Crackdown on gold-buying companies

 

The Office of Fair Trading (OFT) has taken action against five companies that offer to buy gold from consumers by post, including one in Cheshire East.

Cheshire East Council initiated enquiries into CashMyGold, who are based in the north of the borough, after receiving complaints from across the country.

The OFT took over the action as part of a wider investigation into business practices.

During the investigation the OFT raised concerns 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.

Three companies (CashMyGold, Cash4Gold and Postal Gold) have agreed to change their business practices following the investigation.

Two other companies (CashYourGoldNow and Money4Gold) have ceased trading after the OFT talked to them about changing their business practices.

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 displaying both options, and the risks of each payment, clearly and prominently;
• giving consumers clear information on the prices offered for gold, including the weight and carat of the items assessed; and
• 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.

Councillor Rachel Bailey, Cabinet member with responsibility for safer and stronger communities, said: “I would like to congratulate the OFT for their work in this area. It is all too easy for vulnerable people to fall victim to poor business practices like these, especially during these tough economic times.

“I would also like to thank the Council’s Consumer Protection and Investigation Team for their close partnership working with the OFT.”

Heather Clayton, Senior Director of the OFT's Consumer Group 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.”