Know the rules before hosting a 'gold party'

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Know the rules before hosting a 'gold party'

By Michelle Graff

April 23, 2009

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The high price of gold has made buying secondhand gold jewelry from consumers a lucrative business for retail jewelers in these trying economic times.

New York--Retail jewelers cashing in on the phenomenon of private "gold parties" should be aware of the laws that regulate secondhand purchases, the Jewelers Vigilance Committee (JVC) cautions.

JVC President and Chief Executive Officer Cecilia Gardner said before retailers buy jewelry from consumers--whether it's in their store or at an in-home gold party--they need to be aware of the secondhand licensing requirements in their area, anti-fencing laws and anti-money-laundering obligations.

Here's information from the JVC about each of these:

--Secondhand dealer's license: A local consumer-protection agency or state attorney general's office can provide information about licensing requirements in your area.

Gardner said that while the "traditional scenario" for which the secondhand licensing requirements were drafted don't exactly fit the in-home gold parties, it is her opinion that jewelers--who need these licenses to buy gold in their stores and might have one already--shouldn't shy away from getting one.

"I think they probably do (have a secondhand dealer's license)," Gardner said. "But if they don't, they should get one anyway."

--Anti-fencing laws: To know what these laws are in your area, contact your local consumer-protection agency or state attorney general's office.

--Anti-money-laundering program: The U.S. Patriot Act dictates that jewelers who buy and sell more than $50,000 in precious metals and stones must have an anti-money-laundering (AML) program. The JVC offers a USA Patriot Act Compliance Kit to help jewelers set up a program if they are covered by the Act but not in compliance.

In-home gold parties--where a jeweler or representative gathers people together to sell their gold jewelry, splitting the profits in several ways--are being dubbed this recession's equivalent of a Tupperware party. But instead of spending money and leaving with goods, attendees sell their unwanted gold jewelry and leave with cash in hand.

A recent story that appeared on the Web site of New Jersey newspaper the Ashbury Park Press, for example, detailed two jewelry stores in the Garden State--Twin City Jewelers in Lakewood, N.J., and Earth Treasures in Eatontown, N.J.--that were hosting gold parties in some form.

In addition, there are retailers who have entire companies separate from their stores that deal only in the hosting of gold parties.

For more information on laws that regulate secondhand purchases, visit JVCLegal.org.

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