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The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): I congratulate my hon. Friend on securing this debate, on her excellent research and on her clear presentation. The whole House understands the concerns that have led her to raise the matter. She speaks not only for her constituents but for the many people who may have been duped by such schemes.
The Government are certainly concerned about the risks inherent in gifting schemes such as "women empowering women". As my hon. Friend spelt out, the danger of such schemes is that they depend on each participant recruiting several more to the scheme. I pay tribute to David Perry and The Press & Journal for highlighting the problems of such schemes and alerting people in the area and throughout the UK to them. A network of participants cannot expand indefinitely and will eventually break down. Participants joining a scheme late in the day stand a good chance of losing their original contribution as well as any chance of a return. Even those who join early may lose out if those whom they recruit to the scheme fail to recruit further participants.
No doubt, some people go into such schemes in full knowledge of the risks, but the Government are concerned about those who participate unaware of the risks; those who are misled by others when invited to join; and those who risk money that they cannot afford to lose. Earlier this year, specific warnings about the scheme were issued by trading standards officers. My right hon. Friend the Secretary of State for Trade and Industry, who has ministerial responsibility for women, commended the Department of Trade and Industry for reinforcing that.
I want to reiterate the message that I gave three years ago in the House warning the public of joining any scheme that promises something for nothing. That message was recently reinforced by the Department and the media. Indeed, earlier this year, my right hon. Friend added to those warnings. Sadly, some people have ignored all the advice about schemes that promise something for nothing. My right hon. Friend said that the Government would consider avenues for protecting the public from such schemes.
The "women empowering women scheme" received a great deal of media attention earlier this year. It appears to have emerged first on the Isle of Wight, and spread to other parts of the United Kingdom. It claimed to be restricted to women participants and operated by participants making a gift of £3,000 to a member of the network; they handed over that money in the expectation of receiving multiples of that amount as others joined the network.
Against that background, my right hon. Friend asked the Secretary of State for Culture, Media and Sport to consider such schemes in the context of possible changes in the legislation in response to the review report. The Culture Secretary confirmed that the case for changes to current gambling legislation to act against schemes such as "women empowering women" would be considered in the context of the follow-up to the review of gambling legislation. Of course, any changes in that area are likely to require primary legislation. In the meantime, I join my hon. Friend the Member for Aberdeen, South in urging women to avoid participating in any scheme that appears to promise something for nothing.
I am aware that the media speculated on the number of women who joined the scheme, but accurate figures are hard to come by. The way in which the scheme operates, by means of separate and independent gifting groups, makes it impossible to make any realistic estimate of the numbers involved. In the summer, a survey revealed that local trading standards offices across the country had received about 170 inquiries or complaints about the scheme, but that provides no reliable basis for assessing the number of people who handed over £3,000 in anticipation of collecting a lot more in return for little or no effort.
The scheme has been referred to as a form of pyramid selling or a pyramid investment scheme. Both descriptions are inaccurate. The scheme was considered carefully by trading standards officers, the Financial Services Authority and the DTI. It did not purport either to trade in goods and services or to generate profit and income from investment.
The consensus of the enforcement officers, backed by legal opinion, is that the scheme operated as a form of chain letter and was outside the scope of legislation covering trading schemes, pyramid selling or investment services. The variety of descriptions highlights the difficulty of effectively defining a type of scheme that appears to be new to the UK and outwith the scope of current legislation.
Of course, all schemes where money changes hands are subject to the general criminal law on fraud, theft and deceit. Evidence of criminal behaviour is a matter for investigation by the police. In the case of the "women empowering women" scheme, promotional material has avoided using language capable of being interpreted as
It is apparent from the media coverage that many participants in the scheme acknowledged the risks inherent in it, but treated it as a form of gambling. Arguably, many participants saw no harm in taking such a gamble. Others may have seen no harm in making a gift
Miss Begg: I accept that there are women who know that the scheme is a risk and a gamble, but there are others, particularly those who come in at the end of a scheme, who may not get the warnings or who, because the amount of money that they can invest has reduced to such an extent, think that the scheme is a sure-fire winner. Those are the most vulnerable women and probably the ones who have been most fraudulently treated.
