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20 Feb 2008 : Column 131WH—continued
Miss Begg: I am sure that the Office of Fair Trading will read this debate with interest. The hon. Gentleman has made his point.
As part of my preparation for this debate, I spoke to Del Henderson, a trading standards officer in the Aberdeen office. She confirmed that the OFT had involved all the local trading standards officers throughout the country to ensure that they were involved in the stamp out scams campaign. She also told me about Consumer Direct’s information line for consumers. I was not aware of it, which may show a remarkable lack of knowledge on my part, but it is a fairly new organisation. In the past week, it has updated its website so that it is now much easier to report scams, and she said that the website is easy to use.
It is important that people know how to report scams, and to believe that if they pass on letters or e-mails and so on they will be taken seriously, and that something will be done. Most people, including me, put such letters in the bin, and would not think of passing them on to anyone in authority, whether trading standards or the OFT. Until this month, I did not realise that the OFT was taking such an active role. It is important that the Office of Fair Trading is proactive, tracks down the source of scams, and takes action to close them down or to prosecute the perpetrators. The difficulty is that the perpetrators often live not in the UK, but abroad.
It is difficult for a member of the public to know what is illegal. Letters are often constructed in such a way that it is difficult to define them as fraudulent. We need clearer guidelines on what constitutes fraud. There are so many examples in circulation that it must be possible to define the most common practices as a criminal offence. I realise that by the time the fraud is tracked down, the fraudsters have moved on, thought up a new scam, moved abroad, or closed it down. I know that only too well, because I have been involved in changing the law on a pyramid gifting scheme—women empowering women. It is amazing how inventive such fraudsters can be. It can also be difficult to track down fraudsters, because many scams originate outside the UK, particularly in Canada and Holland, but also in Switzerland and elsewhere.
I am not in a position to judge whether the OFT has sufficient powers in this area. I know that it has a scam buster unit, and I hope that it is advising the Government on what action needs to be taken to close down some of the worst perpetrators. I hope that it is clear whether more consumer protection regulations are needed, and if so, that the Government are aware of that, because I am sure that all hon. Members would support such legislation. More people would be more willing to pass on examples of mail if they thought that something would happen as a result and that their complaint would not just be ignored.
I would like to know whether the OFT is working with Royal Mail to identify the companies that are sending out fraudulent and misleading letters, so that the Royal Mail will end their contracts. The letter that I received said that Royal Mail will do that if there is proof, but I suspect that only the OFT is in a position to prove whether mail is fraudulent. Has that ever happened?
When someone believes that they have been the victim of a crime, the first organisation to which they turn is the police, but if my constituent’s experience is anything to go by, the policeman or woman on the front desk will
be dismissive and say that the police can do nothing. Police forces should be aware that local trading standards offices or the OFT treat scam mail seriously, and an individual seeking help from the police should be directed to one of those organisations.
It is impossible to legislate to save people from their own gullibility, but some scams are so professional and so convincing that it is difficult to tell whether they are bogus. Even people who would not call themselves gullible cannot always tell. Is a charity called Feed My Children, which sends my mother gifts for which she has sent it money, legitimate? It has a website, but is that part of the charade? Mr. Lennox’s father-in-law also received letters from that charity.
It is easy to tell people that if something sounds too good to be true, it probably is. It is also easy not to be sympathetic to someone who has been taken in because of greed and because they thought that they would get something for nothing. However, it is worth remembering that a sizeable number of the people who are taken in by such scams and lose money that they cannot afford to lose are of a generation for which it is merely polite to answer mail.
I hope that the OFT will, in the words of its campaign, stamp out these scams, and I look forward to hearing what the Minister has to say.
5.8 pm
Alison Seabeck (Plymouth, Devonport) (Lab): It is a pleasure to be serving as a speaking Whip under your tutelage, Mr. Gale.
I congratulate my hon. Friend the Member for Aberdeen, South (Miss Begg) on securing this debate on an issue that is serious and distressing for both the victims and their families, and I share her concern. Sadly, it is often the case that the most vulnerable members of society are targeted by these conmen and criminals, and that makes the matter even more distressing.
