
yes, i have no problem with online poker.
there is no exploitation here. there’s buying and selling.
It’s the praise that I’m having trouble with.
If this is “capitalism at its finest”, we need to drastically overhaul our standards.
I have no problem with online poker either, in that I don’t believe it should be illegal. I do, however, believe the industry profits solely through the self-harming decisions of individuals (who happen, often, to be poor). I call that exploitation. This company is no different.
Seriously, go read Michael Moore’s blog, if he has one, and dream of the day when “capitalism is no more”
Then, the government can tell you if you can or cannot start your business….that will great
Michael Moore is a sensationalism-loving hypocrite. But if you want to high-five Cash4Gold you have zero compassion and very low standards/integrity.
Payday loans, sub-prime mortgages, cash4gold, etc. are predatory businesses. They prey on the uneducated. Applauding them is like applauding the guy on the street corner that sells you a watch that doesn’t work. “Good job buddy! You pulled one over on them!”
Yes, it is legal. But it is horribly misleading. Their commercials and ads play up the fact that “they own their own refinery so they can cut out the middle-man.” Sounds like you should get a better deal, right? No, you get 50% or less of the value of the gold you send in. That’s why the majority of their customers are pissed off, that’s why they make such huge profit margins and that is why they will no longer be in business in 5 years. There will be regulation / backlash.
And regarding the analogy of Apple making huge profits… that’s very flawed logic. Apple creates. They make products that you can’t get elsewhere for less. They earn profits by creating real products and providing real value. Cash4Gold just extracts value from the uninformed through misleading marketing tactics.
Yes they are smart. Yes they are making lots of money. Yes, it is legal (for now). But it is totally misleading and a sketch business and definitely not worth of praise from TC.
Seriously, michael, you really need to either stick to startup news, or get some instruction on sociological issues, morality, ethics, etc.
I guess we can expect your next column to be on the capitalist virtues of meth dealing. Crack, perhaps?
Direct shipping online crack store, genius. One day, Michael, one day. Keep the dream alive.
It is amazing how you reveal your moral inferiority and are so quickly willing to lay your credibility on the butcher’s block.
your wrong about poker, you seem to be pooling it with things like roulette when in fact it is a game of skill that actually values intelligence over everything else. if it isnt a game of skill, why are there people like phil helmuth and doyle brunson that have won the world championship multiple times?
how is it self harming to deposit a few quid in a poker account and try to make it grow? and i guarantee you if you take the game seriously you would make it grow. there are people that have turned $5 into $25,000 in a matter of months. that wouldnt be possible if you were playing roulette.
if people decide to be stupid and play above their comfort levels then thats their problem, but there are plenty of people that have turned $50 into plenty of thousands.
im not particuarly keen on cash for gold, but thats more down to the fact that im not keen on sending gold in the post and its only logical that these companies after paying for postage, insurance and smelting etc, arent going to be able to offer as much as a pawn broker.
Actually, drawing the analogy to poker is great here. Poker (and online poker especially) has, through advertising, convinced everybody that they can make a living playing poker.
$5 to $25,000? Then back to $5, right? That’s called variance.
Ask anyone who truly plays poker for a living: if you’re playing consistently well, you should be making about 3BB per hour. At a 10/20 table, that’s $60 an hour. Good money, but not tremendous, that also happens to require a bankroll larger than most people can afford.
This idea that anyone can get rich playing poker is absurd. 99.9% of players can’t out earn the rake. That’s how poker sites get rich.
That being said, as long as their business practices are sound, I have nothing against poker or cash4gold. Why would cash4gold need to rip people off when they’re making so much money? It wouldn’t be in their best interest.
Because they have no reason not to rip people off. For those of you so outraged by Cash 4 Gold’s business, you could probably steal a massive chunk of its market share by offering more money/a better service to customers. That’s capitalism, if they suck, beat them, don’t piss and moan and cry for more regulation.
Well, Maybe. Is it wrong to keep someone’s wallet after you wait 2 hours and holler back at the direction they left in; “Hey, you dropped your wallet mister?” Or more appropriately, does it push the envelope to warn a victim just before a dagger thrust; “Commando knives may in fact cause serious injury of death?”
Is capitalizing on any or all of us wrong, or if not, what is the extent to which business or individuals should profit from our loss? Ethics is a deep whole Mike, one to which your’s or my opinion is only a drop in the ocean. We have to decide collectively.
