Purchase of gold by post: unfair contract terms
Five closed Office of Fair Trading (OFT) consumer enforcement investigations.
Complainant: OFT own-initiative investigations
Bullion Buying Ltd trading as CashMyGold, Company registration No.06970670, with a registered address at Suite 4, Atlas Park, Simonsway, Manchester, M22 5PR (www.cashmygold.co.uk)
Green Bullion Europe Limited trading as Cash4Gold, Company No.06862911, with a registered address of Seventh Floor 90 High Holborn, London, WC1V 6XX (www.uk.cash4gold.com)
Sigma Response Limited trading as Postal Gold (www.postalgold.com) Company registration No. 124249C, 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, Company registration No. 06821749, with a registered address at 81 Rivington Street, London, EC2A 3AY
Vertex Watch Company Limited trading as CashYourGoldNow , Company registration No. 06785655, with a registered address at Unit K, Venture House, Bone Lane, Newbury, Berkshire, RG14 5SH (www.cashyourgoldnow.co.uk), and
Money4Gold Ltd trading as Money4Gold, Company registration No.06766539, with a registered address at 105 St. Peters Street, St. Albans, Hertfordshire, AL1 3EJ (www.money4gold.co.uk).
CashMyGold - CRE-E/25646
Cash4Gold - CRE-E/25648
Postal Gold - CRE-E/25647
CashYourGoldNow - CRE-E/25649
Money4Gold - CRE-E/25652
These included (i) concern that consumers were unfairly pressured into selling their gold , due to the companies' business practice of sending out payments to consumers and requiring them to reject and return these payments within what appeared to be restrictive time periods, failing which their gold is melted down (ii) misleading price advertising combined with a lack of price transparency; consumers did not have sufficient information on the prices offered or paid for gold (iii) a lack of transparency regarding other key matters, such as the insurance arrangements on sending and returning the gold and whether gemstones were purchased, returned or at risk of damage as part of the service.
The Enterprise Act 2002, The Consumer Protection from Unfair Trading Regulations 2008, The Unfair Terms in Consumer Contracts Regulations 1999.
These five investigations were opened by the OFT on its own initiative to investigate the business practices of a number of companies who offer to buy gold from consumers using the postal service.
In the course of its investigation, the OFT sent information requests to the five companies under section 224 of the Enterprise Act and subsequently engaged in consultation with these five companies under section 214 of the Enterprise Act.
In consulting with these companies the OFT outlined its view that they may be operating in breach of certain provisions of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) and sought undertakings in lieu of court action. In particular, the OFT identified the following practices with which it confirmed it had concerns:
the practice of sending payments to consumers (instead of an offer or quote) which were taken as being accepted if consumers did not reject and return the payments within what appeared to be restrictive time periods
the lack of appropriate pricing information provided to consumers which prevented them from making an informed choice about whether to sell their gold to the company
the lack of transparency regarding key information such as insurance arrangements and whether gemstones are purchased or returned
the use of misleading statements, for example claiming to pay high prices for gold without clarifying that such prices are based on the scrap value of gold
the use of potentially unfair terms that (i) undermine consumers legitimate cancellation rights, (ii) limit or exclude the legitimate rights of consumers to obtain legal redress against the company for loss or damage to their goods and (iii) are not in plain and intelligible language.
- Bullion Buying Ltd trading as CashMyGold (www.cashmygold.co.uk)
2. Green Bullion Europe Limited trading as Cash4Gold (www.uk.cash4gold.com)
3. Sigma Response Limited trading as Postal Gold (www.postalgold.com)
Following the consultation, CashMyGold, Cash4Gold, Postal Gold and their appropriate officers signed undertakings to address the OFT concerns that the above practices may breach the law. 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 concerns.
The Undertakings require that the companies do not continue or repeat the conduct of concern in this case. For example, they have agreed to:
provide consumers with either a quote or an option of receiving a quote or payment and clearly and prominently display both options, setting out the risks associated with the payment option (namely, that their gold is at risk of being melted down if they do not reject and return the payment within the time periods) in its gold bag and terms and conditions
provide consumers with a reasonable period of time to consider the quote or payment and to return and reject the payment and not melt down a consumer's gold until s/he has either accepted the quote or in the case of payment until the reasonable periods have elapsed
provide clear and transparent information on whether gemstones are purchased and the risks associated with sending in gems (e.g. that consumers gems may be damaged or will not be returned)
provide clear information, in writing, before or at the time of providing the consumer with a quote or payment of the weight and contents of the gold bag, the price per gram offered, and the total price offered for the contents of the gold bag
provide clear and transparent information on the insurance arrangements it has in place covering both the sending and return of consumers' gold items
not make representations which claim that it will offer or pay a 'high price', 'top price', 'best price' or similar without clarifying that the price offered for their gold is based on the scrap or smelt value of gold
not claim it is the UK's No.1 Gold buyer, or any statement of similar effect, when this is not the case
not unfairly or inappropriately limit or exclude the legitimate rights of consumers to make an insurance claim for loss or damage to their goods
clarify that the limitation of liability of the company is up to the full market value of the unwrought gold, based on its weight and carat, and
provide consumers with a complete set of Terms and Conditions in the gold bag.
Cash4Gold, Postal Gold and CashMyGold have also agreed to provide the OFT with copies of any consumer complaints relating to matters within the scope of the undertakings, three and six months following the provision of undertakings in order that the OFT can monitor whether the undertakings are effective and the companies are complying with them.
4. Vertex Watch Company Limited trading as CashYourGoldNow (www.cashyourgoldnow.co.uk)
CashYourGoldNow and its director provided undertakings to the OFT, however, the company also informed the OFT that it had ceased trading in the UK gold buying market.
5. Money4Gold Ltd trading as Money4Gold (www.money4gold.co.uk).
Undertakings were not obtained from Money4Gold. This company ceased trading during the consultation period and is now in liquidation.
Subject to reviewing any consumer complaint information from Cash4Gold, Postal Gold and CashMyGold in the following three to six months, having secured these Undertakings, the OFT has now closed its investigation into this matter.
During the course of its investigation the OFT was provided with helpful investigative assistance by a number of different Trading Standards Services.
- Questions and answers
- Press release OFT takes action against gold buying companies (14 February 2011)
- Press release OFT requests information from gold buying companies (21 January 2010)
Summary of work/background published during the investigation
The OFT has announced that it is looking into the business practices of a number of companies who offer to buy gold from consumers using the postal service.
The OFT wrote to the companies asking for information which would enable it to consider whether they comply with consumer protection law.
The OFT has since reviewed information received from the companies and formed the view that the companies may have breached a number of consumer protection laws.
Consequently, the OFT is consulting with the companies to bring about a cessation of the breaches it believes has occurred and seek undertakings. In the absence of suitable undertakings the OFT may take appropriate court action.