Santa Monica precious metals dealer Goldline International Inc., one of the nation's largest gold retailers, has resolved a criminal prosecution by agreeing to refund as much as $4.5 million to former customers.
Goldline agreed to an injunction that requires the company to "change its unfair sales practices" and to disclose price markups in recorded telephone conversations with customers, said Adam Radinsky, head of the Santa Monica city attorney's consumer protection unit.
The Santa Monica city attorney in November filed a 19-count criminal complaint against Goldline, accusing the company of running a "bait and switch" operation in which customers seeking to invest in gold bullion were instead sold gold coins that were marked up more than 50%. Six current and former employees were also charged.
The settlement, approved Wednesday by Los Angeles County Superior Court Judge Lisa Hart Cole, resolved a consumer-protection lawsuit that the Santa Monica city attorney's office filed against Goldline this month. As part of the agreement, the city attorney dismissed all of the criminal charges.
Goldline, which has used radio talk show host Glenn Beck as a pitchman, issued a statement that said the agreement would help the company "enhance its industry-leading disclosures to prospective precious metals buyers."
Radinsky said the settlement of the civil lawsuit "has tremendous benefits for consumers." The agreement calls for a third party to monitor the injunction and make sure the company is disclosing the markups, through undercover buys, recorded telephone calls and meetings with employees.
"The company is being forced to change its entire business model from one based on misrepresentations to one providing accurate information, including price markups for each transaction," Radinsky said. "There are extreme benefits to consumers from the injunction in the civil case."