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Mr. Peter Bone (Wellingborough) (Con): I congratulate the hon. Gentleman on securing this important debate. The case that he describes is extraordinary. Had it been a credit card, the credit card company would have to refund the money. Why is BT not refunding it?
Mr. Blizzard: The hon. Gentleman has taken the words right out of my mouth. The key principle of this case, which applies to all commercial transactions, is that one should not have to pay for what one has never bought. There is indeed a comparison with fraudulent items on credit card bills.
Why should my constituent, Mr. Gasson, and others have to pay BT money that we now know was fraudulently generated? BT, and no other organisation, is the organisation with which he has the commercial relationship as a customer.
I accept that BT is a victim too. It did not wish this to happen and it did not intend to defraud people. However, BT is a giant company that has an overview and understands what has happened. It is much better placed than individual customers to pursue matters along the chain of comms companies involved in the process and to recover the costs in that way. BT is very keen to absolve itself of any blame. It sent me a briefing document that said:
"although the cost of these calls appears on telephone bills, originating communications providers (such as BT) have absolutely no control over the calls in question (although we are obliged to carry them) and receive only a tiny proportion of the revenues involved".
BT has maintained throughout that it will have already paid the money up the chain of operators, arriving eventually at the fraudster, before it becomes aware of the customer's problem, and so then has to recover the money from the customer.
But BT is in business and should know about business risk. It signed up to a system whereby it pays out before it gets paid by customers. If a hit has to be taken, BT, as a business, should take it. It is unfair that the customer is being punished. France Telecom has not punished its customers; it has waived charges for proven fraudulent internet rogue dialler calls. It is disappointing that BT does not have the same sense of duty to its customers. Instead, demands have been issued, lines have been blocked for outgoing calls, and many of my constituents have been disconnected. Even a local charity helpline was cut off for non-payment. It was reconnected after my intervention, but the dispute has still not been settled.
BT has made some ex gratia payments, ranging from almost nothing to £250. I have told BT that its system is inconsistent. It has not demonstrated to me that it has
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any underlying rationale. The only consistency lies in its unwillingness to waive the offending charges. Ex gratia payments are left to the discretion of individual advisers; that has been admitted to me in letters. This leads me to believe that BT's response is driven more by concern about how its reputation might be perceived than by real concern for its customers.
The heart of the matter is that it is wrong to pursue innocent individuals for charges that we now know were fraudulently generated. To be fair, BT has acted to improve the situation for subsequent and future customers by issuing free premium rate service barring, free software downloads and a more rapid warning system to alert customers whom they suspect are being defrauded.
Mr. Philip Hollobone (Kettering) (Con): I too congratulate the hon. Gentleman on securing this important debate. Is there not an interesting contrast between the water companies, which are not allowed to cut off customers who have confusion over their bills, and BT, which is the dominant player in the telecoms market?
Mr. Blizzard: I thank the hon. Gentleman for that comment.
BT is also now filing transaction reports with the National Criminal Intelligence Service and withholding payment in cases where it has suspicion.
The Department for Trade and Industry and Ofcom have also acted to tighten up the system. They have encouraged ICSTIS to institute a prior permissions regime for dialler software utilising premium rate numbers, they have introduced the requirement that no money should be paid out to service providers for at least 30 days, and they have increased the fines for offenders. Those actions, when they are all in place, will result in a better system, but the fact that they have had to introduce those measures demonstrates the failings of what was going on last year. However, the new measures do not address the situation of those people who have already become victims of internet rogue dialling, on which I am concentrating tonight.
Because I feel that BT took fraudulently generated money from customers and passed it on through other companies in the communications chain to the very people who perpetrated the fraud, I asked Suffolk police to investigate whether BT was in breach of the Proceeds of Crime Act 2002, and that matter is being pursued by Suffolk police and the Suffolk Crown Prosecution Service. BT knew at that time that the money was dodgy because it was paying its share to a charity. It denies guilt today, and I am not trying to take on BT on that count. It says that it was doing only what it was contractually obliged to do.
But the great feature of the whole matter is that no one will accept blame, fault or responsibility. BT said to me that it
"has a regulatory obligation as a carrier to interconnect with any comms provider in the interests of competition, with extremely limited ability to withhold funds if there is a suspicion of wrong doing"—
except that that is what it is now doing, according to the Crown Prosecution Service.
