Given the market realities today, jewelers are increasingly being asked to purchase jewelry from their customers. Consumers are looking to use their unwanted jewelry to acquire some ready cash, or to put it towards the purchase of new jewelry. What should a jeweler consider in this area in order to avoid liability and risk?
First, a jeweler should be aware that if purchases from the public and subsequent sale of precious metal, stones or jewels in any one year exceed $50,000 in the aggregate, they will have to institute an Anti-Money Laundering Program pursuant to the USA PATRIOT Act. Visit the JVC web site www.jvclegal.org for more information.
Next, there are usually state or local laws targeting the sale of stolen property that often require jewelers to acquire identification from the person offering the jewelry for sale, and further require the jeweler to keep a log of a detailed description of the item purchased. Check with your local consumer protection agency or state attorney general.
Consumer expectations are usually outlandish when it comes to the value of the jewelry that they are offering for sale. Often, they come in armed with the current price for an ounce of pure gold, and expect that you will base your offer on that value. Be sure to explain that the gold in the item offered for sale is not pure—and that the labor that went into the manufacture of the item will not be a part of your purchase price. Instead, you will probably be paying only the value of the precious metal contained in the item. By addressing these often unwarranted expectations in the course of your conversation, you will be able to ensure that your customer feels that the transaction was safe and fair.
If you intend to re-sell the item as jewelry, retailers are often required to have a special license for this activity—usually called a “second hand dealers” license. Again, check with your local government agency.
If you intend to sell the gold or other precious metal to a refiner, you should make sure that the refiner is reputable and that they have an anti-money laundering program in place—they are required to do so by law. If they do not, take that as a warning about their legitimacy!
Avoiding risks and pitfalls is usually easy – it just takes a little thought, and the knowledge of the requirements associated with this activity. To get further information about legal compliance in this area, or others, join the JVC—visit www.jvclegal.org for membership information.