Digital Economy Bill

Written Evidence submitted by Electrical Safety First (DEB 05)

Digital Economy Bill

1. Executive Summary

1.1 Electrical Safe ty First believes the Digital Economy Bill must be seen as an opportunity to address longstanding concerns and legislative gaps relating to the sale of counterfeit electrical goods online.

1.2 With the Government proposing to target online copyright infringement whilst increasing consumer protections in this Bill , there is a clear omission in not protecting both consumers and UK business from the online sales of counterfeit goods which see copyrights infringed daily . We are pleased that MPs made reference to this in the Second Reading of the Bill, however there was no response to this issue from the UK Government.

1.3 According to the IP Crime Report 2014/15, a third of locations investigated for counterfeit goods are online – social media, auction sites and websites. [1] It is therefore more important than ever, moving forward, that legislation reflects the challenges facing the relevant authorities in tackling the sale of counterfeit goods, particularly those that are electric.

1.4 44 per cent of MPs surveyed in an Electrical Safety First research project, agreed that counterfeit electrical goods were a problem in their area. [2]

1.5 64 per cent of all counterfeit electrical products are bought online. Authorities, such as the Police and Trading Standards need to be equipped with the necessary legislation to tackle the sale of online goods; Electrical Safety First believes the Digital Economy Bill is a fitting Bill to help tackle this rising problem year on year.

2. Counterfeit Electrical Goods

2.1 According to research, in that last year more than 2.5 million people in the UK have bought a counterfeit item. [3] Research has also found that 64 per cent of all counterfeit products are bought online, with sales via social media growing 15 per cent. [4]

2.2 Some of the UK’s biggest and well-known electrical brands are being subject to counterfeiting; this is bad for the consumer and UK business. Brands which are invested in over time can be undermined through no fault of their own as a result of counterfeit goods.

2.3 The Bill could and ought to provide an opportunity to try and work to ensure that the counterfeiters have a reduced opportunity to sell through online portals.

2.4 The issues with counterfeit electrical goods include [5] :

a) Online shoppers are being misled by imagery taken from official product sites, fake official safety marks and believable pricing - items can even be priced just a few pounds below recommended retail value to avoid arousing suspicion.

b) The number of reported counterfeits in the UK has grown by 12% over the last 12 months, and these are just the ones we know about - counterfeit items are now extremely difficult to spot. Counterfeit electrical products are particularly risky as they often contain faulty parts that can overheat and catch fire or deliver a fatal electric shock. [6]

c) Social media has facilitated an increase in the distribution of unsafe products by 15% every year.

d) The market for counterfeit goods in the UK is estimated to be worth more than £1.3 billion per year, of which an estimated £900 million helps fund organised crime.

e) Counterfeiting has grown by as much as 10,000 per cent in the last two decades as manufacturing has become cheaper and easier. Counterfeit electrical products are thought to cause billions of pounds of damage every year, both in terms of the economic impact, fires and injuries.

f) It is estimated that fires caused by faulty electrical products are responsible for over 7,000 domestic fires a year. The Average estimated house fire cost is estimated at £44,500, leaving aside the human cost.

g) Trading Standards detained more than 6,500 electrical items a day in March 2015, and nearly two in five interventions at ports and borders resulted in items identified as unsafe or noncompliant.

h) Each counterfeit item removed from the supply chain saves the UK economy £30.80; detected items are thought to only represent a very small amount of the actual volume entering the country.

i) Research has highlighted that 7% of people have knowingly seen counterfeit products online; these figures are conservative estimates as counterfeits have become more convincing. [7]

j) Those people claiming to have purchased counterfeit goods - 64% purchased online, 16% at a market and 12% in a shop.

k) Many consumers believe that when they purchase goods from legitimate online retailers it is coming from a trusted source. This is often not the case as these sites acts as a portal for vendors.

l) Electrical items were among the top five complaints to Welsh Trading Standards in 2015. Last Christmas Wales TS acted swiftly in response to the national scare over dangerous hoverboards leading to 228 potentially dangerous hoverboards being prevented from getting on the market in Wales. [8]

2.5 Alongside the issue of counterfeit products there is also a problem with substandard electrical products entering the UK supply chain. These issues were highlighted during a Westminster Hall Parliamentary debate on 22 March 2016 [9] . We would urge the committee to look closely at the issues that were raised in the debate given their similarity to counterfeit electrical goods.

