OFT takes action against gold buying companies
16/11 14 February 2011
The OFT has taken enforcement action against a number of companies that offer to buy gold from consumers by post.
Three companies (CashMyGold, Cash4Gold and Postal Gold) have undertaken to make changes to their business practices following the OFT's investigation. Two other companies (CashYourGoldNow and Money4Gold) have ceased trading after the OFT consulted with them about improvements to their business practices.
During its investigation the OFT raised concerns with these five companies that people were being locked into accepting the offer that had been made for their gold. In particular, the OFT was concerned with the business practice of sending consumers a payment, which if not rejected and returned within restrictive time periods, meant that their 'silence' was taken as consent to the payment and their gold was melted down.
In signing undertakings the companies have agreed to make a number of changes to their business practices, including:
- providing people with the option of receiving either a quotation for their gold which requires positive acceptance, or just a payment for their gold, and also displaying both options and the risks of each payment option clearly and prominently
- providing consumers with clear information on the prices offered for gold, including information on the weight and carat of the items assessed
- providing consumers with clear information on other important features of the service, such as whether gemstones are purchased or returned and if the consumer sends a gemstone the risks of damage or loss
- making clear, when referring to the 'high price' or 'top price' paid for gold, that the prices offered to consumers are based on the scrap or smelt value of gold.
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.
'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.'
- In January 2010, the OFT announced that it was investigating the business practices of five companies who offered to buy gold from consumers through the post. See the press release OFT requests information from gold buying companies.
- Undertakings under section 219 of Part 8 of the Enterprise Act 2002 were given by the following companies and their authorised officers:
a. Bullion Buying Limited trading as CashMyGold with a registered address at Suite 4, Atlas Park, Simonsway, Manchester, M22 5PR.
b. Green Bullion Europe Limited trading as Cash4Gold with a registered address of Seventh Floor 90 High Holborn, London, WC1V 6XX.
c. Sigma Response Limited trading as Postal Gold with a registered address at Third Floor Exchange House 54-58 Athol Street, Douglas, Isle of Man, IM1 1JD and Sigma Response Services Limited which previously traded as Postal Gold with a registered address at 81 Rivington Street, London, EC2A 3AY.
d. Vertex Watch Company Limited trading as CashYourGoldNow with a registered address at Unit K, Venture House, Bone Lane, Newbury, Berkshire, RG14 5SH also provided undertakings but has since ceased trading in the UK.
- The OFT also investigated and consulted with Money4Gold UK Limited trading as Money4Gold with a registered address at 105 St. Peters Street, St. Albans, Hertfordshire, AL1 3EJ. This company did not provide undertakings but ceased trading during the consultation and is now in voluntary liquidation.
- See the case closure summary and related questions and answers.
- The undertakings provided relate to alleged breaches of the Consumer Protection from Unfair Trading Regulations 2008 and the Unfair Terms in Consumer Contracts Regulations 1999.
- The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) contain a general prohibition against unfair commercial practices and, in particular prohibitions against misleading actions, misleading omissions and aggressive commercial practices. The Regulations are enforceable through the civil and criminal courts.
- The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) apply to standard contract terms with consumers and protect consumers against unfair standard terms in contracts they make with traders. The OFT can take legal action to prevent the use of potentially unfair terms. A term is likely to be considered unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of consumers. A consumer is not bound by a standard term in a contract with a trader if that term is unfair. Ultimately, only a court can decide whether a term is unfair.
- Whilst the companies believe that their business practices complied with the law, they have agreed to make revisions to their business practices in light of the OFT's investigation.
- The OFT received investigative assistance from the Trading Standards Services during the course of its investigation.
- 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.
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