The United States Federal Trade Commission, which works for consumers to prevent fraudulent, deceptive, and unfair business practices, has told the U.S. House Subcommittee on Commerce, Trade, and Consumer Protection of the Committee on Energy and Commerce that it supports proposed legislation designed to protect cash-strapped consumers who sell their jewelry and precious metals to online buyers.

Jim Kohm, Associate Director of the Enforcement Division of the FTC’s Bureau of Consumer Protection, testified that the FTC supports the proposed Guarantee of a Legitimate Deal Act, which would strengthen the FTC’s ability to protect financially-stressed consumers. According to the testimony, the FTC has begun to see complaints from consumers who are seeking to make ends meet by selling gold jewelry, watches, and other family heirlooms containing precious metals. Consumers complain that some online jewelry buyers provide a price quote only if asked. In some cases, consumers submit their items and receive payment only after buyers have melted their items into their raw form. Once that happens, dissatisfied consumers have limited recourse.

The proposed legislation would make sure that consumers have a chance to consider and reject a specific offer to buy their precious metals before an online purchaser melts or resells the items. It also would require businesses that offer to buy consumers’ jewelry or precious metals to insure items they ship back to consumers who decline their offers. In addition, the measure would give the FTC the authority to seek civil penalties, which would serve as a powerful deterrent and make it easier for the agency to take action against buyers who violate the law.