3. Our recommendations

3.1 Electrical Safety First believes that the Bill must include measures to tackle counterfeit electrical goods being sold online in order to protect consumers, UK business and the UK economy.

3.2 The Government must assess the extent of the problem with counterfeit electrical goods, a) the cost to the economy b) the amounts being imported c) the extent of the problem online.

3.3 An assessment of the effectiveness of legislation that is over twenty years old, such as the Plugs and Sockets 1994 regulations to prevent counterfeit electrical goods being sold and imported by online retail platforms, particularly items that are not compatible with UK legislation.

3.4 The creation of a new task force similar to ‘Operation Jasper’ to combat the sale of counterfeit electrical goods online.

3.5 A statutory obligation on trading standards to report counterfeit electrical goods seized.

3.6 A statutory obligation on online retailers to report people consistently selling counterfeit electrical products to the police/trading standards.

4. About Electrical Safety First

4.1 Electrical Safety First is the UK charity dedicated to reducing the 350,000 accidents, 70 deaths and 20,000 house fires caused by electricity each year across the UK. We believe that no one, regardless of age, income or where they live, should be put at risk of electrical faults in their home.

4.2 Through our work we have been raising awareness of the implications presented by counterfeit electrical goods for a number of years. Counterfeiting has grown by as much as 10,000 per cent in the last two decades and the trend is likely to increase in the coming years meaning ever increasing numbers of consumers will be put at unnecessary risk. Counterfeit electrical products are hazardous and they cause billions of pounds of damage every year, not only in terms of their economic impact and links to organized crime, but through fires, injuries and fatalities. [10]

4.3 In November 2015, we published a report entitled, "A Shocking Rip-Off: True Cost of a Counterfeit", which brings together evidence gathered from our extensive testing and research of counterfeit electrical products highlighting the risk they pose to public safety. Through this research we have found that In that last year more than one million people in the UK have bought a counterfeit item. This indicates a 12 per cent increase over the past twelve months, with 64 per cent of people now purchasing online often through well-known internet retailers. [11]

4.4 Some of the UK’s biggest and best-known electrical brands are being subject to counterfeiting; this is not only bad for the consumer, it is bad for UK business. Online shoppers are being misled by imagery stolen from official product sites, fake official safety marks and believable pricing.

October 2016


[1] IP Crime Report 2014/15 p 3

[2] Dods Research for Electrical Safety First, March 2016 http://www.electricalsafetyfirst.org.uk/mediafile/100757194/Parliamentary-Perceptions-of-Electrical-Safety-March-2016.pdf

[3] Electrical Safety First research - Ipsos MORI, 2016, 4% of UK adults

[4] Electrical Safety First research

[5] Electrical Safety First - http://www.electricalsafetyfirst.org.uk/mediafile/100492991/True-Cost-of-a-Counterfeit.pdf

[6] Electrical Safety First - http://www.electricalsafetyfirst.org.uk/news-and-campaigns/press-releases/2015/11/dangerous-fakes-being-sold-through-leading-online-retailers/

[7] Electrical Safety First - http://www.electricalsafetyfirst.org.uk/mediafile/100492991/True-Cost-of-a-Counterfeit.pdf

[8] Data received from the Welsh Government Association

[9] https://hansard.parliament.uk/Commons/2016-03-22/debates/16032228000001/FaultyElectricalImports

[10] Electrical Safety First - http://www.electricalsafetyfirst.org.uk/mediafile/100492991/True-Cost-of-a-Counterfeit.pdf

[11] Electrical Safety First - http://www.electricalsafetyfirst.org.uk/mediafile/100492991/True-Cost-of-a-Counterfeit.pdf

 

Prepared 10th October 2016