Gold Party Scams
Along with any new craze, there are going to be profiteers ready to take advantage of a good thing, and of you, the consumer. The slump in the economy and the rising price of gold has brought on the latest in get rich quick schemes known as “gold party scams.” Tupperware, Princess House®, Pampered Chef®, and now gold is being bought and sold in homes across America through multi-level marketing (MLM) companies looking to make a quick buck. According to NBC News, the Gold Party business is one of the fastest growing home-based multi-level marketing schemes in the United States today.
So what exactly is a gold party scam?
Gold parties are typically held in people’s homes, at places of worship, and at schools. The hook used to lure you in is the promise of cash for your unwanted gold jewelry, coins, and other items. The buyer tests your gold and pays you cash on the spot (based on the gold’s purity and weight). Sounds like a good deal, right? WRONG!
How to Avoid a Gold Party Scam
Let’s face it, no one is in business to lose money, so your gold is probably worth a lot more when you sell direct than selling at one of these parties. When you sell gold at a gold party rather than dealing directly with the refinery, you are working with a middleman, and sometimes a whole network of middlemen. You will receive a much lower price for your gold because of all the commissions that are paid. The host of the party gets a percentage of the total sales (usually 10%), so right off the bat, you’re down 10%. Then the person who tests the gold and buys it from you has to get their take (usually 5%), and then the company who employs the person who is testing the gold gets a piece, and so on… So who is paying all of those people their “fair” share? You are, by selling your gold for far less than what it is worth!
So how do they dupe you into taking less for your gold than what it is actually worth? There are a handful of techniques for taking advantage of the gold seller. Here’s how the scam works:
1. Undervalue the Purity/Karats: Since most of us do not walk around with a nitric acid gold testing kit, we rely on the person testing the gold, measuring its purity. We also rely on that person to be truthful about their findings. Gold party scams are notorious for reporting a lower level of purity than what the test results indicate. For example, you might bring in an 18k (75% pure gold) ring and you will be told it is 14k (60% pure gold).
2. Undervalue the Weight: Gold scam parties are notorious for misreporting the weight of your gold. A typical technique is to determine the weight in pennyweights vs. grams, which is confusing to most people.
3. Convince you the Karat stamping on the piece is wrong. This is very common when the piece bears a foreign stamp.
4. “Low-ball” you on the price of the piece and see if you are ignorant enough to accept the offer. Scammers take advantage of the fact that most sellers do not know what the scrap metal value is of their jewelry.
These gold parties pay out an average of $5,000 per party, and most often, the person doing the buying is not even a professional in the jewelry business. Do you really trust a non-professional with telling you how much your gold is worth? There are many websites out there teaching people to host gold parties with nothing but a nitric acid test kit and a small pamphlet. To make the correct assessment on your gold, it is imperative that the person doing the testing be knowledgeable and trained in precious metals. This person should know the difference between all the precious metals and how to test for them. Without a trained expert, you are gambling on the true value of your gold.
One of the biggest reasons to avoid gold parties is that the people who are hosting them are not in the business of buying and selling gold. This means that they are not concerned about your repeat business and whether or not you will be satisfied with the transaction over the long term. It is far better to go to a professional whose main goal is to not only give you a fair deal, but want to earn your business back time and again.
What can you do to avoid being duped at a gold party scam?
The best way to avoid getting scammed is to find a company or jewelry buyer with a solid reputation. Dealing with a verified jewelry buyer is a far more trustworthy route to take when looking for an appraisal or evaluation of your jewelry. Always be sure that you provide an itemized list of your gold pieces and jewelry before handing it over to someone to test. If you are going to ship your gold, be sure that it is insured in the event that it is lost in transit.
Online services, such as Cash4Gold, offer the highest level of customer service because we are a direct representative of the refinery where the gold is melted down and processed. Because there is no middleman, you will receive more cash in your pocket at the end of the deal. The stringent procedures and testing equipment is much more reliable and accurate than what you will find at a gold party.