The Government are committed to improving Britain's consumer regime, protecting and empowering consumers as well as being fair to business, which is a delicate balance. We recognise that our consumer regime needs to be more effective at stopping rogues and criminals and those who deliberately set out to defraud consumers, especially the elderly and vulnerable. My hon. Friend highlighted several cases, particularly that of Mr. Lennox’s father-in-law.
Tackling the menace of mass-marketed scams is a priority area for the Office of Fair Trading. Its research found that the UK public lose a massive £3.5 billion to scams every year, which equates to £70 for every man and woman in the UK. It is interesting, but not surprising that older victims of scams lose twice as much as other groups, the average being more than £1,200.
While an estimated 3 million people a year lose money to scams, the greatest impact is often felt by those least able to see through it or to deal with its consequences. Elderly victims, who are often socially isolated, over-trusting or suffering from illnesses such as dementia, can be repeatedly targeted by scammers. Many lose their life savings and suffer ill health as a result.
That is why the OFT takes the issue very seriously. In 2005, in response to a significant problem, the OFT set up a dedicated scambusters team to develop a long-term national strategy to combat mass-marketed scams. The
strategy is built on three pillars: targeted enforcement action; hard-hitting consumer education; and the destruction of the scammers’ routes to market.
Taking effective enforcement action is central to the strategy. The OFT has taken the lead in targeting mass-marketed scams that originate in the UK. Using its powers under the Enterprise Act 2002, the scambusters team has had a number of notable enforcement successes. It has secured High Court orders against a variety of scams, including a £17 million pyramid selling scheme, misleading prize draw mailings that were sent to hundreds of thousands of people to con them into calling premium phone numbers and, most recently, a bogus racing tipster who netted more than £200,000 from innocent victims.
The OFT also works closely with regional trading standards scambuster teams funded by the Department for Business Enterprise and Regulatory Reform. Those teams work closely with other enforcers, including the police, to tackle the range of scams that blight our communities. I am pleased that the Secretary of State for Business, Enterprise and Regulatory Reform was able to announce recently the extension of the trading standards scambuster teams. That will give trading standards an opportunity to bid for a share of a further £7.5 million extra over the next three years to tackle the toughest scams. That will help to build on the success of the past two years.
The statistics alone are impressive: £16 million-worth of fraud has been uncovered, £2 million-worth of criminal assets have been seized, and £3 million-worth of savings have been made for consumers. The OFT has been successful with the existing civil powers. However, while it has been successful, there are often outright crooks behind the scams. Therefore, I am delighted that we will be strengthening the powers of both the OFT and trading standards services later this year with the implementation of the Consumer Protection from Unfair Trading Regulations 2007. Those new rules will ban all types of unfair selling and marketing methods and, crucially, they will be enforceable through both the criminal and civil courts. That will ensure that appropriate action is taken against the prolific scammers and serve as a deterrent to others. In addition, the companies investigations branch of BERR regularly uses its powers under the Companies Act to investigate scams on consumers operated by limited companies, which has led to several such companies being wound up by the court and, in some cases, their directors being disqualified.
Unfortunately, as my hon. Friend rightly pointed out, scammers do not respect national boundaries. They often use borders to try to frustrate law enforcement. However, the OFT has taken the lead in tackling misleading prize draw mailings originating from within the European Union. It was the first public authority to successfully bring a cross-border court action under the injunctions directive 2004. Yet again, EU legislation has a positive impact on UK consumers. It acted to stop a Belgian mail order company from sending out millions of deceptive prize draw mailings to UK consumers. The OFT has also initiated court action in the Netherlands against a Dutch company for similarly misleading practices.
As my hon. Friend mentioned, the OFT has no jurisdiction to enforce consumer law outside Europe. However, it has been successful in building important links with international counterparts in more than 30
countries to detect and to act against the perpetrators of scams. For example, the OFT has formal enforcement co-operation agreements with partners in the United States, Canada and Australia, and is a member of two Canadian partnerships, based in Vancouver and Toronto, targeting the fraudsters behind many international sweepstake scams.
The OFT has also instigated an innovative policy of warning traders outside its jurisdiction that they should stop disseminating deceptive mailings to UK consumers. Indeed, that has led to a number of publicised successes in relation to misleading weight loss and prize draw mailings.
