While jewelry and fur may not be top of mind to consumers in the middle of summer, the Federal Trade Commission has long had enforcement authority over the marketing and sale of these products and recently supported legislation that further strengthens consumer protections in these areas.
On June 30, the House Energy and Commerce Committee's Commerce, Trade, and Consumer Protection Subcommittee cleared two bills focusing on consumer protection: the Guarantee of a Legitimate Deal Act of 2010 (H.R. 4501) and the Truth in Fur Labeling Act (H.R. 2480). The Guarantee of a Legitimate Deal Act sets standards for businesses that exchange cash for precious metals through the mail. The Truth in Fur Labeling Act extends the current Fur Products Labeling Act to require even fur products containing less than $150 in fur to have labels detailing the type of fur incorporated in the item.
The market for mail-in gold, in particular, has grown rapidly due to the doubling in the price of gold over the past three years to $1,200 an ounce. A major player in this industry, Cash4Gold.com, has been able to multiply traffic to its website through extensive advertising, including a commercial during the Super Bowl. Businesses like Cash4Gold generally operate by soliciting consumers to mail in jewelry, making the consumer an offer by sending back a check, and giving the consumer a limited amount of time to reject the offer before the assuming it is accepted. There have been widespread consumer complaints of under-compensation -- some reports indicate that these companies offer customers less than a third of the true value of the jewelry.In an attempt to protect financially-stressed consumers selling their jewelry to these businesses, the proposed Guarantee of a Legitimate Deal Act would require online purchasers of precious metals to wait for affirmative acceptance before melting the jewelry and to promptly return jewelry if the offer is rejected.
Currently, the FTC enforces the Fur Products Labeling Act, which entails producing the Fur Products Name Guide that articulates rules for the labeling of fur products. This law does not, however, require labels on products containing less than $150 in fur, which often leaves consumers uninformed as to whether they are purchasing faux or animal fur. The proposed Truth in Fur Labeling Act would aid consumers who prefer not to buy real fur by eliminating this loophole, which now allows 14% of fur products to go unlabelled. This Act would not preempt states from passing more stringent regulations concerning fur product labeling. Retailers who sell fur products stay tuned for further developments.
- Amy Mudge and Andrew Macurdy