The wisdom of the ancients may reveal more about this than these acute observations of modern day cheaters. If a site says a pawn shop may pay more, that is like saying; “bend over buddy if you have half a brain.”
Just my thoughts.
Always,
Phil
i don’t let the group decide my ethics. history shows that tends to conclude in disaster.
So how did you come to be surrounded by like minded individuals?
Now you’re just relying on dimestore historical wisdom to support an already fishy position.
no, i’m not. I’m pointing out that mob opinions aren’t always, or even usually, “good”.
Yeah, mob opinions and group consensus is bad.
So is holding on to your position when you’re clearly wrong.
There is no way you can logically hold onto the position the Cash4Gold is worthy of TC. It is a predatory business doing nothing innovative other than misleading people at a very large and profitable scale.
To coin a phrase, there is no honor amongst thieves. I think there should be between businessmen.
And if this feeling is common ground between you and I, Mike, then we must concede that it isn’t only about profit, but also about how that profit was realised. If it was only about profit and nothing else, then we might have a little more in common with the thieves than we cared to admit.
do gooders ruin everything. they have a knack.
just because something sounds nice, it doesnt mean it is a good idea.
Think about Google’s Adwords and Adsense. They charge advertisers through Adwords one rate to have their ad appear on websites in their network of publishers. They pay the publishers through Adsense a lower rate and never disclose the percentage difference. The gap there may be 50-70% difference.
Cash4Gold and Google are doing what we all want to do, make a huge profit.
Google actively encourages advertisers to become more savvy about their advertising spend ROI, offering tools from Google Analytics to Google Website Optimizer (which does A/B testing) to improve their conversion rates. I’ve found that the more advertisers know about ROI, the more money they tend to spend on targeted keyword ads and Google.
another horrible analogy with very flawed logic. Google and Apple are providing innovative and valuable services and delivering what they promise (and consumers are very satisfied with the services after they buy them). That is called a good business.
Predatory businesses like Cash4Gold use misleading ads, prey on the uninformed, have huge post-purchase complaints and provide zero real value (they only extract value).
T
Excuse me? Yes, Google provides innovative, valuable services. Yes, the original AdWords was a fantastic golden goose for both the advertisers and Google. Alas, they do not ALWAYS deliver what they promise any more. They often deliver garbage traffic to unsuspecting advertisers.
See the post I’ve linked to this comment that explains what advertisers really need to know to not become VERY unhappy with what they’re spending.
It amuses me how we are all so ready to call these companies scam artists even though likely what they are doing is legal. Why hate the company for taking advantage of the system? In reality the invisible hand over time should fix such issues. Competition should come along, take a lower profit margin that still nets a nice profit forcing the big boys to change their ways. I guess some people are never happy. If the government stepped in people would run around saying we live in a capitalist society… and likely the same people are complaining about large profit margins. When will people get a clue that profit margin is all corporations or businesses really care about. No business has morals in this world today.. only the illusion of whatever is the most profitable…
Let’s not confuse legality for morality.
Taking advantage of the weak for personal gain is not moral. We’re not talking about adsense where I am provided service(s) I value in exchange for seeing ads. Cash4Gold brings little, if any, value to the table, they are simply a middle-man that has a 50% markup. 50% markup on luxury items is one thing, and I am ok with that. In many cases, these people are selling their gold because that’s all they have.
If farmers mark-up a necessity like milk 50%, would you be ok with that?
but that is capitalism… the market will correct itself.. that said businesses all the time make choices that are far less moral than this… I bet if you went to your closet you would find a whole ton of clothes made in sweatshops… does that bother you? Lets get off our moral high ground… we all use or are a part of things that are far more immoral than cash4gold. Your mad cause someone is making a killing off boom vanity? Give it a rest already. We don’t care about the poor in this world or those who are down on their luck. We give lip service… in the US you don’t even give your poor decent healthcare or education…
cash4gold might be unsavory to some…but if the profit margin is too high get in the game. Reduce it to 25%. See the thing about a high mark up is it leaves an opening for competition…
you know I was watching this movie on rwanda… you want to talk about morals..4000 troops might of saved 800 000 lives.. now that is immoral.. you need to put things in perspective…
yes it is capitalism. Yes the invisible hand will correct.
The point is, this is no way a TC worthy story and Cash4Gold deserves no praise for creating a short-term predatory business that will be corrected over time.
