There Is A Difference Between Evil And Just Absurdly Profitable

http://www.techcrunch.com/2009/10/04/there-is-a-difference-between-evil-and-just-absurdly-profitable

by billclerico • 17 years ago

12 22 17 years ago

billclerico2• 17 years ago

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.

noodle2• 17 years ago

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.

billclerico2• 17 years ago

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• 17 years ago

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.

noodle2• 17 years ago

for many people, they're sending in gold because they're in dire straits. they get that check in the mail and they don't have the time to go through the process to appeal. they'll cash it because they need to.

i feel like the process would be more ethical if there was more of a customer feedback process. like, if the customer were informed on the amount of gold and the size of the check before it was in their hand.

dantheman• 17 years ago

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.

patio112• 17 years ago

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/2009/09/18/rebatedelivery-res...

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.

vaksel• 17 years ago

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

simonw2• 17 years ago

Presumably because it's controversial.

JacobAldridge2• 17 years ago

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• 17 years ago

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.

JacobAldridge2• 17 years ago

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.

idm• 17 years ago

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

http://consumerist.com/5349663/the-article-cash4gold-doesnt-...

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.

cookiecaper2• 17 years ago

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?

simonw2• 17 years ago

You're lying to them about the value of their property?

earl• 17 years ago

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.

Zak• 17 years ago

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.

patio112• 17 years ago

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• 17 years ago

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.

arnorhs• 17 years ago

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

There Is A Difference Between Evil And Just Absurdly Profitable

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