JAMES RICHARDSON heard about Goldline on Beck's radio show late last year. A disabled former trucker who lives in Tennessee, Richardson called the company with the intention of buying one-ounce gold bullion coins. The purity of American bullion is guaranteed by the Treasury and its prices are transparent, because they're closely linked to the spot price of gold. But when Richardson got on the phone with Goldline, he says, a sales rep pressured him into buying something entirely different: $10,000 worth of tiny, 20-franc Swiss gold coins.
"I paid them on a credit card the same day, didn't have no brochures on them or nothing," he says. "They make it sound really good, like you can't lose on them."
Richardson regretted the purchase almost as soon as he hung up. "I'm not a coin collector," he says ruefully. The $10,000 represented one-fifth of his entire savings, and after some research he realized that he had vastly overpaid for the francs. The 34 coins he'd ordered from Goldline were 90 percent gold, amounting to about 6.3 ounces of gold, which was then selling at around $950 an ounce. He'd paid the equivalent of around $1,600 an ounce, meaning it could be years before he recouped his investment—if ever. "It was just a lose-lose situation," he says.
Goldline's marketing and disclosure materials explain that customers buying coins "for investment purposes" may not be able recoup their costs. They also say that first-time customers can cancel an order within seven days of purchase. But Richardson says that when he tried to get his money back within that time period, salespeople gave him the runaround and insisted he should keep the coins because the price of gold was going to double. He filed a complaint with the Los Angeles-area Better Business Bureau (BBB), of which Goldline is a member, and eventually he got a refund.
Richardson suspects he's not the only Goldline customer who didn't know what he was getting into. "I ain't got no college degree or nothing, but some of these older people think they're investing in gold, but you're not. You're investing in coins," he says. The price of gold increased 133 percent between early 2006 and this May, yet many Goldline customers say they have lost money on their purchases after discovering—as Richardson did—that they had badly overpaid. Richardson is one of 44 people across the country who have filed complaints against Goldline with the Los Angeles BBB in the past three years; customers have also have griped about their dealings with the company on message boards such as Ripoff Report and the Pissed Off Consumer. Regulators in Missouri have sanctioned the company for pressuring an elderly couple to liquidate their other investments to buy overpriced coins.
The Federal Trade Commission (FTC) received 17 individual complaints about Goldline's sales tactics between early 2006 and this May, according to information obtained through the Freedom of Information Act. Many of those stories mirror Richardson's. One customer, whose name was redacted, filed a complaint in February, writing, "Not knowing anything about buying gold, I called Goldline International, Inc. because of their advertisement on Fox News and the fact that Glenn Beck endorses them." Like Richardson, this customer originally wanted bullion, but the sales rep "absolutely insisted" on 20-franc coins, and the customer relented. Unable to get a refund, the customer reported paying $369 apiece for coins that could be bought elsewhere for as low as $208.
A Washington state couple nearing retirement told the FTC they'd invested $31,812 in foreign coins after calling to inquire about gold bullion "as a hedge against the falling dollar." Once they realized they'd overpaid, they were too late for a refund. Another customer complained that a sales rep "insisted" on selling coins, in this case French francs: "He would not relent. He told me lies." A quadriplegic Californian described being persuaded to pay $5,000 for $3,000 worth of gold coins after disclosing a recent inheritance to a Goldline rep.
I wanted to ask Glenn Beck about these complaints. He never responded, but after I sent his publicist some questions, I received a call from David Cosgrove, a former Missouri securities commissioner and lawyer who represents Goldline. He explained that Goldline is a large operation with 200 salespeople. A few problems, he said, are inevitable, but Goldline works hard to avoid them through compliance monitoring and other safeguards.
Undoubtedly, Beck fans who take his financial advice bear responsibility for not reading the fine print. But their trust in the pitchman is an essential part of the symbiotic relationship between host and sponsor that is common on talk radio, where "direct response" advertisers carefully tailor their spots to complement the programming. Toll-free numbers provide instant feedback on how well promotions are faring and allow companies to fine-tune their ad copy on a week-to-week basis. If, for instance, an advertiser sees a surge in calls during a Beck segment focusing on currency collapse, it can play off of his program's message in an upcoming round of ads.
Take the Survival Seed Bank, another loyal Beck radio and TV advertiser, whose promotions echo both his and the gold companies' doomsaying. A spot that ran on Beck's Fox show earlier this year warned that "the politicians and the bankers are going to bring the whole thing crashing down," making its vegetable seeds "more valuable than even silver and gold."
The line between content and commercial is further blurred by guest appearances like the one Goldline CEO Albarian did with Beck last year. Goldline says it does not require such appearances on the shows it sponsors; a spokeswoman for Premier Radio Networks, which syndicates Beck's radio show, likewise says the host has invited Albarian on "because he wants to. It's not a contractual obligation."
Bob Leonard is the head of business development at Strategic Media, a firm that specializes in radio advertising. He says talk radio is a great venue for direct-response advertising because its listeners are especially engaged with what they're hearing. It's not a stretch for them to pick up the phone and dial a company like Goldline because, "If you have someone like Glenn Beck saying, 'You gotta call these guys,' they're gonna call."