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Up to a Third of Goods Sold Through Online Gold Exchanges Could be Fake According to Reports

A recent report commissioned by the Goldsmiths’ Company Assay Office and the  British Hallmarking Council found that up to a third of all gold jewelry sold online could be unhallmarked, and possibly fake. The implications of this are huge, but could also be an opportunity for third party tech solutions that could help in the authentication of gold. As a matter of fact, there has been a variety of blockchain projects that have been tabled or rolled out to address this very issue. The groups who commissioned the study are urging the government and internet giants to help safeguard clients, and enforce online trade. But can it realistically be done?

The Facts of the Case

The study, which was conducted by the WRi Group, took the form of a ten day internet sweep and found that around 36% of all gold merchandise sold through sites like Amazon and Preloved did not mention any kind of hallmarking. Out of these, 24% were suspected to not be real, which makes the listings illegal. But of all exchanges, eBay seemed to be the worst offender, with over 56% of all unhallmarked gold jewelry sold online taking place on the site. In addition, they were able to establish clear links between listings and retail stores where the fake jewelry advertised was sold in large numbers.

Hallmarking Laws are not Being Enforced Online

According to one of the chairmans at the British Hallmarking Council, Noel Hunter, the provisions laid out in the Hallmarking Act of 1973 are not being enforced online. These provisions were put in place to protect retail jewellers and consumers looking for the best place to buy gold online, but there seems to be significant roadblocks that prevent these measures to be properly enacted when it comes to online retailers and exchanges.

Hunter also stated that the internet giants didn’t seem eager to enforce those rules either. According to him, the sweep was only the tip of the iceberg, and more resources will have to be deployed. Currently, regional Tradings Standards departments have to carry the brunt of the load. The issue is that they have seen a significant cut in spending over the last 5 years, which renders them even more inefficient then they already were.

Could Blockchain be the Solution?

Blockchain could however offer a glimmer of hope in this situation. There has been many blockchain projects centered around authentication and supply chain management and traceability, which could be carried out in the precious metals sector. As a matter of fact, IBM recently announced that they will be using the blockchain to authenticate gold and diamond jewellery, from the mine to the seller. The TrustChain Initiative as it is called will use blockchain technology based on IBM’s Hyperledger to authenticate and trace and jewelry through every single stage, providing more transparency.

Online Marketplaces will Have to do their Part

Online marketplaces will have to do more to protect consumers and actually enforce their policies instead of simply paying lip service according to Piers Barclay, sitting Chief Strategy Officer at Incopro. Unless the jewelry industry, government, and exchanges work together, the fight against counterfeit jewelry will be an uphill battle, even with the best tools on hand.

 

 

 

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Pooja K

Pooja K

Training Manager

sedatetech

Member since

19 Mar 2019

Location

Jaipur

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35

This post is from a series of posts in the group:

Financial Inclusion

The financial services industry has much to contribute to the UN and World Bank goal of full financial inclusion by 2020. This group will focus on industry contributions, ideas, barriers and enablers.


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