Is Cash for Gold a Scam

On the rare occasions when I watch television I always see this commercial from a company called Cash for Gold with the saying - Trade in your unused gold for cash. The commercial shows several people who turned in gold and received money usually a few hundred dollars. I went to the company's website and did some research. The company sends you a kit to mail your gold in a pre-paid envelope insured via UPS. Payment is based on the weight and karat of the gold and the daily price of gold. You can receive a check in a few days.

If you recently participated in the Cash for Gold program and had a few ounces of gold you would have at least $2,000-$3,000 considering the current price of gold is $1,004.00 per ounce.

One couple participated in the "Cash for Gold" program and mailed in a two 18K gold diamond wedding rings and received a total of $67 although their local pawn shop offered between $300-$350. If the rings were 1/4 of an ounce in total weight they should have received at least $250.

A good friend told me you always have to find out a company's motive. Cash for Gold's motive is to make money so you will never get the full price you should be getting for selling your gold because they want to make as much money off of each customer as possible.

There are several ways you can be scammed by this company and similar companies: the company offers you less money for your gold than what it is really worth, the company claims the karat of your gold is less than what it really is, i.e. your gold is 18 karat but the company tells you it is 10 karat or they tell you the weight of your gold is less than what it really is.

Due to the recession several fraudulent companies were started and have scammed Americans out of millions of dollars. Don't be a victim. Here are 4 tips to protect yourself if you do business with Cash for Gold or similar companies.

1. Take a picture of your gold before mailing it and record the karat that is inscribed on the inside of the jewelry.

2. Weigh your gold at a jeweler and ask them to verify the karat, weight and price before mailing it in and get it in writing. Compare with the information provided by Cash for Gold.

3. Beware of fraudulent checks. Ask the company to send you a money order instead of a check. This reduces your chances of cashing a fraudulent check and the company having access to your bank account.

4. If you feel you were a victim of a scam report the incident to the Better Business Bureau, Federal Trade Commission, FBI and US Postal Service.