'Cash for iPhones' Under Government Probe After Hundreds of Customer Complaints - East Idaho News
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‘Cash for iPhones’ Under Government Probe After Hundreds of Customer Complaints

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getty 040915 iphone5?  SQUARESPACE CACHEVERSION=1428581773743Mario Tama/Getty Images(NEW YORK) — If you’re in the market to sell an old phone, you may want to do some homework before handing it over to just any company with an appealing offer.

A popular phone trade-in site, Cash for iPhones, offers cash for used phones, but the Federal Trade Commission (FTC) has recorded more than 900 complaints from customers across the country who claim the company offered to pay top dollar for their phones but then actually paid them significantly less.

Francie Taylor, 22, of Chicago is fed up. Cash for iPhones originally quoted her $131 for an old iPhone 5c, but once the company received her phone, it dramatically lowered its quote, she said. The final offer was $11 — a difference of $120.

As part of the terms and conditions on its website, Cash for iPhones says that customers have three days to dispute their quote over the phone with the company’s purchasing department. So Taylor tried calling for three days straight as ABC’s Good Moring America watched. After being hung up on two days in a row, she finally reached the purchasing department on the third day.

“When you received my phone you quoted me $11,” Taylor said. “Is there any way that I could dispute that?”

It was too late. Cash for iPhones said her old iPhone had already been recycled, even though nine hours remained in her three-day window to dispute her price quote. Many customers have complained to the FTC and said they have had a similar experience when trying to dispute their price quotes. Customers said they were unable to get through to the purchasing department at all or, once they did, it was too late.

To see what the experience would be like, GMA Investigates purchased three refurbished iPhones, and ABC News correspondent Linzie Janis asked Dan Ackerman, senior editor at CNET.com, to estimate their market value.

“These look like they’re in fairly good shape,” Ackerman said. “For a new iPhone 6, and this is the 16-gig version, you could probably do [$300], maybe close to $400, if you’re lucky.”

And that quote was just for one iPhone.

“Wow,” Janis said. “How about the iPhone 5s?”

“Now the 5s is a bit older. Probably $150, maybe close to $200, if you’re lucky,” Ackerman said. “And for a 4 or 4s, you know, $50, if you’re lucky.”

For our three refurbished iPhones, Ackerman told ABC News that we could get as much as $600. In general, Ackerman said, the market value for used phones depends on many factors.

“The value can really vary a lot, depending on how new it is, how in demand it is, who makes it. iPhones tend to keep a lot of their resale value for years,” Ackerman said. “Once you get a model or two behind, then it kind of drops off quickly ‘cause people just want the most recent ones.”

On the Cash for iPhones website, Janis plugged in the phones’ information.

“The quote I’m getting for my iPhone 6, 16-gigabyte, from Cash for iPhones is $473,” Janis said. “The quote from my iPhone 4s, just $57 and for my iPhone 5s, $253. So all together I could make up to $783.”

The site said that the non-binding quote was pending inspection, so GMA Investigates sent in the three iPhones to Cash for iPhones’ warehouse in Sparks, Nevada. Two weeks later, Cash for iPhones emailed the final price quote — $114 for all three phones.

That’s $669 less than the original quote. The reason for the difference? Cash for iPhones cited the condition of the phones — although they didn’t give specifics — as well as “up to the minute market conditions.”

Unhappy with the new price quote, Janis attempted to dispute it and called Cash for iPhones for three days — within the company’s three-day time limit for disputes.

On the first day, Janis was on hold for 16 minutes before she was hung up on. On the second day, she couldn’t get through again. When she called, she was told the offices were closed for the day, even though 15 minutes remained until the scheduled closing time. Janis called again for a third day.

“This is day No. 3. I haven’t been able to get a hold of them for the last two days,” she said.

Twenty-five minutes later, the call dropped.

“They just hung up on me,” she said. “They just hung up. I don’t believe it.”

With just a few hours left to dispute the final quote, Janis called once more. Fourteen minutes after being on hold to speak with the purchasing department, the call dropped once more.

“Oh! They just hung up. Unbelievable,” Janis said. “Second time I’ve been hung up on by them today. Well, guess we’ll have to try again tomorrow, but it’s the end of my three-day window.”

The following day, Janis called yet again. It was only on this day — the fourth — that she finally spoke with someone about the phones.

“I would like the telephones I sent returned to me,” Janis said.

However, Cash for iPhones told Janis that her payment had already been processed.

“I have been calling for the last three days to dispute the quote that I’ve been given, and no one would pick up the telephone,” she said. “Now you’re telling me that you’ve already sent me the money. Well, I don’t … agree to this lower quote.

Janis also sold three other phones which were same models and in similar condition as the ones Cash for iPhones got to another company, Usell.com. Its original quote for the three phones was $599. Ultimately, Usell.com paid Janis the exact amount — $599.

ABC News requested an interview with Cash for iPhones’ president, David Kruchin, but his lawyer declined our repeated requests. So GMA Investigates tried to catch him at his office outside of Reno, Nevada.

After waiting for hours outside of Kruchin’s office, he eventually appeared.

“Mr. Kruchin. Mr. Kruchin, it’s Linzie from ABC News. Can I just ask you a quick question? Mr. Kruchin? Mr. Kruchin, I sold you three phones,” Janis said. “I want to talk to you about those phones. You won’t stop and speak to us?”

Kruchin refused to speak with Janis and drove away.

Nevada’s attorney general, Adam Laxalt, is currently investigating Cash for iPhones’ business practices.

“Our office started receiving a huge spike in complaints, which now totals over 300,” Laxalt said.

In general, Laxalt said, many websites that buy used phones are legitimate, but he cautioned that some may engage in fraudulent business practices.

“We’re certainly not speaking about this particular incident. But in general, in this laptop, cell-phone kind of resell space, there’s lots of legitimate companies all over the country that do this right,” Laxalt said.

“But there seems to be a certain arena where fraud is being committed,” he added. “So it’s just important for us to continue to look out for the consumer.”

To get the best price when selling an old phone, Laxalt suggested consumers compare prices and look at a company’s customer reviews.

“Do your research, that’s the first thing we should always say. If the deal looks too good to be true, it’s probably not true,” Laxalt said. “Do some comparative analysis. And if you’re seeing, let’s say, $20 for an iPhone from nine different entities online, and one is offering $200, that should be a warning signal.

“The best thing we could do is just keep warning the customer to be aware of these kinds of things, and make sure that you’re doing your due diligence so that you don’t, hopefully, fall in these kinds of traps,” Laxalt said.


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