Staff at the Office of Fair Trading (OFT) have started investigations into the postal gold industry, aimed at those people who are strapped for cash and may have debt problems, who need to “get money quick”.

Cash for gold companies under investigation

People have been eager to sell their gold as the recession has continued and as the price of gold has boomed in recent months, as it offers a quick way to raise money and get out of debt without a credit check

Companies in the UK that offer money in exchange for gold sent by post are the subject of the OFT inquiry, following a report by consumer magazine “Which? Money”.

The consumer group magazine, described the companies buying gold in this way as offering consumers “shockingly bad value”.

Postal gold buyers only offered on average around 6 oer cent of the retail price for gold that was sent to them by an undercover investigation by the magazine.

By comparison, highstreet jewellers and pawnbrokers offered approx 25 per cent of the retail value.

Which? posted three items of jewellery to four UK based gold buyers – and was offered as low as £38.57 for gold bought recently for £729.

They were also informed that a 9 carat necklace bought for £399 wasn’t gold, and that they would be charged £10.95 to have it returned.

Peter Vicary-Smith, Which’s 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 we have serious concerns about the fair treatment of consumers.”

Juliet Young, from the Office of Fair Trading, 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 is developing in a way that treats customers fairly.”

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