A congressman accused the biggest TV advertiser of cash for jewelry, Cash4Gold, of "systematically ripping off" its customers and rapped its executive for refusing to explain the company's practices to a congressional committee.
"The way they function is truly exploitative of consumers," said Rep. Anthony Weiner, D-N.Y.
He said the hard-pressed consumers who send in their jewelry expecting to get reasonable deals, get "paltry offers," then, if they don't delay acting for long, are told the jewelry has been "melted down." Those who ask for the jewelry back are sometimes told the jewelry was lost in the mail, he said."What they provide is a rip off," said Wiener. "They operate in the dark corner of the country, where they prey on the most vulnerable people."
Wiener's comments came as a panel of the House Energy and Commerce Committee heard testimony on his legislation that would impose new rules for internet sites that offer cash for valuable jewelry. That legislation has bipartisan support. There have been a number of criticisms of similar companies.
Wiener's legislation would require companies who are sent consumers jewelry provide bids for what the jewelry is worth, then give consumers a number of days after receiving the bids to make a decision. Companies would have to return jewelry by insured mail. Wiener said the Postal Service has reported that 1,300 packages supposed to be returned by Cash4Gold were lost.
Cash4Gold, which supports the legislation, said its CEO was attending an industry conference on the West Coast so could not appear, and in a letters to the committee and Wiener offered to take committee members on tours of its Florida facilities.
It has differed before with consumer advocates and it rejected the charges.
"We are proud of the service we have provided to over 900,000 customers, and have a strong track record of working closely with lawmakers, regulatory bodies and local and national law enforcement agencies," the company said in a statement.
"Cash4Gold is extremely proud to have worked closely with Florida officials to create and implement the first law of its kind regulating the mail-in gold-buying industry."
Charles Bell, programs director of Consumers Union, said a 2009 study by Consumer Reports found that on average cash for precious jewelry sites pay between 11% and 29% of the day's price for gold. Cash4Gold says it pays between 20% to 80% depending on condition.
What Is Your Risk Tolerance?
Answer the question "What type of investor am I?".View Course »