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10.31 am

Miss Anne Begg (Aberdeen, South): I suppose that I should begin by congratulating the Government on dropping their plans for members' clubs. I have to admit that I was one of the many hon. Members who had deluged the Minister with letters that I received from my constituents and from everything from the local trades club to bowling clubs and golf clubs, which thought that a valuable part of their income would be lost.

I find it slightly amusing that I am speaking in a debate about gambling. I am one of the 3 per cent. of the population who has never bought a lottery ticket in their lives. Apart from taking part in the ubiquitous raffles that seem to pervade every social event in Scotland, I do not gamble at all, although I have to make a big confession: when I was teaching, I quite enjoyed the end of term sweepstake—we called it a sweepie—that we used to run on the length of the head teacher's speech on prize-giving day.

I always took a very hard-headed approach to gambling and knew that the figures always mean that people lose more than they ever win. That concept brings me here today, and I want to concentrate on a specific part of gambling legislation. I wish to refer to some of my constituents' experience of a pyramid gifting scheme called Women Empowering Women. It is an insidious scheme that tricks women into parting with large sums of money in the belief that they will win back even larger sums.

I have pursued the issue of pyramid gifting schemes for some time. I did so initially with the Department of Trade and Industry, as it issued warnings against such schemes on its website, saying that women in particular—although men have been involved—should not become involved in them. I had naively assumed that such schemes might be covered by the Trading Schemes Act 1996, the regulations of which came into force in 1997. Of course, that Act covers the regulations regarding pyramid selling.

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I had thought that pyramid gifting schemes would be covered under that legislation, but the DTI says that that is not the case. It claims that only pyramid selling is covered and that goods and services have to be involved. I found myself in a circular argument with the DTI about whether gifting schemes should be covered by that legislation, but it says no. I have asked parliamentary questions, and found that there have been no prosecutions under the legislation. The DTI kept telling me that any such scheme should be covered under gambling legislation. That is why I am here today to make my plea to the Department for Culture, Media and Sport to ensure that it will seriously consider such gifting schemes.

Such schemes should not be regulated, but made illegal. I wish to take some of the House's time to explain how such schemes work. Women Empowering Women is the current scheme, but there are many more, and they keep changing their names. Apparently, a new one called Diamonds is now doing the rounds in the midlands. Women Empowering Women came from the United States of America, started on the Isle of Wight, made its way up the country and reached Aberdeen as a brand new thing last summer.

Lots of women were sucked into the scheme, believing that they would make lots of money, but when the scheme hits a new area, women are invited to a party and asked to invest—that is the word that is always used—£3,000 of their own money. If they then recruit two friends to the scheme, they will work their way up the pyramid from the gifting level to the receiving level. They are told that they will get £24,000 when they get to the receiving level, and that happens.

The first people to go into those pyramids win large sums. We can imagine the excitement. The schemes are often arranged at parties, and women go along and get sucked in because they see wads of money being thrown down on the table and women walking out with £12,000 or £24,000, which they have picked up that night. They are carried along with that spirit of excitement, and they pledge their £3,000.

In Aberdeen, with a fairly buoyant economy, that happened for some time. Believe it or not, quite a number of women can put their hands on £3,000 ready money, but the arithmetic obviously does not add up and, very quickly, the number of women who can put their hands on that kind of money soon dries up. Of course the amounts that then have to be pledged are reduced to about £100.

At Christmas last year, leaflets went through letter boxes in Aberdeen telling women that if they invested—again, the word "invested", not "gamble", was used—£100, they would have £800 for Christmas. By the time that the scheme reaches that stage, the women who get involved tend to be the poorest and most vulnerable.

Just last week in Scotland, the Daily Record and the Sunday Herald ran articles saying that, in Glasgow, some of those women are going to loan sharks to borrow the money. Of course they lose the money and are then at the mercy of the loan sharks.

The scheme is appalling. The women who are involved in it do not even think it is a gamble; they think that it is an investment, and there is a strange belief that, like the stock market, more money will be created somehow.

