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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. |
CashMyGold, Cash4Gold and Postal Gold agreed to make changes after an Office of Fair Trading (OFT) investigation. | CashMyGold, Cash4Gold and Postal Gold agreed to make changes after an Office of Fair Trading (OFT) 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 customers' jewellery was melted down on the assumption that they had accepted a quote. | Sometimes customers' jewellery was melted down on the assumption that they had accepted a quote. |
Concern were also raised about two other companies, which have ceased trading following the year-long investigation. | Concern were also raised about two other companies, which have ceased trading following the year-long investigation. |
Growing sector | Growing sector |
CashMyGold, based in Manchester, Cash4Gold, based in west London, and Postal Gold, based in Douglas in the Isle of Man, all accepted they must change their business practices. | CashMyGold, based in Manchester, Cash4Gold, based in west London, and Postal Gold, based in Douglas in the Isle of Man, all accepted they must change their business practices. |
The two that ceased trading were CashYourGoldNow, based in Newbury in Berkshire, and Money4Gold, based in St Albans in Hertfordshire. | The two that ceased trading were CashYourGoldNow, based in Newbury in Berkshire, and Money4Gold, based in St Albans in Hertfordshire. |
The OFT had 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. | 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, compared with an average of 25% offered by pawnbrokers and high street jewellers. | |
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. | 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 | Reforms |
The three firms agreed to make changes to the way they worked, including: | The three firms agreed to make changes to the way they worked, including: |
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Heather Clayton, of the OFT, said that the watchdog would intervene early if new industries grew without proper consumer protection. | 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. | She added that distance selling could be good for consumers, but only if the businesses operated fairly. |
In January 2010, CashMyGold was criticised by the Advertising Standards Authority for a misleading television advert. | |
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. | 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". | 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". |