Consumer Reports Raises Doubts About Gold Firm Touted By Glenn Beck
Investigation Questions Goldine's Sales Tactics, Says Beck Sponsor Asked Nearly Twice As Much For Coin Set As Competitor
By MATTHEW MOSK and JOSEPH RHEE
July 22, 2010 —
One of the nation's top independent consumer advocates has just released a report that casts strong doubts on the aggressive sales tactics at Goldline, the precious metals dealer endorsed by Glenn Beck and other conservative radio and television talk show hosts.
"Maybe if you're worried about Armageddon you might consider it good advice," the editor of Consumer Reports Money Adviser, a newsletter put out by Consumer Reports, told ABC News after reviewing the telephone sales pitch by a Goldline associate.
"I think that when you're buying anything, and here at Consumer Reports it is what we do, anything you're buying we advise that you check as many possible places to see where the best deals are," said Noreen Perrotta, the money editor. "I don't think in this case that Goldline offered the best deal."
In one price comparison, Consumer Reports found Goldline was charging nearly twice as much as a competitor for a popular gold coin set. A Goldline spokesman has not responded to a request for comment.
The findings presented by Consumer Reports stand in a sharp contrast to the A-plus rating that Goldline has received from the Better Business Bureau -- a rating that was touted by Scott Carter, the company's vice president in an interview on ABC's Good Morning America earlier this week.
And they echo some of the concerns raised by Goldline customers interviewed by ABC News, many of whom alleged that they were pushed aggressively into buying collectable gold coins -- at a hefty mark-up -- rather than pure gold bullion.
In a letter to ABC News, Carter said it is in Goldline's best interest to maintain customer satisfaction and trust. "Indeed, we believe that our success for the past 50 years and our A+ Better Business Bureau rating reflect this understanding and commitment."
Consumer Reports initiated its own look at Goldline after seeing the company's television ads in heavy circulation during 24-hour news broadcasts on CNN and Fox News, and hearing about initial concerns raised by Rep. Anthony Weiner, a New York Democrat.
Perrotta said the task of assessing Goldline's claims was assigned to a reporter for Consumer Reports Money Adviser, a newsletter that the consumer protection group sends to subscribers. The "Behind the Hype" column, which appears in the newsletter's August issue, looked at Goldline's claims and prices and found them suspect.
The column says that Goldline's over the phone prices quoted for gold bullion were on a par with those charged by other companies. And the report doesn't take issue with the 0.75 percent fee that Goldline charges to store bullion on behalf of customers.
But the column notes that Goldline was selling a four-piece proof Gold Eagle coin set for $5,924.63 in May, while the American Precious Metals Exchange, a competitor, was selling the same set for $3,295.
The reporter also questioned some of the sales claims Goldline associates made during phone consultations. Perrotta said Goldline told callers they should invest as much as 20 percent of their portfolio in gold. "Most financial advisors say five to ten percent of your portfolio in gold is a good inflation hedge," Perrota said. "Is it good advice? I don't think it's good advice."
The report examines Goldline's assertion that customers should consider buying collectable coins to protect themselves from having the government confiscate their gold. That pitch appears to be a central feature of the company's effort to persuade customers to buy coins, despite a mark-up that can run as high as 35 percent.
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Company sales associates told the Consumer Reports caller that after the Great Depression, the U.S. government seized peoples' private stashes of gold, and warn that history could repeat itself. In fact, the report notes, the U.S. government paid market price, and took that unusual step to prevent people from hoarding bullion while American currency was on the gold standard, the Consumer Reports article says. An expert quoted in the report called confiscation today "a non issue."
"Are you worried about the government confiscating your coins? I'm not," Perrotta told ABC News.