Nigel Griffiths: My hon. Friend makes an entirely reasonable and cogent point. I can only hope, with her, that anyone who was on the dole, in stricken circumstances or on a very low income did not manage to gather the £3,000 to invest in the scheme and was, perhaps, exempt. Some, undoubtedly, were not.
I am aware from the media of the number of people thought to have joined such schemes, but accurate figures are hard to come by. The way in which the scheme operates, by means of separate and independent gift groups, makes it impossible to reach any realistic estimate of the numbers involved. I know that a survey of trading standards officers across the country during the summer revealed about 170 inquiries and complaints about the scheme, but that provides no reliable basis for assessing the number of people who handed over £3,000 in anticipation of receiving a lot more in return, apparently, for little or no effort.
Mr. Simon Thomas: The Minister is accurately setting out the problems posed by the scheme and how difficult it is to ascertain the extent of it, the involvement of individuals and how culpable they are when they join the scheme. Does he accept from me the point that was also made by the hon. Member for Aberdeen, South (Miss Begg)that despite the difficulties, such schemes have been made illegal in several states such as New England? If the Government took account of that in their review of gambling law, it would send a clear message to back up the good advice already issued by the Government that people should not touch such schemes.
Nigel Griffiths: My hon. Friend asked me to make it clear that we will consider any prosecutions in New England and any changes in the law. I can give her a clear guarantee that we will do so. The point is well made. Our problem is framing the law to address such an alleged abuse.
The scheme, unfortunately, did not purport to trade in goods or services or to generate profit or income from investment. Someone has suggested uncharitably to me that there are a lot of mugs out there who will be suckered into such schemesinto giving up £3,000 for no promise of any return. I make no value judgment on how the
Of course, all schemes in which money changes hands are subject to general criminal law on fraud, theft and deceit. Evidence of criminal behaviour is a matter for investigation by the police. In the case of the "women empowering women" scheme, promotional material has avoided using language that is capable of being interpreted as fraud or a definite promise of a return. So far as it is known, no evidence justifying investigation by the police has been presented. None of the approaches to local trading standards officers has included evidence of fraud, theft or deceit.
We know that there is a danger that, by changing or introducing legislation too quickly in response to a particular scheme in one form, we may open the door for some unscrupulous people to develop new variants that succeed in evading the law. In practice, it is not possible to introduce new legislation in response to every new scheme or variant of a scheme that comes along, so in the long term it is better to consider carefully whether legislation is the right approach and, if it is, what form it should take.
That is the approach that the Government are taking. We obviously want people to be protected against losing their money, but we do not want new situations to produce a bad effect. When my right hon. Friend the Minister with responsibility for women issued her warning about the scheme earlier this year, she explained that the Government would be considering very closely the avenues for tackling schemes of this sort. We are looking at the approach that is likely to be adopted in other countries, specifically in Europe, and also, as has been mentioned, in the USA. The evidence gathered to date is not completely conclusive because of the differences between the legislation of member states and between federal and state legislation in the USA. There is evidence that some member states and some states in the USA would regard the "women empowering women" scheme as a form of gambling. The fact is, however, that some may not regard it as such.
As hon. Members will know, the review of current gambling legislation chaired by Sir Alan Budd presented its report during the summer. Schemes such as the "women empowering women" scheme did not fall within Sir Alan's remit and he made no specific recommendation about them. Such schemes may, however, be relevant in terms of the strong concerns that he noted about lottery and other scams to which people can fall prey, many of which originate outside the UK, as the "women empowering women" scheme appears to have done. Sir Alan recommended that lotteries should be for the exclusive purpose of good causes.
Against that background, my right hon. Friend the Minister with responsibility for women asked my right hon. Friend the Secretary of State for Culture, Media and
In the meantime, I join my hon. Friends and other hon. Members in urging people, and especially women, to avoid participating in any such scheme that appears to promise something for nothing. The Government are determined to take on board all the arguments that have been advanced in the debate and to take whatever actions are practicable and appropriate.