Gold-buying firms told to improve by OFt ?

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.

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.

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.

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.

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 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.

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.

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 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.

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".

Have you used a gold-buying company? You can tell us your experiences using the form below.

source: bbc.co.uk

Posted in: Bisnis Emas