The great pawnbroker rip-off: How Cash Converters buys second hand goods at rock bottom prices and adds huge mark-ups before selling them on
By Gavin Allen 13:06 BST 16 Jan 2012, updated 16:59 BST 16 Jan 2012
High Street pawn show Cash Converters is buying goods from hard-up sellers for as little as a quarter of their value and selling them on with huge mark-ups.
In some instances the company sells products on for more than double the cost it paid to sellers who are seeking help after Christmas as the country threatens to fall back into recession.
At a branch in Camden, North London, the MailOnline was offered £80 for a Sony PlayStation 3 games console (160GB memory).
Cash Converters, which buys around 10,000 items a day, are selling the same model online, for £139.99.
High mark-ups: David Patrick, CEO of Cash Converters, outside the branch in Camden, North London, which offered MailOnline £350 for an iPhone 4S, while selling the same model online for £550
MARK-UP MARKETPLACE: THE FIGURES AT A GLANCE
Sony PlayStation 3 Buys for: £80 Sells for: £139.99 Mark-up: £59.99
iPhone 4S 32GB Buys for: £350 Sells for: £550 Mark-up: £200
Toshiba C660 Laptop Buys for: £80 Sells for: £199.99 Mark-up: £119.99
Philips 42in LCD TV Buys for: £150 Sells for: £479.99 Mark-up: £329.99
Flip Video camera Buys for: £25 Sells for: £49.99 Mark-up: £24.99
The business, which offers second-hand goods for sale, isn’t always cheaper than buying the same items new.
A used iPhone 4S 32GB is advertised for sale on the Cash Converters website for £550 while a new one can be bought from internet auction site Ebay for £549.99. MailOnline was offered £350 for one at the Camden branch.
A Bristol branch offered £150 for a Philips 42in LCD TV, which they sell for £479.99, a mark-up of £329.99 or 60 per cent.
Further research by The Sun revealed similar mark-ups. In Islington, North London, Cash Converters offered to buy a Toshiba C660 laptop computer for £80, yet the same model is on offer for £199.99 on the Cash Converters website.
In Warrington, staff offered to buy a Flip Video camera for £25, while selling them on at £49.99.
‘We provide consumers across the UK with a viable choice, we give them the opportunity to walk into one of our 200 stores, sell their item and walk away with the cash in their pocket,’ said said Cash Converters’ UK Chief Executive David Patrick.
‘As a bricks and mortar business with a strong high street presence, we have rent, staff and overheads to pay to ensure that we are still able to offer our customers the best possible service.
‘Unlike Ebay and other private selling websites our customers are able to talk to us face to face. We can give them advice and information on the best services to suit their needs as well as immediate access to cash.
‘The price offered and agreed for each individual product will depend on several factors including current retail price, condition, age and what the store feels it can retail the item for second hand.
Price difference: A new white iPhone 4S (32GB) was available for sale priced 1p cheaper on eBay than a used model advertised on the on Cash Converters website Pawn game: MailOnline was offered £80 for a Sony PlayStation 3 while the company sells the same model for £139.99
‘The prices offered may vary store to store due to local competition on the high street. All Cash Converters staff are trained in pricing items and will research and take into account what price customers would get selling the item elsewhere, including online.’
Cash Converters offer sellers the opportunity to buy their own items back within 28 days, provided they are prepared to pay the same price, plus an ‘option fee’ of up to 30 per cent.
Having begun life as a single store in Perth, Australia in 1984, it now has 207 stores in the UK alone and plans to open 40 more stores in the UK in 2012.
Its aggressive policy of expanding through selling franchises saw the company post record international pre-tax profits of AU$27million (£17.7m) – up by 24 per cent – on revenues of AU$120m (£80.8m) for the year ending June 30.
It now has more than 630 stores worldwide making it the largest retailer of second hand goods, its website claims.
Payday loan firms and pawnbrokers are one of the few parts of the global financial sector to have grown during the credit crisis, as mainstream banks have increasingly refused loans to low-income customers.
The company has now moved into the short-term loan market with American loans firm EZCORP owning a 33 percent stake in the group.
In its last reported figures, Cash Converters’ personal loan book grew by 746 per cent, with 100,000 cash advances being made.
‘We’re recession proof. We can do well in good times and we do well when the economy’s tough,’ said Mr Patrick earlier this month.
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