The OFT has taken enforcement action against five companies that offer to buy gold from consumers by post, after a flood of consumer complaints.
The probe was launched late last year, and, according to one Trading Standards official, some consumers are getting only 10 per cent of the value of their gold from companies which operate through the post.
Three companies – CashMyGold, Cash4Gold and Postal Gold – have undertaken to make changes to their business practices, while two othes – CashYourGoldNow and Money4Gold – have ceased trading after the OFT consulted with them about improvements to their business practices.
During its investigation the OFT raised concerns with these five companies that people were being locked into accepting the offer that had been made for their gold. In particular, the OFT was concerned with the business practice of sending consumers a payment, which if not rejected and returned within restrictive time periods, meant that their ‘silence’ was taken as consent to the payment and their gold was melted down.
In signing undertakings the companies have agreed to make a number of changes to their business practices, including:
• providing people with the option of receiving either a quotation for their gold which requires positive acceptance, or just a payment for their gold, and also displaying both options and the risks of each payment option clearly and prominently
• providing consumers with clear information on the prices offered for gold, including information on the weight and carat of the items assessed
• providing consumers with clear information on other important features of the service, such as whether gemstones are purchased or returned and if the consumer sends a gemstone the risks of damage or loss
• making clear, when referring to the ‘high price’ or ‘top price’ paid for gold, that the prices offered to consumers are based on the scrap or smelt value of gold.
OFT Consumer Group senior director Heather Clayton said: “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. 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 about whether they wish to part with their possessions.”
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