

There Is A Difference Between Evil And Just Absurdly Profitable - billclerico
http://www.techcrunch.com/2009/10/04/there-is-a-difference-between-evil-and-just-absurdly-profitable

======
idm
It doesn't appear TechCrunch linked to this article at any point:

[http://consumerist.com/5349663/the-article-cash4gold-
doesnt-...](http://consumerist.com/5349663/the-article-cash4gold-doesnt-want-
you-to-read)

Essentially, The Consumerist makes a strong case that the ads are misleading,
that Cash4Gold systematically offers much less than their ads suggest, and
that their staff are trained to support this scheme.

Specifically, the staff knows the strategy, their script walks through
offering the minimum amount to avoid sending the gold back to the customer,
and the staff are rewarded based on the number of customers they can reject.

When former employees spoke out about this, Cash4Gold sued them under flimsy
pretenses (defamation). Then, when Consumerist ran an article about it,
Cash4Gold sued them too.

Read the article and see if you can find any unfounded or untruthful claims
that might be suggestive of defamation.

This is unethical at best, and evil at worst.

~~~
cookiecaper
The lawsuits are unethical, but I don't see the problem with the process. They
make a legitimate offer to the person, and that person is completely within
their rights to accept or reject it. Those rights are not abridged by an
under-market offer, there's no obligation to accept the crappy offer.

There's nothing unethical with making a low offer. If the person is willing to
sell it to you at that price, then great, what's the issue?

~~~
earl
Exploiting asymmetric information to intentionally screw low-information
consumers on the value of their property makes you an asshole in my book.

Cue the glibertarians to spew their idiocy about blah blah blah, consenting
adults, blah blah blah. That's fine, and believe me, I'll be pointing and
laughing when it happens to their grandparents.

And yes, I can't give you a technical definition of screw. Much like Justice
Potter, I know it when I see it. And paying out 20% of value or less is
screwing people.

~~~
DanielBMarkham
_Exploiting asymmetric information to intentionally screw low-information
consumers_

But all negotiations are based on asymmetric information, right?

This is like the cigarettes discussion. Cigarettes kill people. So just tell
them so and let's move on.

These guys screw people over. So just tell people and lets move on. There are
lots of ways for people to lose money.

I think there is a line where a company would be evil, but I draw that line
where high-pressure sales tactics are used for large sums of money, such as
time-share sales. These guys are no different than the neighborhood pawn shop.

------
dantheman
There definitely is a difference between Absurdly Profitable and Evil, but
Cash4Gold is Evil. They mislead and try to exploit their customers. When two
people enter into a deal they should be trying to reach a mutually beneficial
deal, they shouldn't resort to underhanded techniques.

For instance, when companies offer mail in rebates that are difficult to
redeem (must jump through a lot of hoops, takes a long time, etc) they are
misleading you. It's just like a mechanic overcharging you because you don't
know how much it should cost.

~~~
patio11
_For instance, when companies offer mail in rebates that are difficult to
redeem (must jump through a lot of hoops, takes a long time, etc) they are
misleading you._

So it turns out that someone actually measured this and found out that things
you might naively assume are in the customer's interest (short forms and long
periods until the rebate offer expires) actually _decrease_ redemption rates.

<http://news.ufl.edu/2004/06/15/rebates/>

(Totally anecdotal evidence: Japan offered me an economic stimulus payment of
$120 direct-deposited to my bank account within a week, for filling out a
three-line form and stamping with my personal seal, and gave me nine months to
do it in. I put it in my closet and figured I'd mail it some day when I got
around to it, because my personal seal was at the office the day I got the
form. Sure enough, I missed the cutoff by a week. If it had said "You have to
stamp this TOMORROW or you lose $120" I'd probably have gotten it done.)

Totally not anecdotal evidence:

[http://www.alwinhoogerdijk.com/2009/09/14/rebatedelivery-
mai...](http://www.alwinhoogerdijk.com/2009/09/14/rebatedelivery-mail-in-
rebates-for-online-sales/)

[http://www.alwinhoogerdijk.com/2009/09/18/rebatedelivery-
res...](http://www.alwinhoogerdijk.com/2009/09/18/rebatedelivery-results-of-
ab-split-test/)

Take a look at the results of his A/B test: it shows that offering rebates for
his software essentially prints money.

I'm seriously considering implementing this in my software -- offering a $5
rebate to bring the price down to $25. The only thing holding me back is the
feeling that I'd be exploiting the difference between my customers's self-
perception of themselves as organized and their actual organizational skills.

