Today, the Office of Fair Trading has announced the launch of an investigation into online gold buying companies and whether they are complying with consumer protection legislation.
It appears the investigation has been instigated, following a Which? Money report that described a number of gold buyers as offering, "shockingly bad value".
The OFT has also received a number of complaints in relation to the claims made on a number of web sites.
Juliet Young, a Director in the OFT's Consumer Market Group is quoted as saying:
"Buying gold using the postal service is a relatively new business model, and while innovation often brings benefits for consumers, we want to check that the market and businesses operating in it are developing in a way that treats customers fairly."
Although the OFT doesn't name the five companies under investigation, The Times reports that two of the companies are believed to be cashmygold.co.uk and postgoldforcash.com.
One notable similarity between both these sites is that neither actually tells the customer up-front what they pay for scrap gold. Quite simply, you're expected to send your valuables through the post without any indication of what you're likely to be paid.
Would you be this trusting? I wouldn't!
Personally, I am delighted this investigation has been announced. In the last 12-months, we have seen an explosion of 'cash for gold' web sites, along with TV, press and radio adverts. With some dealers offering as little as 20% of market value, consumers are too often being caught-out with slick advertising and carefully worded marketing slogans that claim a great deal, but fall woefully short.
Anyone with feedback relating to the use of a scrap gold service should contact the OFT. If you have a complaint or feel you have been misled, they (and we) also recommend you get advice from citizens advice and make a complaint via your local Trading Standards office.
