Their television advertisements, featuring celebrities such as the perma-tanned Dale Winton and TV presenter Anne Diamond urging viewers to send in their gold jewellery and coins in exchange for cash, are a phenomenon of the current economic crisis.
But now five companies which proffer cash for gold sent via the post are the subject of an Office of Fair Trading (OFT) inquiry. Although the OFT has not named these companies, they are believed to include CashmyGold and PostGoldForCash, fronted by Mr Winton and Ms Diamond respectively
The investigation has emerged after a report by Which? Money, the consumer group magazine, described the gold buyers as offering “shockingly bad value”.
Peter Vicary-Smith, Which? chief executive, said: “The poor value for money that these TV gold buyers are providing is simply shocking. The cash for gold market is unregulated, and this investigation has raised some serious concerns about the fair treatment of consumers. People should be wary of buyers’ adverts as they could almost certainly get more money for their gold elsewhere.”
The OFT has received a number of complaints about the actions of the postal gold companies from people who have used their services. It is now investigating whether consumers’ rights to reject the offers for their gold jewellery are being respected, and if the claims made in the companies’ advertisements are correct. The companies’ terms and conditions will also be examined to assess whether they are fair for consumers.
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As the price of gold has reached $1,100 (£680) per ounce, these companies have been trying to cash in by buying gold from consumers and then selling it on. Advertisements on daytime television have tempted cash-strapped consumers as the recession has continued.
Juliet Young, a director in the OFT’s Consumer Market Group, said: “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.”
To investigate the companies, Which? sent three pieces of brand new gold jewellery to four gold buyers that advertise on television as well as three independent jewellers and three pawnbrokers. The consumer group said CashMyGold offered the lowest prices on all three items, offering just £38.57 for the three pieces of new jewellery purchased for £729.
One of the poorest deals from CashMyGold was at just under £10 for a £215 9ct gold bangle – an independent jeweller quoted £54 for the same piece, while Cash4Gold, which has Goldie, the drum ‘n’ Bass artist famous for his gold teeth, promoting its services quoted £14.57.
People who have used the services of companies who buy gold using the postal service are urged to let the OFT know about their experiences through the OFT website.