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10.25 am

Mr. Fabian Hamilton (Leeds, North-East): I congratulate my hon. Friend the Member for Birmingham, Northfield (Mr. Burden). I heard him on "The World at One" just before Christmas when he had won the lottery, which is held each year, for private Members' Bills. I was delighted that, subsequently, he chose this subject. Like my hon. Friends who have spoken and the hon. Member for North Cornwall (Mr. Tyler), I feel not only that it is a good choice of Bill, but that, in its small way, it will help a good number of people who have had money taken from them by deception by some of the more unscrupulous companies in the sector.

I support the Bill not only because my hon. Friend the Member for Northfield is one of my oldest friends--

Mr. Forth: Ah.

Mr. Hamilton: Let me get on to it. I support it also because the National Group on Homeworking is based in the city of Leeds. The group has done much good work. It is a lottery-funded project; it is independent; it campaigns, informs and educates and does a lot of research. It has a free telephone advice and information line, which I am glad to say is funded by the DTI.

We have all seen the posters and advertisements on the lamp posts, street furniture and street signs on major roads--for example, the junction of Canal road and Armley road, the major arterial route into Leeds from Bradford, which I often use when travelling into the city centre in Leeds. While waiting in the traffic, we look at those. That is how people often advertise.

During 2000, the National Group on Homeworking dealt with more than 5,000 calls to its advice and information line. The majority of those inquiries were from people looking for home-work employment. The schemes that claim to offer on-going work, which can be done at home in return for an initial fee or deposit, continue to be the subject of many calls to the advice and information line. Invariably, the callers have lost money already, or found that the claims were not justified. Even in cases where work was provided, no payment was forthcoming.

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During 2000, the National Group on Homeworking received 647 reports of people losing money to bogus home-working schemes. It calculated that the sum lost was more than £25,270. The reports named 211 different companies, some of which hon. Members have already mentioned. Neath Mailing Services seemed to be top of list--it was reported 122 times. Outworkers Direct was reported 72 times. The sums paid in advance ranged from £20 to £100. IS Trading was reported 56 times to the national group, with a payment of £20 being made in advance. Procraft International was reported 41 times. In that case, the sums paid ranged from £15 to £36. The list goes on.

One of the examples that was given to me involved a constituent of mine, Natasha Harris, of 21 Allerton Grange Vale in Moortown, Leeds. She was about to send money to a local home mailing scam in Bradford costing £10 until the West Yorkshire home-working unit advised her that she should not send the money. The scam is called DPMS. It is based at PO Box 1000 Bradford BD2 1XL. It even advertises in the Yorkshire Evening Post. Natasha works part-time from home at the moment and is one of those who could least afford to lose that money.

I move on to the question of premium telephone lines, in which I know the Opposition spokesperson, the hon. Member for Rutland and Melton (Mr. Duncan), has an interest.

The National Group on Homeworking made a number of complaints to the regulatory body, the Independent Committee for the Supervision of Standards of Telephone Information Services. I am pleased to say that many of the complaints were upheld and that fines were imposed. Baker Telecom, for example, operated an internet site that people could access on a premium-rate telephone line. As the company did not have permission to operate the telephone line, it was disconnected and the company was fined £500.

Eagle Promotions was fined £10,000 for breaching the ICSSTIS code, as was Select Publications. Seekers UK was fined £500, as was Westcliffe Associates. Although I have not read the details of those cases, I imagine that the penalties were imposed for the reasons outlined by my hon. Friend the Member for Northfield.

As we know, the Bill proposes banning up-front deposits from consumers for work at home or fees for directories containing such schemes. I am certain that the Bill will ensure that the money paid by premium telephone lines to the companies concerned is treated as an up-front payment. The Bill also aims to give trading standards officers the power to shut down bogus home-working schemes quickly and to take action against the organisers. It also imposes a fine of up to £5,000 for each offence against a member of the public and a criminal record for those who break the law. Finally, it aims to close the loophole allowing the scams to be advertised.

At any one time, about 300 bogus operations are known to be operating across the country. Without the action that the Bill makes possible, that type of bogus activity will continue and could involve 1 million victims or more.

