By Jackie Jones

It probably comes as no surprise that some gold-for-cash businesses don’t pay people the true value of their gold.

But like most financial scams, people let the desire for quick money get ahead of their good sense.

It’s tight out there. Black unemployment stands at about 15 percent with little relief immediately in sight. The nation is still in a recession and who can’t use a little extra cash?

The commercials make it seem so easy. You just mail in your gold, get an estimate, sign off and get a check in return, all without having to leave the comfort of your home or exposing your financial woes to others.

What most consumers don’t know, according to Consumer Reports, however, is that these companies are paying customers only about 20 percent of the market value of the jewelry.

Just like check cashing and payday loan operations, the Internet and mail-in gold businesses target lower-income and minorities, people who are less likely to have jewelry that has been appraised or to have relationships with reputable jewelers whom they can trust to tell them the true market value of their possessions.

With gold trading around $1,000 an ounce in commodity markets, it seems to a lot of folks like a good time to unload some for quick cash.

And black people have gold to sell. Studies have shown, including one in 2007 by professors at the Harris School of Public Policy at the University of Chicago, that lower-income and formerly oppressed people are more likely to spend more of their disposable income on cars, clothes and jewelry, not because they are newly affluent, but to shed the image of being poor.

According to a summary of the University of Chicago report, the authors found that black people spend about 30 percent more, on average, on visible goods than whites after adjusting for differences in lifetime earnings. Over the 16-year period examined for the report, the spending was evident across all age, income, education and marital status groups. Education reduced the difference, but did not eliminate it, the study said.

In other words, black folks may be easy marks for online and mail-in gold businesses.

The Better Business Bureau began getting complaints in 2006, just as people began to feel the effects from the early stages of the recession, from consumers who said not only were they not offered a fair rate for the gold, but in some instances the company had found ways around the grace period for letting customers retrieve their jewelry. That meant they were locked into deals they didn’t want or sometimes their valuables had already been melted down and sold.

“Their business model is based upon the ignorance of consumers,” Rep. Anthony Weiner, D-N.Y., told ABC’s “Good Morning America,” in explaining why he was introducing legislation in January to tighten up the mail-in-gold industry.

Weiner’s Guarantee of a Legitimate Deal Act of 2009 (HR 4501) would make it illegal for a gold company to melt or destroy jewelry or precious metals before the consumer signed off on it. The company also would have to return the jewelry if the consumer declined the offer and have to insure the jewelry for the same amount the customer did in sending it to the gold company. If there was no proof of insurance, the gold dealer would have to insure it for at least 60 percent of the melt value of the jewelry.

Between mid-May and early July 2009, Consumer Reports had mystery shoppers send identical 18-carat chains and pendants, which retailed for $175 and had meltdown value of about $70, to three gold buyers. The shoppers also took gold directly to jewelry stores and pawn shops in three different states.

The mail-in gold companies paid 11 to 29 percent of the market price for gold, while the other businesses offered 35 to 70 percent of the going rate.

Local television stations around the country also compared the payments from the gold companies to jewelers and pawn shops, with similar results.

Consumer experts say it is important to get your jewelry appraised, especially if you think it may be antique. Intact jewelry is worth more than the meltdown value of the gold. Overall value is related to karats, which determine purity of the gold, and weight. Karat is purity, carat is mass—they aren’t interchangeable So a 14-karat chain is about 50 percent pure, compared with 24-karat, which is 100 percent.

If you don’t have an appraiser, look at the stamped karat mark on your jewelry, weigh it on a kitchen scale then go to an online calculator, and enter the karats and weight to determine the value based on the current price of gold. Gold prices also can be checked at www.kitco.com, a retailer of gold and precious metals which post live market quotes and real-time rates on its site.

Do your due diligence. Before mailing off your gold, call several jewelry or coin stores or pawn shops and find out what they are paying for gold. Most gold buyers are willing to negotiate and you want the highest percentage of meltdown value you can get – at least 50 percent. If a store manager or jeweler won’t tell you what’s he’s paying for gold, that’s a sign to keep looking for a reputable business.

After you identify a firm you think you want to deal with, check with the Better Business Bureau (BBB) not only to see if there have been complaints but whether there have been queries. If the BBB has no record of the business, you may want to keep looking. It doesn’t mean necessarily that the business is untrustworthy, just that there is no track record to provide assurances for customers.

Jackie Jones is a freelance writer as well as a career and fitness coach for those who want to get their lives in shape.