Can’t wait to see your next business profile. Suggestion, how about a VC backed Pay Day Loan company?
Because it’s not you know, like payday loans turn out to be beneficial to most of the people that use them.
http://reason.c...ay-of-reckoning
Hooray for Usery – one of the few money practices that has been outlawed and cast out from society for thousands of years – now an integral part of your daily life!
ARRG!
I really don’t see what the problem is. A business making a profit on people’s lack of knowledge of the value of their goods is hardly unethical.
Hell, one of my friends made some tidy extra cash on eBay for a year selling silver bars he bought directly from the mint. He linked to current silver prices and people *still* paid him more than it cost to buy from the mint themselves. Why do this? They obviously couldn’t be bothered researching the price and thought that because it was on eBay that they were getting a deal.
FYI, I was a consumer affairs investigator for 6 years and have seen pretty much every scam in the book.
i dunno, sometimes ppl don’t have the knowledge not just because they didn’t bother to research. Some ppl just aren’t smart enough (which isn’t a crime really) or maybe they are in desperate need.
Aren’t a substantial number of regulations meant exactly to help/protect such ppl?
I agree, its not illegal. But ethical? Still debatable, I’d say.
“A business making a profit on people’s lack of knowledge of the value of their goods is hardly unethical.”
Wow. I didn’t know Madoff still had access to the Internet in prison.
+1
Cash4Gold is stealing from the stupid… might be legal, but certainly not the kind of business I would want to have.
Dear Idiot,
They are not stealing. They are charging for convenience. Take the price or not, your choice.
no they are clearly stealing. it’s not the apporpriate word or the meaning of stealing as we know it but they are clearly being deviant in their business practise. they have made it because people are stupid and they, c4g encourage stupid people to buy into their psuedo good great money making business, although anyone with a brain who has seen their commercials should automaticaly question the laws that regulate tv advertisments and allow for that gibberish fineprint that is usually placed at the bottom of the screen at the end, to be magnified.
But hard bargaining and lowballing offers to consumers isn’t evil. It’s just a business decision.
Affirming the consequent, aren’t we? Just because something is a business decision doesn’t mean it can’t be evil. You forgot to account for that part.
http://consumer...h4gold-employee
Cash4gold targets customers who obviously aren’t educated enough to use internet to find out they are in fact being ripped off. This is a business deal where only one side is profiting and the other side is losing, driven by financial crisis and lack of information on the customer side. How is this not evil? Legal and profitable, sure… but why can’t you see the principle behind this is pretty shady?
you are assuming that someone elses stupidity and lazyness is somehow C4G’s fault. People are responsible for thier own decisions.
I am sorry, but I for one, don’t need people who think they are smarter than me, making decisions for me.
Yeah, it’s not C4G’s fault that someone is stupid. They should be applauded for figuring out how to exploit that stupidity so well.
Business model of the year candidate?
The market will correct this business over time, but we don’t need to applaud C4G for preying on the ignorant, do we?
This is definitely the best way to get rid of gold jewellery from house burglaries.
It’s funny, I was talking to my dad about this a week ago and he said something very similar. And you’re both right.
I would strongly suggest checking out the Silver and Gold Exchange before selling gold or silver to ANYONE. I did a great deal of research, online and offline, and learned a lot about this business. I checked pawn shops, jewelers, “gold parties”, hotel “buying events as well as the online buyers, including the “as seen on tv” guys. I found that the Silver and Gold Exchange paid more than anyone else I could find. I liked the fact that they post the prices they pay per gram (beware of the places that quote in pennyweight/DWT) on a live price chart at http://SilverAn...oldExchange.com I also checked out their Better Business Bureau report and found they have never had a single complaint as opposed to HUNDREDS of complaints some other companies have! I recommend them 100%
it’s really not much different from payday loan.
With all due respect you are either ignorant about the business model or your own ethical compass is in serious need of adjustment.
Pennies4Gold doesn’t come even close to paying 50% of the value for the valuables their marks send in.
There is a SERIOUS disconnect between what they advertise and what they actually do.
So what? The people sent it in, the Cash 4 Gold secret police did not break into your house and take your gold from you…Hard bargaining is not unethical, nor is it immoral, it is shrewd. Like I said earlier, haven’t any of you people ever bought a used car?
I’ve never liked companies such as cash4gold, but not because of the prices they offer. If people sell their gold items for less than they could that’s their fault, they should have researched. It’s no different to selling anything else; you may end up selling your car for less than its worth if you just sell it without researching.
