The Federal Trade Commission testified before a House panel that it supports a bill to protect consumers from online “cash for gold” services that may not deliver a fair price or properly shipped returned items – but the proposed law needs a couple of important tweaks.
Even as gold prices reach new highs this week, the FTC said it is getting increasing complaints from sellers of gold jewelry or other precious metals who say they are not getting a raw deal.
The Guarantee of a Legitimate Deal Act, introduced in January by Rep. Anthony Weiner, D-New York, would give consumers the right to consider or reject a cash offer for their precious metals before the merchant melts or otherwise liquidates the submitted items.
The proposed legislation would also require online purchasers to adequately insure items they ship to consumers who decline their offers.
Although the FTC has not yet brought any cases against merchants who purchase precious metals from consumers, the agency is seeing more complaints on shipping practices and prices offered without recourse, according to Jim Kohm, an associate director with the FTC’s Bureau of Consumer Protection, who testified yesterday before House Subcommittee on Commerce, Trade, and Consumer Protection.
The Fair Deal Act “addresses the potential abuses, consumer confusion, and possible deception discussed above without imposing price controls or other burdensome, and possibly counter-productive, regulation,” Kohm said.
As tough economic times persist and gold prices surge, more financially-strapped consumers are turning to online merchants, such as Cash4Gold.com. But the proposed legislation focuses only on online marketers.
The language of the bill should be modified to prevent “an incentive for some marketers to avoid the law by marketing solely through alternate means such as telemarketing, direct mail, or radio and television advertisements,” Kohm testified.
The definition of “purchaser of precious metals” should be expanded, he said.
In addition, another section of the bill should “clarify that purchasers of precious metals must make a firm offer to purchase the items for a specific price.” Otherwise, he testified, “an unscrupulous marketer could claim that its vague offer to pay a good price is accepted when consumers ship their items.”
One way for people to learn how not to be taken is to become educated. That’s why I started GoldEducator.com to teach people who want to sell gold or buy gold, how to do it and what to beware of. It’s an free educational resource with nothing to sell.
The scrap gold industry needs cleaning-up. Here in the UK, the Office of Fair Trading are investigating the business practices of a number of cash for gold companies.
Far too many consumers are being caught-out by sharp business practices that result in them receiving amounts way below the market value of their gold.