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The Office of Fair Trading reports that 3 million people a year fall victim to scams using post, text and e-mail. With the credit crunch, the scammers’ target has become some of the most vulnerable people in our society. Although we do not want to take a nanny-state attitude to protection and regulation, it is clear that such unfair practices must be sorted out.

Susan Kramer (Richmond Park) (LD): I wish that I could have made a speech, but I have to attend a meeting. Is my hon. Friend aware, however, that the protection available to consumers who make purchases from salespeople who come to their property—the salesman might have come to see them after they answered an advert—is far weaker than that available to those who make purchases over the internet or by post? If the salesman comes to their property, consumers no longer have the right to cancel their order if the goods are not what they expected, although they would have that right if they purchased the goods over the internet or by mail. The problem often impacts on vulnerable people.

A salesman from Willowbrook, which provides recliner chairs, visited an invalid in my constituency, who ordered some chairs. When the chairs arrived, they were not of the right dimensions and did not provide the therapeutic effect that the customer thought they would. However, she could not cancel the order and get her deposit back, because she had ordered from a salesman who came to her house. I wonder whether my hon. Friend can work with the Minister to see whether this egregious loophole can be remedied.

Lorely Burt: I am grateful to my hon. Friend for that example. The answer to her question is that I was not aware that there was less protection for someone who orders from a salesperson at the door. I hope that the Minister will specifically address the issue, because that loophole clearly should not exist, particularly given that door-to-door salespeople often target more vulnerable people with their sales patter.

We have all been told that we have won a prize draw and that we have to send a fee to get the money. When we read the small print, however, we see that we are only being entered into the draw. We have all had e-mails saying that we have won a foreign lottery prize, but anyone who takes up the matter—I have not—discovers that the prize does not exist. We have all heard of the entreating e-mails from Nigerian business people who cannot spell and who need our help to get a large sum out of the country. We have also heard of boiler room scams, with cold callers offering shares and property investments, which might exist, but which are usually wildly overvalued if they do.

Another trend is the increase in pyramid selling. The practice is illegal, but it is thriving, especially on the internet, and the credit crunch makes it particularly tempting. Bernie Madoff is one example. Ponzi schemes are widespread, and one in my area of Birmingham targets women, telling them that they can make £21,000 in weeks. Pyramid selling is already illegal, but we need a lot more consumer awareness, particularly among vulnerable groups who do not realise what is involved.

The hon. Member for Edinburgh, North and Leith mentioned builders, and everyone probably knows somebody who has fallen victim to cowboy builders who have done a job that is incomplete or of insufficient
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quality. If the consumer pays the bill, there is, as the hon. Gentleman said, no redress and no incentive for the company to come back and make good the work, which should have been done properly in the first place. One lesson that I recently learned at the hands of a builder is that people should never pay the final sum until they are completely satisfied.

A constituent ended up with a bill of £30,000 for a new drive. The builder kept finding more little jobs to do, saying, “I’ll just do this for you,” and my constituent ended with a huge bill. I intervened. Trading standards said that everything was perfectly legal, but the threat of being exposed by an MP had some effect, and my constituent did not end up paying the whole amount.

Mark Lazarowicz: The hon. Lady is giving very good advice, which applies to many builders, but will she deal with the situation that I highlighted of people who move into new properties? They do not have the option of retaining the money, because they have to pay to get into the property. They then have the problem of dealing with any difficulty, but they have no easy way of forcing the builder to do so quickly.

Lorely Burt: I listened carefully to what the hon. Gentleman said about new build. As he said, the national house builders body is supposed to deal with the issue, but the time and energy involved in getting redress on behalf of properties’ new owners is totally inappropriate. Will the Minister tell us how the situation could be more appropriately and speedily dealt with?

A constituent of my hon. Friend the Member for Montgomeryshire (Lembit Öpik) was a victim of an internet scam after he ordered a mini digger from eBay. When all the paperwork was done, it was agreed that there would be a five-day trial. He thought that he was giving the money to the eBay solicitor, and everything was documented. He paid £5,900 and was told that the digger was being shipped, but it never arrived. According to eBay, the problem was nothing to do with it, because the payment did not go through its approved system.

