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Mrs. Linda Gilroy (Plymouth, Sutton): A project carried out by Plymouth's trading standards department

2 Feb 2001 : Column 575

revealed that numerous children respond to advertisements of this kind. They must be especially in need of the protection afforded by the Bill.

Angela Smith: I have not encountered that in my constituency, but children who want to earn some extra pocket money will obviously be at risk.

What is so sad is that those who are being ripped off are honest, good people who want to work for a living. It is disgraceful that such people should be denigrated. It is often those who are least able to shell out--children, obviously, come into that category--who are forced to do so. Relatively large sums are frequently required for start-up costs. They may not seem large to Members of Parliament, given their salaries, but they represent a considerable proportion of the disposable income of some of my constituents who reply to these advertisements. They are having to shell out for materials, directories, registration costs, fees, deposits and--always--premium-rate telephone calls, in advance.

The poorest members of society are the least able to afford the consequences of paying for bogus schemes. I feel that we in Parliament have a duty to deal with those who seek to fleece the most vulnerable people.

Those who support the Bill are not against home working. Indeed, it is because he is in favour of home working that my hon. Friend has presented the Bill. Home working is a valuable and important lifeline for many, and genuine home-working scheme operators have nothing to fear from the Bill. In fact, as my hon. Friend said, they have a great deal to gain from it, as it will raise the status of home working and encourage those who know they will not be ripped off to engage in it.

Mr. Duncan: If the Bill succeeds in its aim it will be useful, but which part of it would outlaw premium rate calls, given that that money is presumably payment for the telephone call rather than for the outworking scheme?

Angela Smith: It is a payment for services. By paying for a premium rate phone call, the person concerned is paying for a service, and the Bill covers that.

Companies that do need to fear the Bill are those such as the company that the trading standards department cited as having raised £600,000 in nine months from advance payments of £25. Although £25 may not seem much to many people, £600,000 is a great deal--and the Department of Trade and Industry described that as no more than a medium-sized operation. We are talking about a trade whose ill-gotten gains run into millions.

The Bill will catch companies such as the one in north Yorkshire that charged people for construction kits, and then rejected all the finished products as being not up to standard. Trading standards officers joined the scheme and asked professionals to assemble the kits; they were still rejected.

The Bill will protect those such as the woman from south Wales who obtained home work sticking labels on envelopes. Her work was rejected because the labels were not stuck on straight. I hope that, in the forthcoming local elections, Members will encourage their local party workers, thousands of whom will be involved in similar activities, to make sure that the labels are stuck on straight.

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Improving the rights of consumers has been important to me for some years. I was the Labour spokeswoman on Essex county council's trading standards committee. Christine Wade--who is now director of that department--and her valuable team have been at the forefront of action against bogus home-working schemes. They have not been fortunate in every case, but they took a company called Hayden Marketing Services to court under the Trade Descriptions Act 1968 and the Theft Act 1968. They were quite creative in seeking out legislation that would cover that case.

The company was charging people £25 or £35 for a starter pack, which it claimed contained everything people needed to start work, and guaranteed that 43p would be paid for every envelope submitted. The pack outlined what they needed to do before they could submit any work; it did not contain the work. People were informed that they must buy two specific types of envelope, expensive A4 paper, mailing lists, sticky labels and two stamps per unit. They must have the leaflet printed, and ensure that all requirements were met, down to the stamp being in exactly the right place. They had to send the first batch of 500 by recorded delivery.

The trading standards department estimated that submitting the finished pack would cost the consumer 67p; the consumer would be paid 43p. It was not possible to comply with the information on the pack without incurring costs. The company ended up banking £3,500 from people applying for packs--and not one person submitted any completed envelopes.

In an article in Trading Standards Review last August Nicola Webb, principal advice officer at Essex trading standards service, said of the conviction of the person who ran that company:

On behalf of my constituents who contacted the service to complain about the company, I echo her words, but I think that the penalty was inadequate: the lady concerned merely had to do community service and pay the money back.

