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Scams

Volume 472: debated on Wednesday 20 February 2008

Thank you, Mr. Gale, it is a pleasure to be here under your chairmanship.

I am pleased to have secured a short debate on an issue that has a devastating effect on the lives of people throughout the United Kingdom. I am sure that, like me, all Members of Parliament have been contacted by constituents because either they or a relative have been the victim of a scam of one sort or another, be it a mail scam, an internet scam, a door-to-door salesman scam or a get-rich-quick scheme that seems too good to be true. There is even an internet dating scan, which was exposed just last week on “Tonight with Trevor McDonald”. It is a sad reflection of life today that large numbers of fraudsters are constantly trying to trick people—often elderly and vulnerable people—out of money that they usually cannot afford to pay.

Few people will not have received a scam letter or e-mail. Most of us recognise those for what they are: clever ways of pretending that if people send a cheque for £20, for example, they will win £5,000, or if they phone a number they will hear that they have definitely won a prize. Of course, that phone number is for a premium line and by the time that people have learnt that they have not won the phone call has cost £10. I am sure that even you, Mr. Gale, have received such communications.

Most of us immediately bin such letters and e-mails, but some are sufficiently convinced that if they send the money or make the phone call they will receive money, but they never get anything back and even when the evidence of their own experience should be telling them that this is a scam, they continue to be taken in. We know that that is so, because if there were no return for the fraudsters they would stop. However, instead, they produce even more elaborate letters and become even more sophisticated.

I shall confine my remarks to mail scams and I shall explain why I asked for this debate today. Over the years, a number of constituents have come to me with sacks of mail all demanding money in return for a promise, a gift or a poor-quality item. My advice has always been to put any further letters of that kind in the bin and never to send any money. One lady asked if I could get her money back and I had to say no. One gentleman went to the police with the catalogues for cheap, sub-standard goods that he had bought, but they told him that there was nothing that they could do because the goods originated from outside the United Kingdom. I was not able to help that man get his money back, no matter what bad value the goods were.

My constituents knew that they had been taken for a ride, but they did not want to admit that they had been so gullible as to believe the promises. They just wanted the mail to stop. However, ironically, as long as the mail kept coming, they were constantly tempted to reply because they could not distinguish what might be real from what was part of the scam.

Towards the end of last year, a constituent of mine, Gordon Lennox, came to see me because he was concerned about what had happened to his father-in-law, who had died in the summer. Mr. Lennox and his wife only became fully aware that her father, Robert Somerville, had been the victim of multiple scams after he died. At that stage, his mail was redirected to their house and they got control of his bank accounts.

They had suspected that something was going on, because when he was in hospital he used to get very agitated about not being able to pick up his mail. He even went so far as to take taxis from hospital to his home to pick up his mail because no one else would bring it in. Even so, Mr. and Mrs. Lennox were flabbergasted when a deluge of mail arrived addressed to Mr. Somerville. I have one week’s worth of his mail in front of me. When they saw how much he had been paying out, they were even more amazed. In three weeks in May last year, he had sent £650 to fraudsters, trying to claim prizes that they said he had won. Mr. and Mrs. Lennox think that he must have spent between £6,000 and £7,000 during the last year of his life. That was all the money he had, because he was an 87-year-old pensioner who lived on the basic pension and only had attendance allowance as a supplement. He even incurred £240 of bank charges while in hospital because he was still sending money, but had not been able to get to the bank to pay money in.

Mr. Lennox says that his father-in-law was like a gambler and had become obsessed. But he was also of a generation that believed what was written in the letters it received. Why would he not believe that? The letters were addressed to him personally; they were emphatic in their promises; some of them looked like real invoices and real cheques; and sometimes they contained gifts that he felt obliged to pay for, especially when they appeared to have come from a charity. He was also of a generation that believed that it was only polite to reply to mail. However, he did not realise that the more money he sent, the more scam letters he received. By this time, he was on the suckers list, so his name and address were a saleable commodity.

Much of the mail that Mr. Lennox’s father-in-law received was in envelopes with a Royal Mail stamp, even though many of the return addresses were abroad. When he came to me, Mr. Lennox told me that he felt that there was a moral obligation on Royal Mail and that by accepting such bulk postings it was profiting from illegal activity. In his view, that should be illegal, too. He also felt that, as a public company, Royal Mail had a responsibility not to aid and abet people who were making money by deception.

In November 2007, I wrote to Royal Mail expressing Mr. Lennox’s view that it had a responsibility not to take money from people who were clearly fraudsters. The reply that I received said that there was little that Royal Mail could do:

“We are prevented by the Postal Services Act 2000 from opening or interfering with post. The Act requires that Royal Mail as the Universal Service Provider delivers the mail to the intended recipient as set out on the address/letter.

We are also governed by our licence to ensure (Condition 8 - integrity of the mail) that we take steps to ensure that the mail is not interfered with between the sender and the intended recipient. It therefore is not possible for Royal Mail to intervene in mail as the carrier.

This issue is also covered under the Act where statute 83 states that, ‘A person who is engaged in the business of a postal operator commits an offence if, contrary to his duty and without reasonable excuse he intentionally delays or opens a postal packet in the course of its transmission by post or intentionally opens a mail bag’.

The letter continues:

“there are prohibitions within the Act”—

such as on sending creatures, something that “is likely to injure” someone else, or “indecent photographs”. So there was no joy from Royal Mail; it appeared that it was not going to accept any responsibility for what was in the envelopes that it took money for delivering. The only part of the reply that gave any hope was a paragraph that stated:

“Royal Mail will cancel the contract of a company if it is proved that its mailings are fraudulent or misleading.”

Who is the judge of whether the contents of the letters were fraudulent or misleading? It is the Office of Fair Trading.

I received that reply in November, and I had intended to apply for an Adjournment debate in December or January, but had not got round to it, so I was delighted when I came across a press release from the Office of Fair Trading saying that it had designated February as scams awareness month. That was music to my ears, because it meant that someone was taking the issue seriously, and I was pleased to hear about that initiative, which is called “stamp out scams”.

The OFT has produced a new booklet for carers and care professionals on how to recognise scams, and how to deal with them.

I congratulate the hon. Lady on securing this debate. Does she agree that it is not only the Office of Fair Trading, but local communities, local Members of Parliament and local elected representatives who must raise awareness of the issue? The only way of stamping it out is to ensure that people do not respond, so that there is no profit to be made.

I could not agree more, and I was going to suggest that the OFT should communicate directly with Members of Parliament to say that it has a locus in the issue and is interested in receiving complaints. I was not aware that that avenue was open to me. I was aware of the local trading standards office, but I was not aware that the OFT would treat the matter as seriously as it does. I have since discovered that the OFT has a scam buster unit, and is interested in the problem. I hope that the Minister will tell us how the OFT wants to take the issue forward.

I am grateful to the hon. Lady for raising the matter, and for informing us that February is stamp out scams month.

Before Christmas, I pointed out to the Office of Fair Trading what I would call a scam on our high streets with games and consoles being bundled together. I hoped that in the run-up to Christmas, people would be able to buy what they wanted to without games being unnecessarily bundled in to hike up the price and put families into debt. Unfortunately, I did not see much action as a result of my correspondence with the OFT, but I hope that during this month it will try to stamp out that scam also.

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.

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.

Question put and agreed to.

Adjourned accordingly at twenty minutes past Five o’clock.