The European Commissioner for Consumer Affairs, Meglena Kuneva—apologies to her if I have pronounced her name incorrectly—said that the privacy rights of internet surfers are abused by companies that amass personal information and supply it to advertisers that target consumers without their knowledge. I loved the quote from her in which she said that

Again, this is a serious problem, and we need to address it in what are changing times in the area of communication.

The hon. Member for Edinburgh, North and Leith mentioned holidaymakers and a company acting as a front for a more well-known company, which then takes no responsibility when things go wrong. I am sure that the Minister will have some comments to make about how that can happen.

My concern is about holidaymakers who book their holidays themselves. When things go wrong, they are not covered by ABTA. The hon. Gentleman talked about First Choice and First 4 Hotels, and I agree that
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ABTA should take more responsibility—it cannot be a fair-weather friend. It is hugely important that the issue be addressed.

Another issue about which we have had a lot of complaints in Solihull is mobile phone contracts. The contract details look good—in fact, they look great, with cash back and all sorts of other offers—but the small print ties people into long contracts with the same phone. The cash back never materialises unless people meticulously pay the relevant amount on the exact day. In 2007-08, Consumer Direct received more than 100,000 complaints about mobile phone contracts. The terms of those contracts and all other credit contracts should be made clear and understandable. Perhaps an organisation should have the responsibility for scrutinising small-print contracts; if they are not up to scratch, they should not be legally valid.

Businesses are not exempt from scams, including free listings in business directories, which however mean that a company unwittingly signs up to pay for advertisements in bogus charitable publications, hard selling and grossly overpriced goods.

There is also, of course, the problem of companies going into liquidation, described by the hon. Member for Edinburgh, North and Leith. There is an answer that we could use simply and cheaply to expose serial liquidators of all kinds in business: a requirement for the director of a company that goes into administration to register in a centrally kept register of administrations. Someone thinking of supplying or being supplied by a company could go to the register to see how many times its directors appeared there. That would be a simple way to help companies that might lose their livelihood because of the cynical financial manipulation of bumping a business and going on to create another.

We can welcome two things this morning: first, the consultation on the European consumer credit directive, which has many good elements, including a general clause on defining unfair practices. Secondly, as the hon. Member for Edinburgh, North and Leith said, we can look forward to the White Paper on modernised consumer rights. We do not want to stifle innovation or bring about a nanny state, but somewhere in our consumer regulation, there should be a principle of basic fairness, which should not be contravened.

As my hon. Friend the Member for Richmond Park (Susan Kramer) mentioned, we need protection with respect to door-to-door salespeople and the time allowed for goods to be returned. We also need the register of administration for serial liquidators, and better consumer advice, especially about communications media such as the internet, particularly for young people who buy things on the internet and discover, if those things are faulty and do not reach the required standard, that they are not confident about getting redress.

11.33 am

Mr. Geoffrey Clifton-Brown (Cotswold) (Con): As I said in the previous debate, it is a great pleasure, Mr. Sheridan, to serve under what is I believe your first chairmanship in this Chamber. It is also good to see the Minister; and I congratulate the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) on the very reasonable way in which he put across the problems in his constituency involving dealing with a property
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company at Corinthian Quay, the holiday company, First Choice, and look-alike websites. I want to deal with all three problems in the brief time available to me. I am also pleased to follow the hon. Member for Solihull (Lorely Burt).

