Congressman: Goldline International preyed on consumers' fears, lied
A House committee on Thursday examining TV gold ads heard accusations of fraud and misrepresentation, most directed against Goldline International.
The comments came as a hearing of a panel of the House Energy and Commerce considered legislation from Rep. Anthony Weiner, D-N.Y., that would require companies like Goldline to more fully disclose the actual value of the gold in products they are selling and the markup for gold products.
Weiner accused Goldline of using ads and letters like the one citing the 1933 incident, to scare consumers into making bad investment decisions.
"The television gold industry is an industry that is built on fear, lies and ripoffs," he said.
He charged that heightening fear of impending economic collapse is "a staple of every single statement they make" followed by "a lie" that coins rather than bullion represent a good investment, followed by a "rip-off" because the company's markup is more than its competitors.
"This is not whether consumers are idiots. It is whether they are being lied to. The fundamental question should be, 'Should you be implying that a confiscation order is in place, when it hasn't been in place since my father was born,'" he said.
The doctor, Julius A. Bazan, of Lynbrook, N.Y., acknowledged that buying gold coins and selling them six months later was likely to cost him money, but said he was shocked at how much.
"I thought I was buying at the market price," he said. He said he was shocked to learn later that because he bought the higher markup gold coins rather than gold bullion, he'd immediately lost $2,000 of the $3,300 per coin he spent.
Other Democrats also questioned Goldline's tactics.
Scott Carter, executive vice president of Goldline, denied the charges. He told the panel that Goldline had been in business for 50 years and competes with more than 5,000 other firms. He said consumers have numerous sources available to compare pricing and policies.
"Goldline has assisted thousands of people to buy and dispose of gold products," he said, adding that the company is an A plus member of Better Business Bureaus. He said every customer gets a "Coin Fact" booklet containing disclosures, the ability to cancel any deal within 7 days, and is warned that pricing is unlikely to appreciate short term.
Carter also defended the warning that government might seize gold bullion, describing it as "one component" in the economic picture.
Howard Beales, a former Federal Trade Commission official now an associate professor at George Washington University, and a former consultant for Goldline, supported Goldline's view.
"Goldline is the antithesis of the get rich quick seller," he said. Goldline makes no representation that it is selling at the lowest price."
Weiner, other congressmen and a consumer advocate questioned that representation, noting investigations of gold sellers by state attorneys general and other local officials.
Lois Greisman, associate director of the FTC's Bureau of Consumer Protection, who generally endorsed the legislation, said the FTC has received about 850 complaints about gold and precious metal sales in the last five years, less than 1% of the FTC's annual complaints. She said the FTC hasn't brought any complaints recently, but hinted that may change soon.
"Commission staff are actively pursuing various investigative leads in this industry," she said.
Republican members suggest that criticism of the company's tactics and ads - some on conservative TV and radio shows - was misdirected and political.
Instead of being concerned about how Goldline sells coins, said Rep. Steve Scalise, R-La., committee members should be concerned about President Obama's spending policies that have caused consumers to want to buy gold.
"Rather that beating up on people who are selling gold, I would hope Congress looks at why [gold is rising]," he said pointing to a warning from Moody's that the rating for the country's bonds could drop.
A second Republican, U.S. Rep. Ed Whitfield, R-Ky., said some of the same criticism of high markups made against Goldline could be made against the U.S. Treasury, which charges a premium for U.S. gold coins.