The OFT seeks to take strong enforcement action against scams wherever possible, but enforcement alone will not eliminate the harm that is caused. Great emphasis is therefore placed on educating and empowering consumers and equipping them with the skills that they need to recognise and to avoid scams. Key to success has been the effective targeting of the 6 per cent. of the UK adult population who fall victim to scams every year, and especially the hard-to-reach, vulnerable groups.
In addition, the OFT is developing resources aimed at delivering consumer education alongside basic skills learning in further education. Those resources aimed at further education tutors are adapted to suit a variety of needs in the UK. They will help develop adults’ consumer skills, knowledge and confidence while also improving their literacy and numeracy skills.
BERR also established Consumer Direct, which is now managed by the OFT, as the first port of call for consumers who have been wronged by traders. The helpline received more than 1.5 million calls last year alone. In addition, it has worked with local authorities across the country as part of its “scamnesty” campaign. In Dundee, Edinburgh and the Scottish Highlands, local authorities are placing bins in local libraries and other public places to encourage the public to report scams. That is providing crucial intelligence to the OFT to target new and emerging scams and to raise awareness with the public in general. That may be something that other hon. Members who participated might want to look at in their particular areas.
The OFT has focused on helping so-called “chronic” scam victims. Those are elderly people who are repeatedly taken in by scams. Victims may be too ashamed to admit that they have been scammed to family or friends—as confirmed by my hon. Friend—or simply refuse to accept they have been taken in, rationalising their failure to receive what was promised as bad luck. As a result, they do not tell anyone and often continue to send off money.
Working with partners such as local authority trading standards services, social services, Age Concern and Help the Aged, the OFT has undertaken a range of initiatives to raise awareness of the plight of elderly scam victims and to empower local support networks to protect them. As my hon. Friend has highlighted, the
launch of the OFT’s scams awareness month campaign this month focused on that particular issue. As part of its campaign, the OFT has run targeted radio adverts and launched a free booklet for carers and care professionals. The OFT material provides useful tips on how a repeat victim can stop being scammed.
Beyond that awareness raising, the OFT is delivering, in partnership with local trading standards services, advice to vulnerable elderly victims on a more personal, individualised basis. That often arises where the OFT becomes aware of potentially vulnerable victims through the interception of responses to scam mail. Family and friends are vital in that process. Obviously, if they fear that relatives or friends are being abused, they should report that either to local trading standards services or to the OFT direct.
A final plank of the OFT’s strategy has been to disrupt key choke points in the scam supply chain. Often, the services of legitimate businesses, such as postal operators, mailbox providers and money transfer agents, are abused to facilitate scams. My hon. Friend may be interested to know that the OFT is working with Royal Mail to finalise a protocol for facilitating requests for the suspension or termination of bulk-mail contracts that are being misused to distribute scam mailings to UK consumers. Obviously, Royal Mail has a duty to deliver the mail. As part of the OFT’s protocol with Royal Mail, Royal Mail has changed its standard terms and conditions to make it easier to terminate contracts where there is abuse. The OFT will continue to work with Royal Mail in that area.
I am also advised that the Advertising Standards Authority is working with Royal Mail to try to reduce the amount of abuse that potentially goes through the Royal Mail system. I hope that that slightly reassures my hon. Friend. The OFT has developed an information-sharing protocol with Mail Boxes Etc., the largest private supplier of mailboxes, to facilitate the rapid exchange of intelligence about customers who abuse mailboxes to facilitate scams.
The Government and the OFT are committed to tackling mass-marketed scams at local, national and international levels. I have heard what hon. Members have said about their lack of knowledge of what the OFT is capable of doing. I will take those comments back to the Department and see whether we can ensure that hon. Members are better informed—more directly, perhaps, by the OFT itself. Although much has been achieved, clearly too many people are affected by scams, so the OFT plans aggressively to use its new powers and criminal sanctions to detect, prosecute and deter scammers. Importantly, it also intends further to increase its engagement with overseas enforcement agencies to combat effectively what is a global phenomenon. It will continue to educate and empower consumers to recognise and resist scams.
Adjourned accordingly at twenty minutes past Five o’clock.
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