------
JacobAldridge
Not being in the US, I first came across Cash4Gold through Cockeyed.com - Rob
was even 'offered' a few grand to help recast their reputation -
<http://www.cockeyed.com/citizen/goldkit/reputation.shtml>

Arrington's comparison to baseball hot dog vendors and $30 hotel wi-fi seems
fair though. You kinda feel like you're being ripped off, but you do have
choice, and ultimately that creates room for competition.

"We pay 65% of its value" may sound an unlikely marketing strategy to some of
us, but it sounds like their target market is similar to the one targeted in
Vegas' "Our Slots return 97%" campaign.

~~~
blasdel
For the last several years, Rob Cockerham has made all of his posts structured
around exposes of scams that happen to be high-value Adsense: Cash4Gold, Kirby
vacuums, MLM, Viagra, etc. His "Levitra couch" hoax was particularly inspired.

~~~
JacobAldridge
That's a good observation, and they all seem to have happened after he
discovered he was a top Google rank for 'silly string'. Not just (even?) a
pretty face.

------
patio11
My take on this: yes, it is targeted at poor consumers. They're almost
certainly going to receive objectively worse terms than people who are
smarter, savvier, and (not unrelated to those two) richer. This happens in
many, many things poor people buy.

There are a lot of folks whose actions are responsible for this state of
affairs. Its interesting that while responsibility is diffuse, blame gets
concentrated pretty acutely on particular participants in the value chain.

For example, I can't remember the last time someone blamed jewelry vendors for
the plight of poor people. Poor people spend more as a percentage of income on
jewelry than any other socio-economic group. Poor people have more of their
assets tied up in jewelry than any other socio-economic group.

Its interesting to me -- and I mean that, interesting, not the passive-
aggressive way of saying "y'all are stupid" -- that we go after Cash4Gold for
offering $12.50 for $75 worth of gold when we don't go after Kay Jewelers for
selling the $300 brooch the gold is in. Cash4Gold is seen as cheating the poor
customer out of $62.50, but Kay Jewelers is just an honest businessman who
made $225 off of selling the bauble in the first place.

More broadly: a portion of the attraction to jewelry for poor customers is
that it is a value store and access to short-term credit for people who are
unbanked. (If you own a $300 bauble from Kay's then you have a $100 line of
credit at your local pawn shop which charges you APRs of $STAGGERING_PERCENT.)
Jewelry is a TERRIBLE alternative to banking services.

Incidentally: jewelry is a consumption item. Don't buy it with the intention
of it having resale value. Don't buy it if you can't afford it.

~~~
jacquesm
Or, even simpler, don't buy it. Real people are more than beautiful enough by
themselves and don't need to be plastered with gold. Especially not if the
only thing that gold does is show that you now no longer have money. Better
spend it on something useful.

------
Zak
Wait... high-priced wifi at a hotel _isn't_ evil?

As far as I can tell, Cash4Gold is taking advantage of people too lazy to make
an effort to find someone willing to pay market value for their gold. Phrased
another way, their low payments are a convenience fee, just like valet parking
or fuff-service gas stations[0]. I see nothing wrong here.

[0] Well, outside of Oregon and New Jersey, at least.

------
noodle
in my mind, it is unethical. it relies on its users being apathetic or not
particularly smart. the payments sent out are intentionally low/minimal. and
for those that are smarter and motivated, it makes the process by which you
appeal your low payment difficult and convoluted.

~~~
billclerico
i agree with your second point (that a difficult & convoluted process is
unethical) but lots of businesses rely on users being apathetic or not
particularly smart (real estate agents, godaddy.com, etc etc)

~~~
Scriptor
Except for real estate (which isn't all that bad) a lot of services like these
still make it possible for a consumer to opt out with relative ease once they
find out they're being cheated. With Cash4Gold, once they've melted your gold
there is no going back.

------
billclerico
i think it's an interesting ethical debate.

regardless of the moral judgment (I personally think its a fine business),
it's an interesting data point that neither highland capital partners nor
general catalyst have confirmed the financing, despite its size and high
profile.

------
vaksel
who cares if its evil or profitable, why the hell is techcrunch covering them
in the first place? they aren't a web startup.

~~~
simonw
Presumably because it's controversial.

------
arnorhs
If people don't like the price they're getting for their gold, go somewhere
else... there's nobody that forces people to do business with them

