Scrounge up cash with used gadgets

Last week, we looked at ways to save money during tough times by refurbishing old computers. Since then, unemployment claims have spiked, companies have announced thousands of layoffs, and consumer confidence fell to its lowest level on record. Still worried about money? I thought so.

Perhaps it's time to bring in a little extra cash, by disposing of your unused devices. According to the Consumer Electronics Association, the average American household has two dozen such gadgets - such as TVs, DVD players, cameras, game consoles, and computers. And unless you take your meals intravenously, you don't have time to use them all. Nearly all of us have an obsolete cellphone or iPod buried in a drawer, still in working order and worth a few bucks.

But how do you sell them? There are always Internet trading sites like eBay and Craigslist, but these can be costly and risky options for amateur traders. EBay requires a complicated sign-up process and charges transaction fees that will eat into your profits. Craigslist is free and simple, but provides no protection against scam artists who may try to pay with forged money orders or rubber checks. And you can't be certain your stuff will sell, and at what price.

No wonder lots of people sell to dealers who pay cash up front, then resell the gadgets online. A couple of local Internet sites simplify the process. NextWorth Solutions Inc. in Lawrence operates www.nextworth.com, while Second Rotation Inc. of Boston runs www.gazelle.com. Both sites track the wholesale value of used devices. A visitor punches in a description of the product he's looking to sell - say, a fourth-generation iPod with a 20-gigabyte hard drive and some scratches on the case. Up pops the price that NextWorth or Gazelle is willing to pay - a mere $27 at Gazelle, or a lavish $40.50 at NextWorth. Prices vary based on supply and demand. If you agree, the companies will send you a prepaid shipping container. Send in your item, and if it passes inspection, you get paid in about two weeks.

Nextworth deals in only one brand - Apple Inc.'s iPods and iPhones. "We remain focused on that single product category because we find it's got the most demand on the secondary market," said NextWorth chief executive David Chen. But Second Rotation is more ambitious. Gazelle offers to purchase thousands of electronics, including computers, GPS navigation devices, and even video games and movies. Gazelle recently offered $10 for old PlayStation 2 game consoles. Then again, a Nintendo Wii in good condition was worth $117.

Both Gazelle and NextWorth were born in the days when gadget recycling was about protecting the environment. Now that's changed. "The driver behind it today is the economic pressure that consumers are having," said Rousseau Aurelien, chief executive of Second Rotation.

Some of us want more gadgets, not fewer, yet we can't afford to buy new. There's a vast market in used electronic gear; the challenge is finding reliable sellers and merchandise.

You can play it safe with major tech companies that sell refurbished products. Apple's online store sells overhauled Macintosh computers, usually for 25 to 35 percent off the original prices. It offers even deeper discounts on iPods and iPhones.

Dell Inc. sells more computers than Apple; maybe that's why Dell's online store features thousands of refurbished units. Both companies back their machines with a one-year warranty, a lot better than what the typical used-laptop merchant on eBay offers.

Still, I wouldn't rule out eBay as a source of used electronics, mainly because of SquareTrade Inc., a San Francisco company that sells extended warranty protection for used digital devices. I'm generally not a fan of such warranties. New electronic devices are unlikely to break down, unless you abuse them. They're usually sold under a one-year warranty. And if you buy with an American Express card, or many other bank credit cards, you'll automatically get an extra year of warranty coverage. With that much backup, why spend hundreds of dollars on an extended warranty?

But you can't count on this kind of protection if you buy used items online. Luckily, SquareTrade offers a shield that works.

A couple of years ago, I spent about $90 for a used iPod from an eBay vendor. For an additional $10, I bought a warranty at www.squaretrade.com. About eight months later, the iPod died. I shipped it to SquareTrade, which promised to either fix it or refund the $90. Within two weeks, I had my money.

SquareTrade has its limits - coverage doesn't start until 61 days after a purchase, and few eBay vendors offer 60-day warranties on used items. So if the device breaks down a month after you bought it, too bad.

SquareTrade warranty prices vary. A one-year warranty for a used $300 laptop will cost about $60, or $90 for two years. That's not exactly cheap, but in exchange, you get a rare measure of security for a used product. And we would all welcome a little extra security these days.

Hiawatha Bray can be reached at bray@globe.com.