Gold firms not treating customers fairly, says OFT
Three gold-buying companies have been told they must change the way they treat customers after claims they were melting jewellery before people had the chance to reject the cash being offered for them.
The warning came after an investigation by the Office of Fair Trading (OFT) who said people are being locked into offers with no chance of negotiation.
CashMyGold, Cash4Gold and Postal Gold are charged with locking people into deals and not giving them a reasonable time period to accept or reject cash offers for their unwanted jewellery.
Two other companies, CashYourGoldNow and Money4Gold have now ceased trading.
Customers send in their unwanted gold and receive a payment from the company. But if this is not rejected and returned within a set time period, the company takes this as consent and the jewellery is melted.
These companies have become more popular recently reflecting the poor financial situation many people are in after the recession. Sending away your jewellery and receiving a cheque in the post sounds like a simple solution but many people are receiving an unfair deal for their airlooms.
These companies must now provide people with the choice of receiving a quotation for their gold, which they must accept and send back, or just a payment. Both options must be clearly explained and prominently set out.
Information on the weight and carat of the gold must also be provided and other features in the service, for example what happens to gemstones that are set in the jewellery.
It must also be made clear that the price customers are getting is set against on the scrap value of gold. Therefore if people are told they're getting the 'highest price on the market', this is the scrap-gold market.
Heather Clayton, senior director of the OFT's consumer group, says these days there are more and more new distance selling businesses around and they are good options for consumers if they're fair.
"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" she adds.