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Updated: Fri, 30 Nov 2012 12:05:10 GMT | By Joe Castaldo

Cash for gold closes shop

Customers complaints, bad publicity and high marketing costs eventually did the company in.


 (© Photo: YouTube)

(Photo: YouTube)

The idea of Cash4Gold came to Jeff Aronson while lying in bed one night. Aronson had already established a refining company in Florida, but business was tough. His new plan involved dealing directly with consumers, who would send him unwanted gold through the mail, which he would appraise and deliver a cheque for, before melting the gold for resale.

Aronson founded Cash4Gold and parent company Green Bullion Financial Services in 2007, and promoted his venture with low-budget television ads and lots of press releases. In only his early 30s, Aronson trumpeted his expertise. After addressing students at a small Florida university in 2007, Cash4Gold put out a press release quoting a professor as stating, "Jeff was one of the best speakers we've had."

The next year, Aronson scored a US$40-million investment from two venture capital firms-a figure he later claimed was inaccurate, but never corrected. His timing with Cash4Gold was fortuitous. A financial crisis was about to hit, and millions of Americans would soon become desperate for cash. By 2009, the company was processing up to 4,000 fine ounces of gold per week. Its success rankled traditional jewellers and refiners, and spawned countless imitators.

The company cemented its place in pop culture in 2009 with a multimillion-dollar Super Bowl ad featuring Ed McMahon and MC Hammer, in which the two pitchmen sold increasingly absurd gold items (sledgehammer, hip replacement) for cash. Cash4Gold soon expanded into Canada, the U.K. and the Netherlands.

The company never missed an opportunity to get its name in the press. It promoted a dance party featuring MC Hammer to be held in the vault at its headquarters. "There is no doubt that with help from Hammer this is going to be a really hot party," Aronson said. It is unclear whether the party occurred.

As the company grew, so did the complaints. The Better Business Bureau collected hundreds of grievances from customers who claimed Cash4Gold low-balled their jewelry, denied receiving packages in the mail, or didn't allow enough time to rescind offers. The company said it never promised to deliver the highest prices for gold, and urged consumers to do their research. New York state went so far as to implement legislation to reform the industry. "Cash4Gold has used these bad economic times as a golden opportunity to fleece hard-working people," claimed former congressman Anthony Weiner in 2010.

The complaints, bad publicity and high marketing costs did the company no favours. In July, Cash4Gold's parent firm declared itself insolvent, and a third-party administrator assumed control. In October, Fortune reported Cash4Gold was in the final stages of a sale to Direct Holdings America for just $440,000. Its plans for Cash4Gold are not known. It could turn the operation around. But the self-promoting era Aronson initiated likely is at an end.

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