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Gold-buying firms agree change after OFT probe
LONDON (Reuters) - Gold-buying companies Cash4Gold, CashMyGold and Postal Gold have agreed to change the way they purchase metal from consumers after a year-long investigation by the Office of Fair Trading.
The OFT said it was particularly concerned by the practice of sending consumers a payment, which if not rejected within a certain timeframe, was taken to have been accepted. The items sent by consumers were then melted down.
The three companies will now offer customers the option of receiving either a quotation requiring positive acceptance or a payment for their gold and include more information about the weight and carat of items assessed, the OFT said.
They will also make clear that the prices they offer to consumers are based on the scrap or smelt value of gold and clarify their policy on gemstones, it added.
The OFT raised concerns with five companies that consumers were being locked into accepting offers been made for their gold. They also included CashYourGoldNow and Money4Gold, which have ceased trading since the investigation was launched.
"These days we see more and more new business models which involve consumers' distance-selling goods to firms. These options are good for consumers, providing business practices are fair," said Heather Clayton, senior director of the OFT's Consumer Group.
"Where we see problems, however, we are keen to intervene early so that these markets develop with an appropriate level of consumer protection."
The business of buying back scrap gold from consumers has boomed in recent years as spot gold prices have surged on the back of concerns over global economic growth and the stability of the financial markets.
Figures from the World Gold Council showed that the amount of scrap gold returning to the market in the third quarter of last year -- the most recent quarter for which data is available -- rose 41 percent year-on-year.
Prices have soared by more than 50 percent since the collapse of Lehman Brothers in late 2008, hitting a record high at $1,430.95 an ounce in December.
(Reporting by Jan Harvey; Editing by Jane Baird)
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