I’m glad you wrote this follow-up article.
If this were really capitalism at its finest, we would have seen competitors come in and offer more money than C4G, driving prices up until these sites simply offered spot prices.
Why would anyone offer spot prices? There are costs associated with melting down otherwise worthless items, even ignoring postage, insurance, overhead and profit.
You can never buy precious metals at spot (unless you buy directly on the commodities market, and take the whole 100 oz contract), and you will never be able to sell them at spot (ditto).
Pawn shops may offer more due to the potential to repair a piece of jewelry and sell it AS jewelry. And retail prices for jewelry are never a good judge of value, as the jewelry store typically has a 70-90 markup from wholesale.
All I’m saying is that if the C4G prices are truly unfair (and I haven’t studied them), then it would only make sense that more services would enter the market and drive the prices back up to a “fair” price.
Perhaps those complaining about the service can open up their own cash for gold business and give the consumers more return. Better yet, open a non-profit and give them 100% return and pay postage from donations, if they get any.
ridiculous
Everyone is MISSING the point. This is NOT a web company and NOT a technology company. Mike is simply trying to find a reason to get them on the site for SEO purposes. There can be no other logical explanation.
Hello everyone, This is Jeff Aronson CEO of Cash4Gold! It’s funny to me that some of you think we are not a tech company imagine the systems that needed to be built and put in place to track 4-5 million individual pieces of gold, silver and platinum a week! We have so many systems in place to go through them would take hours, our CTO is the founding CTO of stubhub and 80 percent of our leads are drivin through the internet, from all over the world where they must be consolidated sent to fulfillment and individually inventoried and bar coded. Imagine trying to find the one correct gold ring out of 5 million to send back to someone! Also on a side note we explain on almost all commercials that we offer a 100 percent 12 day guarantee and it is very prevalent on our web site as well, if for any reason the consumer is not happy their material is returned, we are a service company most of our customers would never go to a pawn shop we offer a safe convenient alternative service, so maybe you can get 5 dollars more for a piece of gold but it cost you 10 dollars in gas to get it and 2 hours of your time whats that worth?. We run a 40,000 sq ft facility that is state of the art in everyway with over 300 employees all trying to provide the best experience for the consumer possible thank you for the opportunity to respond to some of your questions! Last but not least we are also the only company in this sector that actually asked to be regulated and worked with the state of Florida to construct a bill for reporting that was signed by the governor and went into affect on the 1st, so the last place you want to send stolen material is Cash4Gold
Jeff Aronson
Jeff,
“so maybe you can get 5 dollars more for a piece of gold but it cost you 10 dollars in gas to get it and 2 hours of your time whats that worth?.”
Are you serious? $5 more. Have you seen the consumer reports data that ranks you as the lowest paying option? Even your lesser known competitors paid out more.
Recently you offered Terry Herbert who found 16 LBS of gold 62% of spot price in a C4G press release. Can we get you on the record stating that you’ll pay that to everyone? Or more than likely that would drive you out of business. Why make the offer then?
What exactly do you consider “Top Dollar” as you advertise?
Mike you can keep censoring the contents of the people that challenge you (like a coward) but I’m documenting all of it.
http://singlepi...d-of-the-truth/
It’s really too bad you had to profile this company and reveal a man with such compromised values and morals. TC will never be the same to me.
I hope that’s not actually the ceo of cash4gold – or any ceo of any company for that matter. That comment is so poorly written it’s laughable (in a sad way).
Those of us who feel discomfort with this business’s actuals can consider what might be an optimal solution to a genuine problem – lack of competition.
When sufficient number of technically capable individuals get wise and market their own competitive services the business will no longer be so profitable at the expense of fools.
Arrington’s article could do more than nearly any amount of carping to re-balance a loaded business model. In this particular case, way to go TC.
Well said Mr. Arrington…
As long as fraud is not taking place, and individuals are making their own voluntary decisions, that’s what counts.
Fraud seems to most certainly be taking place from their blatantly false advertising to the internal policies dictating scams to avoid returning jewelry.
Michael’s “the accusations disagree with the company’s posted policies” comment is amazingly naive or criminally complicit.
Michael’s “the accusations disagree with the company’s posted policies” comment is amazingly naive or criminally complicit.
Exactly.