In that case, because of the wording of the leaflet that the company used, a conviction was possible; but it was an exception. Trading standards departments up and down the country know that many cases cannot be brought to court because no law has been broken. Hayden Marketing Services was smart enough to fleece the vulnerable, but not smart enough to avoid prosecution. I have no doubt that other companies involved in such scams have given careful consideration to why Hayden Marketing Services was convicted, and have worded their advertisements in a way that makes their prosecution under the current law impossible. Such cons are typical of the bogus schemes that are being set up.

The hon. Member for North Cornwall (Mr. Tyler) quoted a trading standards department that supported the Bill. Indeed, trading standards departments throughout the country are seeking legislation to protect people from these schemes. Essex county council's trading standards department has produced a leaflet on home working, advising people on what they should do to avoid scams. It is entitled "Do your homework first." It points out the pitfalls that home workers need to be aware of. People are not being sent any work after they have paid the fee. It is difficult for individuals to get their money back.

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Businesses often stop trading. There are misleading schemes, with non-refundable registration fees, where the individual has to find his own customers and, when he has done so, to recruit other customers. It is impossible to meet the quality standards for the work.

Because of the prevalence of this practice in Essex, a charity has been established, Essex Homeworkers, based in Chelmsford. It works mainly with retired and disabled people to organise sales of their craft work. The charity is needed not just to organise the sales, which have become very important, but because current law cannot adequately protect its members and clients from those who are seeking to rip them off. I am sure that the charity will be the first to welcome the Bill, even if takes away part of its work. It is doing that work only because the current legislation is inadequate.

As I have said, genuine home working companies have nothing to fear from the Bill. Their reputation will be enhanced by taking cowboy firms out of the picture. For many people, home working is the only viable way of engaging in paid work. They need to have the confidence that, when they do so, they are not being ripped off and cheated and will not be in a worse financial position than before. The message must go out loud and clear from the House: advance payments must be stopped. I am particularly pleased that premium rate telephone lines are being brought within the definition of advance payments.

Far from this being a draconian measure, as has been suggested by some, I strongly believe that we have a duty to legislate. I feel strongly about my constituents being conned--there is no other word for it. I get extremely angry and upset by those who do not feel that this is an appropriate method by which to legislate on the matter.

We must stress some of the horrors associated with home working and the fact that the proposals do not attack genuine home-working jobs, which can be suitable for both reputable companies and for individuals who need, or want, to work from home. We are talking about closing the loopholes available to the unscrupulous, the uncaring and the underhand who make money from the exploitation of others. We are talking about people selling goods or services when there is no intention to pay for the finished product. Often, there is no market for the goods, or the services in a directory do not actually exist.

It is a great shame that legislation is needed, but without the creation of the new criminal offences under the Bill, the scams and unfair practices will continue. It is a sad fact that current legislation, and the threat of civil action by consumers, is not enough to deter determined rogue traders from repeatedly exploiting those working at home. The whole home working, or outworking, market is being discredited by those people.

It says a lot for the Bill that it brings together several organisations that have championed consumer rights, including the National Consumer Council and the National Association of Citizens Advice Bureaux. I pay tribute to citizens advice bureaux in Thurrock and Basildon, which have worked extremely hard and which, in many cases, have to pick up the pieces afterwards.

Often, when someone has been a victim of such a scam, they go to their Member of Parliament or citizens advice bureau and it is too late. Nothing can be done; the law may not have been broken; they cannot get any remedy. If we are lucky, occasionally, as in the case of Hayden Marketing Services, trading standards officers may be

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able to take action, but in the vast majority of cases no action can be taken and we are left with distraught constituents who have been ripped off. The Bill will be welcomed throughout the country; there is so much malpractice. I hope that today's debate will help those who are considering taking on home working. They can look at the debate and, I hope, the publicity surrounding the introduction of the legislation and then hope to be protected from the worst excesses.

I understand that the Minister has welcomed the Bill wholeheartedly. I welcome that, but there is a wider context in which we should see the Bill. The Department of Trade and Industry White Paper, "Modern Markets: Confident Consumers", made it clear that

Today, we have the chance to put those words into practice. We can take a stand against the rip-off merchants who prey on our constituents. On their behalf, we should all support the Bill.

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