Of course, consumer affairs is a tremendously broad term, covering all interactions between the entities that consume—principally, the general public and small businesses—and those that supply, which are often large firms. There is quite a lot going on, both by way of Government changes and, as the hon. Member for Solihull said, through the European consumer rights directive. We welcome the merging by the Government, on 1 October 2008, of Energywatch, Postwatch and the National Consumer Council, to form a new statutory consumer watchdog, called Consumer Focus. The new organisation fights to secure a fair deal for consumers throughout the United Kingdom. It has the right to investigate any consumer complaint, provided that it is of wider interest to the public, the power to conduct research and the ability to make an official super-complaint about failing services. It would be interesting to hear how the Minister feels the new, merged organisation is doing, particularly as there is now such a narrow focus in the ownership of the energy markets. Some accusations have been made of cartel activity in the energy markets and energy pricing, particularly in relation to fuel poverty.

The hon. Member for Solihull referred to the consumer rights directive, which the current European Commission is considering, although it will of course probably have to be put through by the new Commission when that is adopted, probably in November. For the record, the proposal represents the most far-reaching change for European consumer law to date. It brings together four existing pieces of community legislation—on unfair contract terms, sales and guarantees, distance selling and doorstep selling—into a single horizontal consumer rights directive. It would be interesting to hear whether the Minister feels that the legislation on doorstep selling indeed deals with the points raised in an intervention by the hon. Member for Richmond Park (Susan Kramer) about the differences between guarantees affecting doorstep selling and selling on the internet.

The Minister for Trade, Development and Consumer Affairs (Mr. Gareth Thomas): I should perhaps have intervened a little earlier in response to the query by the hon. Member for Richmond Park (Susan Kramer). My understanding of the legislation on doorstep selling is that it offers the same right as in any other case to reject goods if they are not as they were described. The doorstep selling law also gives people a seven-day cooling-off period after the making of the agreement, in which to cancel it. I hope that that will deal with the concern raised by the hon. Lady; but if she or any other hon. Member taking part in the debate has further information or concerns about the working of the provisions, I shall be happy to discuss them in more detail.

Mr. Clifton-Brown: That clarification is helpful. The problem with the legislation is enforcement. We all know about fly-by-night doorstep sellers, and although I am wary and would not expect to be sucked in by such a salesman, many people are; if those people receive faulty goods, how do they know who the salesman was? How can they find him again and enforce any law
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against him? That is the difficulty for consumers. No doubt, the hon. Member for Richmond Park will contact the Minister if I am not correct.

The hon. Member for Edinburgh, North and Leith raised an important subject: the Corinthian Quay development in his constituency, the parent company, Elphinstone, and the fact that the subsidiary company providing the building contract, Holyrood Services Ltd, went into administration. That continues to be a problem in the building industry, because of the recession, among other things, and the fact that many building companies have difficulty in making ends meet. People make quite a number of complaints about the buying of new homes. I declare at this point that I am a fellow of the Royal Institution of Chartered Surveyors. I have a few general comments to make about the purchase of new properties.

The purchase of a property is not subject to the Sale of Goods Act 1979 or the Supply of Goods and Services Act 1982, which cover the majority of purchases, and consumers are left without adequate protection in a high-value risk field. At present, most regulatory protection is aimed at sellers rather than buyers. Since the Consumers, Estate Agents and Redress Act 2007 came into effect on 1 October 2008, which I welcome, every residential agent selling property in the UK must be registered with an approved redress scheme. As estate agents act principally for the seller, the buyer has relatively little redress under the scheme. Although estate agents are not obliged to tell buyers every last detail about the property—they are, after all, making a sales pitch—they must answer buyers’ questions accurately and to the best of their ability.

We have a list of typical complaints, to which the hon. Gentleman alluded, which broadly fall into the following categories: time taken to finish a building; misdescription or misrepresentation of the property or area; the contractual process after the exchange of contracts; inability to gain access to snag the property before completion; quality of finish on moving in and the time taken to come back and rectify the faults; absence of customer care; no legal right to damages or compensation, even if major problems with the property cause significant disruption or loss of amenity; and dissatisfaction with the actions of the National House-Building Council—however, when I had a complaint about one of my own properties, I found that the NHBC could not have been more helpful.

