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Friday 22nd January 2010
Gold cash firms 'offer bad value'
The trading watchdog has demanded information from companies that offer consumers cash for gold jewellery to ensure they are not breaking the law.
The Office of Fair Trading said it was asking five companies to explain claims made in their advertising and on their websites and give details of their business practices to ensure they were complying with consumer protection laws.
The call, which followed complaints from consumers, came as Which? Money warned that the gold buying companies offered "shockingly bad value" and urged people not to use them.
There has been an increase in the number of companies offering to buy people's old gold jewellery in recent months as the price of the metal has soared.
But research carried out by Which? Money found that the gold companies that advertise on television offered people an average of just 6% of the retail price of their gold.
The group sent three pieces of brand new gold jewellery, collectively worth £729, to four groups that promise to buy consumers' old gold for cash, as well as to three pawnbrokers and three independent jewellers.
The group said the TV gold buyers consistently offered the lowest prices, with CashMyGold offering just £38.57 for all three pieces of jewellery, including quoting only £9.64 for a 9ct gold bangle that had been bought for £215 and for which an independent jeweller offered £54.
In another case, Money4Gold told the Which? researcher that a £399 9ct gold necklace was not gold, and demand they paid £10.95 to have it returned.
Postal Gold also increased its offer for all three pieces of the jewellery after the researcher rejected its initial quote, nearly doubling the amount it would pay for two of the items.
But despite this, the quote was still far lower than that offered by pawnbrokers and high street jewellers, who paid an average of 25% of the items' retail price.
Source: Press Association