Cash4Gold Faces Class-Action Lawsuit

A class-action lawsuit has been filed against the parent company of Cash4Gold, claiming the company misrepresented its services and defrauded customers who sent in their gold jewelry in exchange for cash, court documents say.

Cash4Gold made a splash in February with its Super Bowl ad starring MC Hammer and Ed McMahon. That spot is shown below.

The 100-plus-page complaint names Cash4Gold’s parent company, Green Bullion Financial Services LLC, and was filed as a class-action lawsuit in U.S. District Court for the Central District of California on Oct. 6.

The suit was filed on behalf of two California women who were former Cash4Gold customers, but attorneys in the case are asking the court to open the suit to all persons “who suffered injury from Cash4Gold’s unlawful practices from Oct. 6, 2003 to Oct. 6, 2009.”

In the lawsuit, the plaintiffs claim that Cash4Gold’s “unlawful behavior can be distilled down to three specific frauds.”

First, according to court papers, Cash4Gold promises to provide the highest care for any goods sent to its facility, a promise asserted in two sections on the company’s Web site.

“However, this high degree of care is a lie, as items sent to Cash4Gold are commonly ‘lost,'” the suit alleges. “At best, this means that Cash4Gold is not exercising the high degree of care it has promised and is liable for negligence. At worst, this means that Cash4Gold is intentionally stealing the goods sent to it and is liable for conversion.”

The second alleged example of fraud outlined in the suit involves Cash4Gold’s 12-day return policy, which asserts that customers who are unsatisfied with the price offered to them for their gold jewelry may contact Cash4Gold and have their jewelry returned to them.

“However, this ‘return policy’ is a lie,” the lawsuit alleges. “Importantly, it is measured from the date on the check sent to consumers. Then Cash4Gold, as a matter of company policy or practice, routinely issues the checks, sets them aside, and mails them out days later so that customers do not receive their checks until after the 12-day return window has already passed . . . customers are simply unable to reject Cash4Gold’s offer or to have their jewelry returned to them. In fact, in many cases, Cash4Gold actually melts down jewelry before the ‘return period’ has even passed, since it knows that due to its mailing schedule, customers literally have no way to successfully exercise the ‘return policy.'”

Third, the suit states that “to support and disguise the two major frauds of stealing customers’ jewelry and completely fabricating the existence of a return policy, Cash4Gold utilizes a ‘customer service’ staff which is deliberately frustrating and openly lies to the company’s customers.”

The suit claims that Cash4Gold’s customer service representatives are specially trained in techniques designed to mislead consumers.

In a response to the lawsuit sent to National Jeweler, Cash4Gold denied the allegations.

“Cash4Gold is aware that a complaint has been filed,” the company said. “The company believes that this complaint is without merit, and Cash4Gold intends to vigorously defend the case.”

Plaintiffs are asking, among other things, for permanent injunctions against Cash4Gold, barring the company from “utilizing any monies acquired by Cash4Gold’s unfair business practices,” and compensatory, actual and punitive damages.

Nielsen Business Media