In July 2007, the Government announced an increased target of 3 million new homes to be built by 2020, so we will probably get even more of those types of complaint. It is incumbent on the Government to see whether consumer protection is adequate in that area, particularly in the light of the hon. Gentleman’s remarks.

The hon. Gentleman mentioned a company in his constituency, First Choice, and the role of ABTA, which is the industry regulator for the holiday sector. It publishes a code of conduct that requires, among other things, tour operators and travel agents to provide consumers with relevant and accurate information to help them make choices on their holiday and related products, including insurance. However, as the hon. Gentleman probably knows, in 2006, ABTA lost its Government seal of approval after it reduced the amount of financial protection that it offers holidaymakers: the organisation that represents the majority of UK travel agents and tour operators will no longer refund tourists
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who have been sold non-existent holidays by fraudulent agents. The Office of Fair Trading has stated that, given that change to ABTA’s code of conduct, it cannot back the revised scheme because it does not offer the same financial protection to consumers.

Current trends in the holiday market, as reported by ABTA members themselves, show that 68 per cent. of people are prepared to increase their holiday budget this year and that the average spend on holidays this year is expected to be £600 per person. However, despite the number of people willing to spend their money, even during the economic recession, there appears to be an issue—I would be grateful if the Minister addressed this point—and indeed a legal loophole whereby ABTA members can subcontract the provision of travel insurance, which is not unusual in itself, to non-ABTA members who do not subscribe to the code of conduct. Therefore, someone who thought they had bought insurance to cover the failure of their holiday could suddenly find they were insured with a company that would not provide for that. That allows for the provision of insurance that does not provide the same information or that supplies reduced cover.

I have already quoted from ABTA’s website, but it would be interesting to give hon. Members another quote from it:

As I have pointed out, there is probably a legal lacuna in that, which the Minister will need to look at carefully.

The third subject that the hon. Member for Edinburgh, North and Leith mentioned was the cloning of Government websites and lookalike websites. Many Members might have seen the horrific story reported by Matt Warman in The Daily Telegraph on 6 January 2009 about a fake Government website:

That seems to be a horrific scam, and the Government need to take it very seriously indeed. Having lost large amounts of data, the Government need to reassure the public and the consumer that data on Government websites are secure and that there is a clear way of knowing whether those sites are genuine. The penalties for that type of cloning should be severe when proved.

There is a related issue of counter-espionage cyber attacks on both Government and commercial computer systems in Britain, Germany, Australia, New Zealand, India and the USA, and they are thought to have probably originated in the far east. Such an attack caused a cyber riot that shut down banking and
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Government websites in Estonia for weeks after the deployment of new and sophisticated software, such as the so-called storm worm. Some threats to personnel and to commercial and national security are known to exist. Much of that cyber crime feeds on cyber carelessness and companies underestimating the risk.

The Government need to take aggressive, intelligent and persistent action against those threats, but some commentators have said the Government’s approach to the increased threat of cyber crime lacks co-ordination, focus and urgency. Perhaps the Minister ought to look to the United States, which has had its Internet Crime Complaints Centre, IC3, for seven years. It was established as a partnership between the FBI and the National White Collar Crime Centre. IC3’s mission is to serve as a vehicle to receive, develop and refer criminal complaints regarding the rapidly expanding area of cyber crime.

Those are just some of the large number of areas relating to consumer protection. The hon. Member for Solihull raised other areas—it is a big field. New scams are coming along all the time, and it is impossible for any Government regulatory authority always to be ahead of the game, but I have no doubt that clever people are looking at all those things. There used to be an insufficient number of technical people within the enforcement agencies to keep ahead of the game, so we now need to ensure that we have some of the best people in IT and in other skills to counteract those increasingly widespread scams. The problem is that they are now not only domestic in the UK, but tend to have a worldwide reach. Information gained, as the hon. Lady said, through credit card and banking scams means that large amounts of money can be shifted around the world merely at the touch of a button. I do not envy the Minister, because he has a huge job to do, but it would be interesting to hear his views on some of the issues raised today.


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