2 Investigators: Some Gold Buyers Short-Changing Customers
CHICAGO -- Fair and honest prices. The best value for your gold.
That's what one of the largest gold buyers in the country says it gives customers selling their jewelry.
But a CBS investigation in five cities found the company makes millions of dollars by giving customers some bad deals.
2 Investigator Pam Zekman found one way you can get cheated is if the buyer makes mistakes about the karat grade of your gold.
For her undercover investigation, Zekman first brought jewelry to two experts to be evaluated.
One of them, Jack Brown, the general manager of a local gold refinery, examined each piece to see if the karat amount was stamped on the jewelry.
Then he did an acid test on each piece -- a process in which a scratch is made on a piece of stone. Then various acids that test for 10, 14, 18 and 22 karats are used to determine the karat grade.
After the jewelry is separated by karat quality, it is then weighed. Each group must be weighed separately because the higher the karat grade, the more money you should make.
Brown concluded that based on the amount gold was trading for that day, Zekman's stash was worth about $10,348.
A second expert from Harlan J. Berk Ltd. conducted the same tests on a different day and calculated a similar value of $10,314.
But what can you expect when you actually sell it? That will vary depending on where you sell your jewelry. Brown says the Zekman stash could get an offer of about $7,000 as a "minimum competitive price."
But it was a different story when Zekman took the same jewelry to a recent event sponsored by The International Coin Collectors Association, one of several gold-buying subsidiaries of THR & Associates, headquartered in Springfield, Ill.
The company says it does 140 gold-buying events a week in hotels across the country.
The buyer Zekman dealt with did not properly test the karats of each piece and weighed all the jewelry together. Brown says that's akin to cheating a customer.
The THR buyer offered Zekman $3,893 for her more than $10,000 worth of gold, about 38 percent of its value.
"Based on the value of that material -- a bad deal," says Brown, who says a consumer should get at least 84 percent of the value.
Harlan J. Berk pays 70 percent.
Zekman returned to the THR sale that day and questioned Craig Lynch, the company's Illinois supervisor, about the procedures used by his employee.
Lynch said the jewelry should have been separated by karat quality and weighed separate. As for the amount she offered, Lynch said he would have offered at least 50 percent.
But he added: "We always buy as low as we can."
And that's helped Jeffrey Parsons, the owner of THR & Associates, gross $330 million last year in sales for his company.
Lynch said customers are not being cheated. But CBS producers in Philadelphia, Dallas and San Francisco took jewelry to THR gold-buying events in their area, and they were specifically told by buyers that 18-karat pieces were only 10 or 14 karats -- either on purpose or by mistake.
Those are all violations of company training guidelines, said THR spokesman Matthew Enright.
"We are going to do what we can to get that corrected and to make sure that those people are following those guidelines and being ethical," he said. "If we have people out there lying, that is something we are going to look at and we are going to correct it."
He said buyers are supposed to separate jewelry by the karat grade and weigh it separately before making an offer because it could mean a difference of thousands of dollars in the deal offered to a customer.
As for whether THR is taking an excessive percentage of the gold value, Enright said, "It's absolutely legal."
"Are we in business to make a profit? Absolutely. Just as every other business in the country is," Enright said.
Enright also says it's a case of "buyer beware" when it comes to consumers making sure they are getting the best deal.
"Now, do they have the opportunity to do their research and find out what their stuff is worth? Absolutely they do. But is it my job to give them that information? No, it's not," he says.
You can get some of that information by logging on to the following websites.
Find out what gold is trading for on that day at www.kitco.com. Now, you won't make that amount. Buyers have to pay their expenses and make a profit and will make an offer that is a percentage of what gold is trading for-- an amount that fluctuates daily. The trick is to figure out which buyers are offering you the highest percentage.
To find out what percentage gold buyers in your neighborhood are offering, go to www.shopmygold.com.
For tips on what to watch out for when you are actually dealing with a gold buyer, go to www.chicago.bbb.org. Click on "news center" to see the alert on selling gold.
