Five investigations into the purchase of gold from consumers by post – Q&As

Back to top

Why did OFT launch an investigation into postal gold companies?

OFT received complaints from consumers about companies offering to buy gold using the postal service.  The business model used by these companies to purchase goods at a distance from consumers, was a relatively new one and although OFT could see that such a distance selling model could bring benefits for consumers, the complaints made raised a number of concerns about whether certain gold companies were trading fairly with consumers.

Back to top

What concerns did OFT have with the postal gold companies? 

We had a number of concerns, but our key concerns were as follows:

• The use of misleading statements, particularly in respect of the prices paid and also the companies' position in the UK market.
• Whether consumers' rights to reject an offer and get their gold back were being honoured.  
• The lack of transparancy in relation to prices offered or paid for gold.
• The lack of transparancy in respect of other key matters such as whether gemstones were purchased or returned and what the insurance arrangements were in respect of the sending and return of the gold.
• The use of potentially unfair terms, in particular terms limiting liability of the companies for loss or damage, terms unfairly limiting or excluding the legitimate rights of consumers to make an insurance claim.

Back to top

Why did the OFT's investigation not extend to other traders who buy gold from consumers such as jewellers, pawnbrokers or traders with stalls in shopping centres?

Many of the key concerns we had with the businesses related to the fact that they traded at a distance with consumers. We were concerned that consumers were required to send off their gold to have it assessed without a clear understanding of how the sales process worked and without proper information on important issues such as price, insurance arrangements and timeframes for payments to be returned and rejected.

Issues facing people selling their gold through the post differ from those using the high street as consumers using shops and market traders who are unhappy with the price offered can walk away with their gold, unlike consumers who lose possession of it when they post it to the postal gold companies.

Trading Standards Services are best placed to deal with concerns about individual traders operating from physical locations.

Back to top

Did the OFT look into the prices offered or paid by these traders?

No. The OFT does not regulate price. However, a business should provide clear and transparent information on the prices it is offering to pay consumers for gold, that way the consumer can shop around and compare prices and make an informed choice about whether or not he wants to sell his gold to a particular company. We therefore engaged with the companies to ensure that they are providing information to consumers on price, so that in addition to the overall price offered for the contents of the gold bag, they provide information on the prices offered by weight and carat.

Back to top

What was the outcome of this OFT action?

Cash4Gold, Postal Gold and CashMyGold and their appropriate officers have signed undertakings that address the OFT's concerns.  Money4Gold did not sign undertakings but during the consultation period it ceased trading and is now in voluntary liquidation. Although CashYourGoldNow also signed undertakings, at the time of providing the OFT with signed undertakings it informed the OFT that it was ceasing trading in the UK gold market. 

Back to top

What are the options for people that want to sell their gold?

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 cities such as London (Hatton Garden) or Birmingham (Birmingham Jewellery Quarter).

Back to top

Have you issued guidelines for the industry?

No. Gold buying companies are under a duty to trade fairly with consumers and should not seek to use unfair terms in their standard contracts with consumers. This enforcement action also provides guidance to industry on acceptable trading practices.

Further general information about the legal requirements for traders is available in the Consumer Protection from Unfair Trading Regulations 2008 Guidance and Unfair Contract Terms Guidance.

Back to top

Tesco have now entered the gold buying market, do you have any concerns with their business practices?

We are aware that Tesco have recently entered the market and the OFT has not identified any reasons to be concerned with their business practices.

Back to top

What should consumers do if they want further information or wish to complain about how they have been treated?

The OFT does not provide advice or resolve individual complaints for consumers. Consumers who are concerned they have been unfairly treated or want advice on their personal circumstances can contact Consumer Direct (telephone 08454 04 05 06 or visit the Consumer Direct website). Alternatively, consumers can contact their local Trading Standards Services.

Back to: GoldPost (closed 14 February 2011)