+1
i have no personal stake with this except that i am a consumer of products, i’m a part of the system that makes it work that allows for companies to make money off me, and i watch a lot of tv. i have seen these c4g adds and even if i ever feel like i need to use that as a last result i never will because i am a bullshitter. i can smell the b.s. from this company and even see it when i view the commercials on t.v. it’s sad there’s so many stupid people in the world and people like this who just come up with the plan/any plan to make money, but this is ludicrous. i can’t believe this is even on tc.
why do the call it cash for gold? because cash it golden…
This is a business which makes a profit from desperation and ignorance. It isn’t illegal, but a sustainable economy relies on business which offer services that generally lead to win-win situations, i.e. a happy customer and a profit for the service provider.
If businesses continue fleecing those who have little left to lose, soon the customers will have nothing at all left to lose. And just because the French revolution happened long ago, and in France; doesn’t mean it can’t recur again, here and now.
It is this very,”Hey, I got mine, Jack” attitude which has led to the recession. This business may be legal, but it smells. And while the stench can hover for awhile, the dead mouse under the floorboards will eventually be found. Unfortunately, you’ve gone on the record before that time.
There’s a lesson here on what price people are willing to pay for convenience – something that is highly subjective. C4G’s customers seem to be willing to forgo 40-50% of the value of gold to enjoy the convenience of two-way postage and insurance. Reminds me of MINT, where over a million people didn’t worry about handing over their Internet Banking access details to a third-party in order to avoid the inconvenience of having to manually upload transaction statements frequently and to let MINT download them automatically. In both cases, there are other factors in play, but I think convenience is key.
Agreed. But the convenience factor is out-the-window once the customer has to waste time and perhaps even money by negotiating the selling price up after the inevitable low ball.
In grocery sotres, pre-cut and packaged apples are often sold for more than a plain, unprepared apple. The customer is paying for convenience, yes, but doesn’t have to haggle with the clerk once asked for $20.00 per apple.
There is nothing wrong with cash4gold. Its all about convenience. Many of the people that use it would otherwise never have sold any of their gold because the other options require some type of effort. Many people don’t care if they give up some value to just make the process simple. A few bucks is better then the nothing they would otherwise get by never going through the effort of selling their stuff.
Mike, not sure if you answered this but if I recall from the first post, people took issue with this not really being a tech story and they wondered why you posted it? Just curious. I did learn something from the article and conversation and know from first hand experience that these guys buy low and sell high, making it not a great way to sell valuable gold. Thanks.
The solution is simple: start your own gold buying company under the policy that you will add 10% to whatever gold price is offered by cash4gold.
Can’t lose, amirite?
A better question is: what percentage of the jewelry is stolen? A friend recently had their home burgled and the police said the jewelry would likely never be found since it had likely been sent to Cash4Gold already. If you’re a legitimate customer who is short on cash, a better price and lower latency transaction at the pawn shop seems more attractive. Makes you wonder who the actual customer is.
Exactly. Cash4Gold is not only low-balling its customers, it is little better than a fence.
According to mike, bankers who caused this depression is insanely profitable, not evil
Ahah, well put sir!
It was worth reading all the way to the end to someone who puts it like it is. No fluff.
I guess, the same can be said for Oil Companies (hey they are making a fcking killing right?!) – I mean we are paying for the convenience of not having to change crude oil into gasoline.
What about the insurance industry, who rake in BILLIONS in profits – yet will happily not honor insurance for people and let them die. Gotta make them profits.CAPITALISM AT ITS BEST!
Go back to watching MSNBC. BTW, Obama will fix it all soon, right?
No, I am all for business to make money when they are contributing to efficiency and productivity for society. The fact is that cash4gold, and many time wall street, is making money by not creating efficiency.
Who is to judge when a business “contributes to efficiency and productivity for society?” If it ain’t the consumer, it can’t be the government. LOL, can you imagine a Cash 4 Gold czar?
None of you are really in the high and mighty position to determine whether cash4gold’s customers are “stupid” or “uninformed”. Who can say why anyone uses a service like this? Why does anyone go to a pawn shop? Why do people use check cashing services? Why do people gamble? Hmm?
Do you see what would happen if you started to make a list of “stupid things people do to waste money”? You would soon have listed just about everything people do. Should we outlaw all these things? What happens when someone with more power than your wants to outlaw the stupid things YOU do?
