The Office of Fair Trading (OFT) has ordered three companies that buy gold jewellery from consumers to improve the way they treat their customers following an investigation.
CashMyGold, Cash4Gold and Postal Gold have all agreed to change their business practices following concerns that people were being locked into accepting offers for their gold.
It found that the businesses sent consumers a payment, and if this was not rejected and returned within a restrictive time period, their silence was taken as consent and their jewellery was melted down.
A further two companies - CashYourGoldNow and Money4Gold - ceased trading as a result of the OFT probe.
There has been a increase in the number of companies offering to buy old gold jewellery by post in the past couple of years as the price of the precious metal has soared.
The OFT launched its investigation in January last year following a number of complaints from consumers, which raised concerns that certain gold firms were not treating customers fairly.
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.”
Following the investigation, Manchester-based CashMyGold, London-based Cash4Gold, and Postal Gold, of the Isle of Man, have agreed to change the way they make offers for people’s gold.
Customers will now have the option of either receiving a quotation which they must actively accept, or they can receive a payment, which they can then return, as is currently the case. Both options will have to be displayed clearly and prominently to consumers, with the risks of each option set out.
Customers will also have to be given clear information on the prices being offered for their gold, including details on the weight and carat. Firms will also have to make clear that when they claim to pay a “high price” or a “top price” for gold, these prices are based on the scrap or smelt value of the gold, and not its value as jewellery.
In addition, customers must also be given information on other important features of the service, such as whether gemstones contained in jewellery are bought or returned, and what the risk of them being damaged or lost is.