'Cash for gold' companies facing probe

The Office of Fair Trading (OFT) is investigating companies who offer cash for gold by post.

As the price of gold continues to soar, there has been an explosion of companies offering cash for gold.

However, there is concern some of these companies are denying consumers the right to reject an offer and receive their gold back.

Juliet Young, the OFT's consumer market group director, says: "Buying gold using the postal service is a relatively new business model and we want to check that the market and businesses operating in it are developing in a way that treats customers fairly."

Consumer magazine Which? has already lambasted the industry as representing shockingly bad value for money.

This followed an investigation in which three pieces of brand new gold jewellery was sent to four gold buyers that advertise on TV, plus three independent jewellers and three pawnbrokers.

The TV gold buyers consistently gave the worst quotes. While high street cash for gold companies offered up to 25% of the retail price of new gold, the postal companies offered an average of just 6%.

In addition Which? found most of the companies indulged in indiscrete labeling such as stamping the special delivery envelopes with the word ‘gold', thereby presenting a risk of theft.

Which? chief executive, Peter Vicary-Smith, says: "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."