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Gold-buying firms told to improve by OFT Gold-buying firms told to improve by OFT
(40 minutes later)
Three companies that buy gold from consumers by post have been ordered to improve their treatment of customers by a watchdog.Three companies that buy gold from consumers by post have been ordered to improve their treatment of customers by a watchdog.
Two others ceased trading after being contacted by the Office of Fair Trading (OFT) during a year-long investigation.Two others ceased trading after being contacted by the Office of Fair Trading (OFT) during a year-long investigation.
The high price of gold has meant that companies that exchange people's gold for cash have grown in popularity.The high price of gold has meant that companies that exchange people's gold for cash have grown in popularity.
But the OFT found that a handful were locking customers into accepting the offer made for their gold items.But the OFT found that a handful were locking customers into accepting the offer made for their gold items.
Sometimes their jewellery was melted down on the assumption that they had accepted a quote.Sometimes their jewellery was melted down on the assumption that they had accepted a quote.
Named Growing sector
The three companies that have accepted they must change their business practices were CashMyGold, based in Manchester, Cash4Gold, based in west London, and Postal Gold, based in Douglas in the Isle of Man. The three companies that have accepted they must change their business practices are CashMyGold, based in Manchester, Cash4Gold, based in west London, and Postal Gold, based in Douglas in the Isle of Man.
The two that ceased trading were CashYourGoldNow, based in Newbury in Berkshire, and Money4Gold, based in St Albans in Herefordshire. The two that ceased trading were CashYourGoldNow, based in Newbury in Berkshire, and Money4Gold, based in St Albans in Hertfordshire.
The OFT has raised concerns with all five about the way offers were made for people's gold, such as jewellery. The OFT had raised concerns with all five about the way offers were made for people's gold, such as jewellery.
The watchdog found that some businesses were sending customers a payment for their gold, which if not rejected and returned within a very short period of time by customers, was taken as consent for the payment. That meant the gold was then melted down.The watchdog found that some businesses were sending customers a payment for their gold, which if not rejected and returned within a very short period of time by customers, was taken as consent for the payment. That meant the gold was then melted down.
Gold-buying companies have become much more prominent in recent times, with many advertising on television or appearing on temporary stands in shopping centres.Gold-buying companies have become much more prominent in recent times, with many advertising on television or appearing on temporary stands in shopping centres.
Consumers sent in their gold by post to be assessed, then received payment back in the post. Unlike the High Street, where people could immediately walk away from a deal with the gold in their possession, the postal service meant the companies had the gold and customers had to reject the payment quickly to get the items back.
Previous research for the consumer organisation Which? showed that some gold companies that advertised on television offered an average of just 6% of the gold's retail value.Previous research for the consumer organisation Which? showed that some gold companies that advertised on television offered an average of just 6% of the gold's retail value.
The OFT does not have the power to order companies to change their prices, or offers of cash, but it can ensure that businesses provide "clear and transparent" information.
Reforms
The three firms agreed to make changes to the way they worked, including:
  • Providing people with the option of a quotation for their gold - which the customer would agree to, or withdraw from the deal - or just a payment
  • Clear information on the prices offered, including the weight and carat of the gold
  • Details on whether gemstones can be accepted, and explaining the risks to the customer of sending them
  • Making sure when referring to a "high price" on offer, that they are referring to the scrap price of the gold
Heather Clayton, of the OFT, said that the watchdog would intervene early if new industries grew without proper consumer protection.
She added that distance selling could be good for consumers, but only if the businesses operated fairly.
In addition to the postal gold businesses, consumers can sell their gold to some High Street jewellers, to pawnbrokers, to other businesses or money shops which provide a range of short term loans or pay day loans to consumers, and in specialist jewellery quarters.
Supermarket Tesco has also just entered the market, but the OFT said it had "not identified any reasons to be concerned with its business practices".