The House passed a bill Wednesday mandating new protections for consumers from companies that offer cash for gold jewelry and other items, while meanwhile, a nationwide dealer of gold coins in California was put in court-ordered receivership.
The House-passed legislation, hailed by consumer advocates, requires consumers to approve the amount they are offered by companies before those companies melt their gold items down.
Rep. Anthony Weiner, the New York Democrat who introduced the bill, said it was targeted specifically at the company Cash4Gold.
“Cash4Gold has used these bad economic times as a golden opportunity to fleece hard working people in need of an extra dollar,” Weiner said in a written statement. “The passage of this bill is an important step towards giving people selling their personal gold the protections they need.”
Proponents say requiring companies to get clearance from consumers before melting down their gold items is crucial because the companies often allow only a short period after signing checks for individuals to reject the amounts, which are frequently for paltry sums.
“This bill will give consumers who do decide to use online cash-for-metal services a fair opportunity to negotiate a better offer, and to promptly obtain the safe return of their gold or precious metal, with appropriate insurance, if they decline that offer,” said Chuck Bell, programs director of Consumers Union, publisher of Consumer Reports.
Meanwhile, Superior Gold Group LLC, a dealer of gold coins, was put under court-ordered receivership in California.
A court order signed by Presiding Judge Gerald Rosenberg of the Los Angeles County Superior Court’s Santa Monica courthouse also froze the companies bank accounts and assets.
The company is accused by the Los Angeles County District Attorney’s Office and the Santa Monica City Attorney’s Office of defrauding customers.
Specifically, the government’s lawsuit alleges customers did not receive coins they bought and were pushed into purchasing more expensive collectors’ coins at above-market rates.
A hearing is set for Dec. 17 to decide whether the company will stay in receivership.
Superior Gold Group was unavailable by phone Wednesday. Cash4Gold did not reply to a request for comment.