I shall briefly explain why the arithmetic does not add up. For one person to win, eight people have to lose. For those eight people to win—I suppose that this is the

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gambling terminology—64 people have to lose. If those 64 people were to win, 512 would have to lose. For those 512 people to win, 4,096 have to lose. So it is obvious that all those people in an area who are gullible enough, or who have not really appreciated what they are getting themselves into, quickly lose their money.

The scheme always gets legs again in an area because the men then get involved. The scheme has run out of women, so men are encouraged to become involved. I know of a pensioner in Aberdeen who has lost £1,000, which was his holiday money for this year. He intends to take a case against the women whom he thinks tricked him out of £1,000 to the small claims court in Aberdeen next week. I have no idea how well he will get on, but the police have told him that such schemes are not illegal and his lawyer has said that it is not worth engaging him because of the sums involved.

The way in which schemes are perceived is a problem. The folk involved do not believe that they are gambling or that there is anything morally wrong with them. Of course they are morally wrong; it is a con trick. Like the cleverest and best con tricks, there always have to be winners to fool and persuade others that perhaps they can be winners too. I am most concerned about vulnerable people.

I spoken to many people about such schemes, and I found myself appearing on GMTV, for example, this morning. Those who have won say, "Oh, but it's just a gamble. People know that they might lose." I am afraid that, very often, people do not know that they will lose. It is not a gamble; if it we were, it would be regulated, as gambling generally is.

The participants do not believe that they are gambling. They think that they are investing their money and that, somehow, they will get that money back. Pyramid gifting schemes cannot be regulated: they need to be completely outlawed. That has been done in some states in the United States, and there have been successful prosecutions. The prosecutions have been of people who participate in the schemes, not necessarily those who organise them—it is difficult to work out who is at the head of the pyramid. As schemes move into an area, the people involved are not necessarily those who thought up the scheme.

I am raising the issue again this morning because I am still not convinced that the Government have got the message. I hope that I will get a good response from the Minister this morning. On page 23 of the Government's response to the Budd report, under the title "Prize Competitions", it states:

I suspect that Women Empowering Women and other gifting schemes are the quasi-gambling products. That is fine. As a result, I tabled a parliamentary question a few weeks ago to discover that that separate report was announced on 23 May; I must have missed it. The consultation paper mentions quasi-gambling products.

In relation to the consultation document, chain letters are mentioned, which work in a very similar way. Letters are sent saying, "Send £10 or £200 to the person at the

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top of this letter, put your name to the bottom of it, and send it to 200 people you know,"—or do not know, as the case may be. The consultation document states:

Pyramid gifting schemes, however, are not mentioned unequivocally. I want to make sure that pyramid gifting schemes will definitely be covered in any new legislation. The Government's intention to bring in new legislation on prize competitions as part of the Bill that may come out of the report that we are discussing is mentioned at the end of the document.

I do not want to be in the same circular position that I was in with the Department of Trade and Industry. I am fairly sure that the Department for Culture, Media and Sport is not like the DTI at all, and I will not get fobbed off as I feel that I have been—slightly—by the DTI. I make a plea for a definition not only of chain letters but of a pyramid gifting scheme—it cannot be called Women Empowering Women, as, by the time that the legislation is introduced, that particular scheme will have been and gone. The idea of these schemes continues to have currency, however, and they have been bubbling around for a number of years. A definition would allow us, at long last, to outlaw them. We should make it absolutely clear to anyone who takes part in such a scheme that it is immoral, wrong and illegal.

I have taken the Department of Trade and Industry's advice, and I am pursuing the matter through the gambling legislation. The ball is now in the Government's court. I make a plea to the Government to make the legislation watertight and to outlaw these odious, insidious schemes once and for all. We should make it absolutely clear to the vulnerable, and to those who do not realise what they are getting involved in, that this is a gamble, and a gamble that they will lose.

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