Interesting that you defend cash4gold yet damn the domain industry. I guess it’s ok to make an absurd profit off of those who need money but not ok to make a profit off of those who have money.
ah, no. the domain industry is seriously shady. but not because of all the money some of the players are making. It’s mostly about ICANN.
I guess it goes both ways. Tommy Smothers said, “The only valid censorship of ideas is the right of people not to listen.”
On the other hand, it doesn’t seem right to shout “Money!” to a crowded wallet.
Robbins,
cash4gold is providing a service, overpriced tho it is. What the heck is the domain industry providing? Profit is a reward for providing something valuable, stop using it like a dirty word.
Mike,
I of course agree with you in the fact that they offer a service. However, there is one key point you are missing:
While Cash4Gold’s website mentions that consumers may fetch a better price elsewhere, it’s TV adverts, which seem to be targeted at the less educated(daytime programming, court shows) and more elderly (TCM, history channel) make a very large point of saying “We own our own refineries and can offer a better price by cutting out the middleman.”
Look, all I’m saying is that they have found a new an innovative way to rip stupid/ignorant/desperate people off. Great. But they don’t belong on TechCrunch. I love this site because its about the intersection of insight, innovation, value, and business acumen. While Cash4Gold may hit some of these points, it definitely doesn’t sit at that intersection.
I thought TCM doesn’t have commercials.
Michael,
I know you have a mother. I believe you don’t have any issues with a company making a killing at other’s expense ( since its Capitalism/profits).
Now what if you were to find out that she has some dire medical condition. What if her coverage for treatment was denied because of a pre-existing medical condition that she did not mention to the Insurance company resulting in surely certain death. They make a killing, but they use a obscure statute – not to save the business – but rather maintain their profits. Would it still be right then?
It gets hairy real fast, when you buy into the bullshit that a corporation is a “person” and has the right to make profit at stupid people’s expense or for convenience.
Afterall, as I see it, Insurance isn’t a god given right, its just that – a DAMN CONVENIENCE, which of course can be denied at any time.
PeopleSearches.com
My husband is always amazed by the lack of financial literacy displayed by members of my side of the family. We have personally unburied family members and close friends out of pay day loans, high interest credit card debt and from real estate related debacles. It’s added up to a huge number, and we are at the point where we need to say no if anyone else asks for help.
This is a preface to point out I am not heartless….
In virtual every case, these people made critical, controllable (and stupid) mistakes.
There is some percentage of people who are duped and deceived, but for the most part, we see people blaming “the man” instead of taking personal responsibility for mistakes.
If we want to regulate something, it should be to provide better financial literacy education.
You weren’t heartless, but you seem to be now. Your cynicism doesn’t equate to justification for C4G’s stench.
well said. Without financial literacy, the problems will never stop
Michael — Wonder if half the issue isn’t the 50-100% mark UP on spot gold they paid when they bought the ring, et. al. Some jewlers have even higher markups. So when you C4G or pan it, it seems like you are getting 10-20% on your purchase price, eh?
yep.
That’s only a valid argument if you ignore all the design, manufacturing, insurance, marketing, payroll, and inventory carrying costs associated with selling jewelry.
We’re talking about a raw material liquidation market here, and 50% of the spot price is about as good as you could ever hope to do.
I don’t take issue with the company’s offers but I do take issue with their practices.
You said that because you don’t understand jewelry business. Fashion industry needs the margin they need in order to provide the variety of selection that consumer are demanding.
A fool and his money are soon parted.
and Caveat Emptor too.
I love all the nationalists and socialists that read TechCrunch – why are you even reading things about businesses (let alone small businesses) if you are so anti-profit. How about switching over and reading NonProfitCrunch?
The US government and its system really has it figured out, right? Let’s take a company like C4G with its “ridiculous” margins (call it 50%). Let’s say they have huge pockets to market that service. Now, enter a new company that will only take 40% margins. Unfortunately, said company doesn’t have much money to market. So, they don’t get much traction.
Does that remind you of any political campaigns? The rich candidate ends up getting traction, while the poor candidate with great ideas on how to make America better just can’t compete. Fewer ads, fewer campaign stops, crappier website = fewer supporters and votes.
At least with the free market if someone sees opportunity, they can raise money and build something…if there’s enough of a value prop. If people are happy to give away 50% of the value for the convenience of free shipping and a mailing envelope instead of driving 1 mile to their nearest pawn shop, isn’t that what it’s all about?
Well, I guess you can also yell “You Lie” during a joint congress session and get $2m.