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ICSTS seems to blame the companies. It said:
"We did, however, introduce an enhanced registration requirement in June 2004 for service providers operating dialler services. No service provider registered international satellite numbers with ICSTIS and no permission certificate has ever been issued for a dialler licence using an international number."
"any dialler services operating on international numbers is doing so wilfully in an attempt to hide wrongdoing."
On that basis ICSTIS told all leading phone companies back in June 2004 that any international or satellite number found linked to a dialler service should be cut off immediately, and it repeated that message in the second half of 2004. But my constituents were still being defrauded. ICSTIS says:
"The issue of BT's effectiveness or otherwise in spotting international dialler traffic and acting to cut access and withhold outpayment is something for BT to address."
So ICSTIS was tending to pass the matter to the companies. The question is: does ICSTIS and its code have enough teeth?
BT tends to blame Ofcom. It said:
"Ofcom should stop handing out premium rate numbers to companies who have no real business model . . . Service providers could also be required to pay an up-front bond—available to compensate customers if the company defrauded them and disappeared."
Where are we now? Everybody has been playing the blame game, when in fact everybody should be trying to help the victims, not just by preventing future victims, but by addressing the problems of those who are already victims.
First, these matters must be pursued through the criminal justice system. The Suffolk investigation is proceeding very slowly. Will my right hon. Friend therefore write to the Crown Prosecution Service in Suffolk in order to be kept informed and to show some interest in the matter? Of course, that might not produce a result. Secondly, BT should take a leaf out of France Telecom's book and stop pursuing the proceeds of fraud. Of course, BT is not the only company involved. Thirdly, therefore, the Government have a duty to ensure effective and fair regulation, which was not in place in 2004. That was made clear in letters dated 21 March from the chief executive of Ofcom, Stephen Carter, which all Members of the House received.
I believe that the Government have a moral duty to protect people as consumers and as victims of crime. The Office of the Telecommunications Ombudsman only considers whether the processes were followed, but the process itself was flawed. That does not get to the heart of the problem. The Government and the industry, principally BT, should act together to establish a compensation scheme.
My right hon. Friend has nobly acted to improve the future. I believe, however, that we need action to redress the past. Crimes have been perpetrated, innocent victims deserve better from BT, and I think that they deserve a little bit more from the Government.
10.21 pm
The Minister for Industry and the Regions (Alun Michael):
My hon. Friend raised some important issues in the debate, which, as he was kind enough to acknowledge, I have been addressing, as has the
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regulator, Ofcom—which, of course, is accountable to the House rather than to Ministers—ICSTIS and others involved, as well as the companies. I felt that this was such an important issue on which to provide enlightenment that I wrote to all Members of the House on 7 November on several of the telecoms issues that were raising concerns, to explain the actions that were being taken by all involved.
Some of the issues raised by my hon. Friend are for commercial organisations to deal with, whereas others are issues that we have already addressed, either directly or through the regulatory bodies, as he was kind enough to acknowledge at the start of his remarks. He was offered an opportunity to clarify his specific concerns, which he has every right not to do, but it is important in responding to the debate to set the proper context.
Let us be clear: when such an event occurs, the blame lies on the author of the scam or crime. Measures that have been put in place, such as withholding money for 30 days to allow recompense or fines to bite, are an important means of protection for the future and of making sure that those who contemplate such activity cannot get away with it.
As my hon. Friend acknowledged, service providers have also been victims. Generosity in dealing with victims is desirable when the service provider is a large company, as he indicated, but it is not enforceable—we cannot require that of a company that is itself a victim, when the problem has arisen because of the ability to use computer equipment that is no part of the provision of BT or any other service provider. We must be even-handed.
Our duty is to make sure that there is effective and fair regulation, and I am pleased by the steps taken to address that. ICSTIS is consulting on changing the way in which its code deals with refunds. Early next year, it should be possible to get refunds from those telecoms companies that terminate premium rate services, which is an important part of the issue.
I would be the first to acknowledge that this is a complicated area of commercial activity in which the fast-changing nature of information and communication technologies, and the pace of convergence between technologies, offer a number of challenges. It should also be acknowledged, however, that it is a success story, in terms of both the services now available and the way in which industry is co-operating with Government to deal with the cowboys. In the case of a number of scams, we have effectively created an antisocial behaviour order for the bad guys without tying the good guys up in red tape. To those who think that internet activity and premium-rate services are wholly bad, I say, "Look at the facts and study the reality." Just banning it all, as a colleague said to me last week, would be so disproportionate as to give the Luddites a good name. I know that that is not what my hon. Friend has asked for.
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