The truth behind cash-for-gold websites

When times are hard and you need extra cash it can be very tempting to flog off your bling. With the spot price of gold hitting a record price of $1,440 a troy ounce recently (a 50% increase in the last three years) it's easy to see why thousands of us have been falling over ourselves in the rush to make some easy money.

As a result, many cash-strapped sellers have been ripped off by the spivs who swarm around the desperate and gullible like wasps around a jam sandwich.

Over the last two years 'cash-for-gold' websites have sprung up offering to buy your jewellery by post. But many seem to have been operating on a strictly 'rip-off' basis, claiming to offer 'top prices' for gold on their sites, then stumping up nothing of the sort.

They manage to get away with it by giving you hardly any time at all to consider whether to accept or reject the miserly offer.

A rash of complaints

Complaints have been flooding in to trading standards offices and the Office of Fair Trading's (OFT) Consumer Direct service.

Pritie Billimoria, an OFT spokesperson, says: "There's been a big increase in the marketing of such services. Towards the end of 2009, we noticed a sudden spike in the number of complaints about gold-buying companies - we had around 300."

In January 2010, the OFT launched an investigation into the five gold-buying companies that had attracted most complaints - CashMyGold, Cash4Gold, Postal Gold, CashYourGoldNow and Money4Gold.

According to the OFT, many consumers felt pressured into selling their gold; the companies would often only give them a couple of days to consider the offer. If they didn't reply in time, this was taken as tacit acceptance and the gold was melted down.

The prices offered were often much less than consumers expected; the websites didn't make it clear claims to offer a 'high price' were based on the scrap metal price, not the cost price of the jewellery.

As part of their high-pressure sales tactics the companies would also send payments rather than an offer or quote after receipt of the jewellery, in the hope that customers would cave in and just take the cash.

The OFT also found that there was little information on what would happen to gemstones that were part of a piece of jewellery.

What now?

Following the investigation, CashMyGold, Cash4Gold, and Postal Gold agreed to revise their business practices and give consumers a clearly defined option to receive a quote or accept payment upfront, with more time to decide.

Crucially, silence can no longer be taken as tacit consent. They also agreed to provide more information on pricing and insurance.

But CashYourGoldNow dodged its responsibilities by saying it had ceased trading in the UK gold-buying market. And Money4Gold conveniently went into meltdown during the consultation period as well.

The OFT has also demanded to see any complaints received during the six months following its intervention, in order to check if the companies are complying with its recommendations. However, the watchdog has no powers to intervene on pricing or resolve individual complaints.

So how are the newly reformed companies doing?

Manchester-based CashMyGold, fronted in TV adverts by celebrity Dale Winton, litters its website with attractive, smiley people claiming to be amazed and grateful at how much the company offered for their gold and how quickly the cash went into their accounts once it was sold.

Misleading sales pitch

CashMyGold's 'How It Works' section on its website says enticingly: "Due to the current value of gold, your unwanted gold jewellery could have a value higher than when you initially purchased it."

However, Caroline Peers, partner of Bleyer, an independent gold bullion specialist, says: "This statement is very misleading. It's highly unlikely you'd get more than you paid for your jewellery, although it depends on how long ago you bought it.

"The mark-up on gold from base metal to finished piece in the shop is around 300%. People often forget that the scrap value of gold is lower than the current spot price.

"We always recommend that people go to their local reputable high-street jeweller for an estimate first, rather than using these postal services." 

CashMyGold makes the whole process seem simple. First you request a 'gold bag' via the website, which is a postage-paid envelope insured for up to £500. Once you've sent off your 'unwanted gold', you get an evaluation letter detailing the offer quote.

But the website still doesn't say how long you have to make up your mind.

Billimoria explains: "Since the OFT stipulated that silence cannot be taken as tacit consent, we don't think the time period to make a decision is an issue any more, so we haven't specified a minimum number of days companies have to give customers."

If you accept the offer, CashMyGold says you'll get a cheque through the post within 24 hours. Once you've cashed the cheque, your gold is melted down. But bear in mind that your gold will be melted down after 10 days anyway, even if you haven't cashed the cheque.

What's it really worth?

But how much can you expect to get? CashMyGold provides a calculator on its website for 'guidance' only.

For example, say you had an 18ct. gold bracelet weighing 15g, the company quotes a guide price of £159.30, roughly a third of the current spot price and half the estimated scrap price for gold (according to So you could lose out to the tune of £150.

In fact, other investigations - by Which? Money, for example - have found that CashMyGold sometimes offer nearly 20 times less than the retail value of the gold jewellery it buys. The stingiest 'cash for gold' services typically offer just 6% of retail value, compared with the 25% offered by high-street pawnbrokers and jewellers.

The burgeoning gold price and obvious demand has even tempted Tesco into the market ( It launched its service in January after trialling an online and in-store service throughout November 2010.

The service works in much the same way as other postal services, although your sale cash can be deposited direct into your bank account and customers can also earn Clubcard points.

Don't get too excited, however. Although Tesco claimed it was entering the market because "customers have been poorly served in this area", it's currently paying just £8 plus 16 Clubcard points per gram of 9ct gold.

Admittedly, this is better than high-street jeweller H.Samuel (£6.99) and H&T Pawnbrokers (£6.50), but it's still way below the current scrap gold price of roughly £10.50.

Tesco quotes Postgoldforcash, WHSmith's recommended gold-buying partner, as offering just £2.98 per gram of 9ct. Yet Postgoldforcash's website doesn't have a calculator or even a quote for price per gram, so how does Tesco know?

The supermarket says it did its own 'mystery shopper' test and sold 15.44g of 9ct. gold to the company on 21 January 2011. But Postgoldforcash claims: "We pay double the price of our major competitors."

It says it bases this claim on research carried out by market research company TNS. It compares its offer price of £117.75 for an unspecified amount of 9ct gold with prices offered by CashMyGold (£54.75), Money4Gold (£54.01), Cash4Gold (£50.37) and PostalGold (£40.35).

Who's telling the truth?

The response from Postgoldforcash regarding Tesco's mystery shopping exercise took us aback at Moneywise.

Kerry Patton, spokesperson for the company, says it deliberately offers customers a very low price at first. "You'll be aware that all the national press and television reports advise customers to shop around," she says.

"As a result, we have been forced to give a lower initial offer to allow customers to follow the advice they have been given to haggle over the price.

"Obviously, if we're being 'mystery shopped' by a competitor, they will always accept the lower first offer," she adds.

So while the cash-for-gold companies squabble among themselves, consumers are clearly still being short-changed - despite the OFT's efforts. All that glitters certainly isn't gold.

If you want to make a complaint or seek advice about these websites contact Consumer Direct (0845 404 0506 or

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