Don't get scammed when selling your old iPhone (Ask Maggie)

I am the first to admit when I am wrong. And indeed, I made a mistake a few weeks ago when I mentioned in this column a certain Web site as a place to sell an old iPhone without checking the reputation of the site mentioned.

In the October 4 edition of Ask Maggie, headlined Where to unload your laptop for top dollar, I listed the Web site CashForiPhones.com as a place to sell a used iPhone. Since then, I've learned from various readers and through my own investigation, that this particular Web site has a reputation for offering customers a high price for their used iPhones and then greatly reducing the offer once the company has possession of the device.

Of course, it's not for me to determine whether this company is committing fraud in the way it advertises its service, but judging from the number of complaints on the Internet related to this service, it should have been enough reason for me to leave it out of any recommendations for my readers. So I apologize for not checking the background of this company more carefully before including it in the original story.

There's no question that smartphones have become a major investment for consumers. And with the pace of innovation accelerating, it seems like the minute you buy one smartphone, a newer and better one has been released. Reselling old devices to help pay for new ones is a great idea, but as I just pointed out, consumers must beware. A whole new industry has popped up to help people unload their old devices for cash, but as with all "gold rushes" there are often some less reputable establishments mixed in with legitimate ones.

In this edition of Ask Maggie I offer some suggestions for how readers can separate the wheat from the chaff and avoid dealing with companies that may try to scam them when reselling their gadgets.

Ask Maggie is an advice column that answers readers' wireless and broadband questions. The column now appears twice a week on CNET offering readers a double dosage of Ask Maggie's advice. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.

How to avoid getting scammed

Dear Maggie,
PLEASE look into the ethics of CashForiPhones. I used your recommendation to sell my iPhone 4. I'm having a terrible experience with them. I also noticed that other people who have commented on the CNET site, who also used CashForiPhones, are also describing a similar bait-and-switch scenario in dealing with this company.

They quote you one price, that in hindsight, is too good to be true. And then they low-ball you, offering half the value of the phone once they have your iPhone. They do not provide any initial assessments like Gazelle, where you can better state the quality of your phone. The site just says, if it's working, you can get X. It doesn't mention anything about reducing the value.

The customer representative who called me to offer me the low price (from $294 down to $137) would NOT take "No" for an answer. He is now threatening to hold my phone for three weeks "to process the return" when he said he could offer me a check in the mail today.

I really hope you can shed some light on these practices. I know some other people who commented on your "How to Unload your iPhone" story also fell for the Cash4iPhones scam. Can you do something about this?

Thanks,
Tony

Dear Tony,
First and foremost I want to apologize to you and every other Ask Maggie reader for providing erroneous information. The last thing I want is for people to follow my advice and to be unhappy with the outcome. I should have checked out the companies I cited in that article more carefully before including them in my column. Perhaps like you and some other readers, I saw only dollar signs when I checked the trade-in value that CashForiPhones offered. But I will admit that I failed you and the other readers. And for that I apologize.

After receiving your complaint, I looked into the CashForiPhones service a bit more. You are not the only consumer to complain about this company. There are message boards all over the Internet as well as people complaining on Twitter that this company uses a bait-and-switch technique to win business. In other words, they seem to lure customers into their site with their promise of a high offer, but inevitably when the device is assessed, consumers are given a much lower figure.

I also found that the parent company of CashForiPhones, Laptop & Desktop Repair, out of Reno, Nev., closed 141 filed consumer complaints filed against it with the Better Business Bureau in Nevada within the past three years. About 84 of those complaints were closed in the past year. The Better Business Bureau of Nevada has given the company a high rating, but the business is not accredited by the agency. So even though it seems like the company is trying to deal with the issues, it's still had several complaints filed, which could be a red flag.

The complaints against the company are all somewhat similar to yours. CashForiPhone quotes one price to consumers and then offers them a much reduced price once the company receives the phone. And then the company stalls or pressures consumers to take the new revised price that was offered.

I tried contacting CashForiPhones myself, but I was never able to get a hold of Chris Smith, vice president of operations. So in all fairness to the company, I still have not been able to get the CashForiPhones' side of the story. Still, as the old adage goes, where there's smoke, there's usually fire. Therefore, I wouldn't trust this company with my valuable laptop, smartphone, tablet or other expensive gadget. And I wouldn't recommend this site to my readers.

Is it even worth trading in your old iPhone for cash? And if it is, who can you trust to resell your iPhone or other valuable gadgets?

Yes, I still believe that it's worth the hassle and energy to sell your old smartphones, particularly iPhones. There is still demand for these devices, and one of the reasons to buy an Apple product over some other product is that you can usually resell it and make some cash, even on products that are slightly older.

Trade-in sites can offer a simpler way to sell your phone. You could sell your device on Craigslist or on eBay and possibly get a higher price, but you'll likely have to put in a lot more effort. Still if you decide to go the trade-in router, you must be careful in choosing a trade-in site.

So to answer the second question: Who do you trust? It's difficult for me to endorse specific Websites, since quite honestly, there are dozens of such sites out there and more seem to pop-up everyday. Also, I haven't personally used every trade-in site on the Internet. (I don't own enough gadgets that I could sell to test every site.)

Kristina Kennedy a spokeswoman for Gazelle told me that at least 30 to 50 new companies have come on the scene this year. And she said it's created a lot more confusion for consumers about who to work with than it was a year ago when there were fewer players.

