Gold-buying companies told to polish up their act
Tuesday 15 February 2011
Two companies that offered to buy gold jewellery through the post have stopped trading following an Office of Fair trading inquiry, while a further three have been forced to improve the way they treat customers.
The OFT said Money4Gold had ceased trading and was now in voluntary liquidation after it consulted the firm, based in St Albans, Hertfordshire, about improving its practices.
Three others – CashMyGold, Cash4Gold and Postal Gold – have agreed to change their behaviour after the watchdog took enforcement action following a year-long investigation. A fifth business, CashYourGoldNow, also signed undertakings but informed the OFT that it would cease trading in the UK gold market.
The investigation dates back to January last year, when the OFT requested information from gold-buying companies after it received complaints from consumers.
The watchdog raised concern about the practice of sending out payments for gold, which, if not turned down by the customer and returned within what the OFT termed "restrictive time period", was taken as consent. This meant a customer would sometimes end up locked into accepting the offer and their gold was melted down.
Following the investigation,CashMyGold, Cash4Gold and Postal Gold have agreed to give customers the option of receiving either a quote which requires positive acceptance, or just a payment, and to clearly and prominently display both options and the associated risks. They also agreed to give customers clear information about the gold prices offered, including details of the weight and carat of the items assessed; clear information about whether gemstones were purchased or returned, the risks associated with sending in gemstones; and to clarify that the high or top price paid was based on the scrap or smelt value of gold. Other undertakings include refraining from making claims about being "the UK's No 1 gold buyer" when that was not the case.
Heather Clayton, a senior director in the OFT's consumer group, said it was important to have consumer protections in place. "These days we see more and more new business models which involve consumers distance selling goods to firms. These options are good for consumers, providing business practices are fair," she said.
"Where we see problems, however, we are keen to intervene early so that these markets develop with an appropriate level of consumer protection.
"Any companies operating similar business models must make sure they treat consumers properly and provide clear information on how the service operates so that people make informed decisions."
Gold-buying firms have become much more prominent in recent years, with many advertising on television or appearing on temporary stands in shopping centres.
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