I agree, it is very confusing for consumers. But even though I can't endorse specific Websites for trade-ins, I can offer you some tips and guidance on finding reputable sites and programs that will hopefully offer you a satisfying experience.

Reputation matters
As in with any business, you want to work with a company that has a solid reputation for being honest and satisfying customers concerns. This is especially true when it comes to finding a trade-in Web site for your old gadgets. There are some companies, such as Nextworth and Gazelle, that have been building a business around accepting trade-ins and reselling devices. These companies work with some big retailers to help them with their trade-in programs. For example, Gazelle works with Wal-Mart.com and Office Depot, while Nextworth is partnering with Target for its iPhone trade-in program. I think the endorsement of these big brands helps lend some legitimacy to these sites.

"We're basically asking customers to send us expensive products, like a laptop or smartphone, with the promise that we will pay them after we get it," Kennedy said. "This requires people to trust in us. And we take that very seriously."

Do your homework
Checking out the reputation of a company requires a little bit of leg work.

Ask your friends which sites they've used. Were they satisfied with the experience? What complaints do they have? Word of mouth and recommendations from trusted friends is the best way to avoid a bad experience.

See what others are saying about the company. Check the company's Facebook, Twitter, Google+, Linked In, or other social networking sites to see if people are talking about this company and see what they're saying. (There are lots of tweets under the hash tag #cashforiphones complaining of the bait-and-switch that you experienced.)

Check the Better Business Bureau for complaints. Clearly, if the Better Business Bureau gives a company an "F" rating, that is a business to avoid. But in the case of CashForiPhones's parent company Laptop & Desktop Repair, LLC, the Better Business Bureau actually gave it an A+ rating, since it resolved many of the complaints filed against it. So it's important to check user complaints online and to listen to friends.

Be wary of deals that look too good to be true
As you mentioned in your note to me, in hindsight you (and I ) probably should have seen the higher price offered for your used iPhone as a warning that something might be wrong. And your instinct was probably correct. Check multiple sites and if one Web site is offering a price that is much higher than the others, then you might want to reconsider the legitimacy of that offer.

Bigger brands may carry more weight
While it's not unheard of for a bigger company to treat its customers unfairly, you're more likely to be able to rectify the problem by escalating unresolved issues through a larger company that cares about protecting its brand. Some smaller mom-and-pop Web sites may not have any policy for dealing with complaints. And you may find it difficult to get anyone on the phone with you to handle your concerns.

Here is a list of trade-in programs from big brand retailers that are recommended by Consumer Reports.:

• Target Nextworth Electronics Trade-In Program
• Costco Trade-in Program
• Radio Shack Trade & Save Program
• Amazon.com Electronics Trade-In Program

Ask questions
Legitimate trade-in Web sites will offer you a way to communicate with company representatives directly before you ship your iPhone or other gadgets to them. In fact, they'll usually have more than one way to contact representatives either by e-mail, online chat, or a phone number you can call. It's also good to make sure you can find a corporate phone number and location for the company offering the service. I'm always skeptical of companies that don't list any corporate information on their Web sites.

When you contact a representative, ask them some basic questions.

• What is the price revision policy? Kennedy of Gazelle said that nearly every trade-in site reserves the right to revise the stated price, since without this stipulation they'd likely face a lot fraud from people who are trying to sell broken or damaged devices. Still, even if the site reserves the right to revise the offer downward, ask for a stated policy of how this is determined. Also, will the site revise the offer upwards and offer you the true value of the device if you mistakenly misrepresented the product in your initial inquiry. For instance, if you said you had an iPhone 3GS, but you really send them an iPhone 4, will they offer you the true value for the iPhone 4? Also ask what percentage of offers the company has had to revise downward. Gazelle claims that only 10 percent of its original offers are revised to a lower price once the company receives the device.

• Is satisfaction with the price guaranteed? Will the trade-in site pay to ship your phone back to you if can't agree to a price? Sites that don't pay to return devices if a price cannot be agreed upon should not be trusted.

• How long will it take for the company to process a payment? Also if you don't agree on a price and they send you the device back, how long will it take them to process the return? Some of the complaints against CashForiPhones said that the company was willing to offer payment for the phone that day, but it would take three weeks to process the product's return.

• How do they recycle products that cannot be resold? This is just a good thing to know, since you don't want to hand over an old product to a company that will just dump it in a landfill.

• What is the procedure for making sure that the device is wiped of all information before it's resold? It's important for you to delete all personal information from your phone before you send it to a trade-in site. But the company should also have a procedure in place for wiping all devices of information before they resell them.

• Who is backing the company? Do they have venture capitalists or investors that are offering financial backing? That's usually a sign that this is a company that is trying to build a business. So information about investors or for investors in the company might be one more clue that a company is legitimate and should be trusted.

Take photos of your device before you put it in the mail.

This may seem like a hassle, but many people who have complained about their experience with CashForiPhones say the company claimed their device had scratches or defects that they did not believe the device actually had. If you have a record of what condition the device was in when you sent it to the company, you will have a better chance of proving your case if you decide to pursue the matter further.

Again, I apologize for not doing my homework to make sure I was listing companies that were worthy of being mentioned in my column. But hopefully, these tips that I have offered will help you and other Ask Maggie readers avoid problems in the future. Good luck!