The National Group on Homeworking sees only the tip of the iceberg. As we have heard, there are many variations on the schemes, including envelope stuffing,

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typing, kit construction, teleworking, craft work and marketing. One 70 year-old man sent a £40 fee in return for work to do at home. Rather than being asked to do that work, however, he was asked to recruit other jobseekers to the scheme and to send in more money. Later, he sent £20 in reply to another advertisement but received only flyers from other companies wanting up-front money.

One woman wanted to earn some money while she was looking after her young child. She was asked to pay a £98 registration fee in exchange for internet work. She was then encouraged to take out a significant loan to buy a home computer. Nine months after she had paid for the equipment, she had still not been supplied with any work.

One company found a very imaginative scheme. It placed its postcard advertisements in post offices, but distributed a £1 coin to those who replied. The company's modest initial outlay prompted responses from more than 103,000 people who sent the company the minimum registration fee of £25. Consequently, the company netted more than £2,575,000. Those who paid the £25 fee--£24 excluding the £1 that they received--were never employed by the company and did not hear from it again. There are many other similar examples.

I hope that the Bill is enacted. It would save so many people from the rip-off merchants who steal money from those who are often the most vulnerable in society. It would go a tremendous way towards ensuring that those who want and need income from home working are far better protected from unscrupulous companies that feel they can get away with theft, which is what it is.

10.34 am

Mrs. Linda Gilroy (Plymouth, Sutton): I congratulate my hon. Friend the Member for Birmingham, Northfield (Mr. Burden), who has a long track record of supporting consumer issues in the House. I particularly welcome the support that he gave to my Fireworks Bill, which was not enacted because it was much further down in the ballot. I sincerely hope that his Outworking Bill has greater success, which it should have as he has won first place in the ballot.

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I encourage the hon. Lady to elaborate towards the Chair.

Mrs. Gilroy: Hon. Members have already mentioned the support given by the National Group on Homeworking, citizens advice bureaux and trading standards officers across the country, who are in the front line in trying to tackle the important issues we are discussing. As hon. Members may know, I am, I think, the first member of the former Institute of Trading Standards Administration--now known as the Trading Standards Institute--to be elected to Parliament. Before joining that institute, I undertook study leading to a diploma in consumer affairs.

I well remember one hot summer's day, travelling up on the inter-city line from the west country, doing some last-minute revision for that qualification and reading the legislation applying to the issue that we are now seeking to address. The subsequent exam contained a question on whether current legislation was sufficient to stop the type of scams we are discussing.

Legislation is available to be deployed against such scams, but, like so much legislation, it is a bit convoluted. One could attempt to apply, for example, the provisions

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of the Control of Misleading Advertisements Regulations 1988 or of part III of the Fair Trading Act 1973, which deals with rogue traders. However, use of those provisions would require a great deal of work by trading standards officers to ensure the effectiveness of a crackdown.

Hon. Members often claim that current legislation is sufficient and that more is unnecessary. Sometimes, however, more can mean less. More can be less if a tighter focus on the real challenges facing enforcement agencies makes it possible to lessen the time required to bring a prosecution. That is the intent of this quite narrow, but focused Bill. More can be less also if the new law makes it possible for the precious time of public servants to be used more effectively. More is certainly less if a clarification and tightening of the law increase the chances of successful prosecutions.

Moreover, if we can successfully drive out crooked operators, we shall be able to create a virtuous circle in which less is the basis for more, but more of what is good--such as more certainty for honest businesses so that they can trade in a fair environment. Hon. Members have already addressed that issue in detail.

Honest businesses will abide by paragraph 54(4) of the British codes of advertising and sales promotion code of practice. Last year, a review by the Advertising Standards Authority found that 11 in 14 advertisements failed to comply with the code. The finding would seem to be sufficient evidence that a voluntary approach to the issue has been ineffective. I am all for voluntary approaches when they work, as they often do. However, for such approaches to work, a large proportion of the companies in the sector must subscribe to the code and belong to the relevant trade association. That is a key principle. Clearly, with outworking, the bogus operators fall well short of observing that principle.

As my hon. Friend the Member for Northfield said, these schemes cynically and cold-bloodedly target the most vulnerable members of our society: pensioners, carers, the disabled, lone parents, those with learning difficulties or poor communication skills or anyone who is not able to work outside the home, but wants to do something to raise their family's income.

Hon. Members may not understand how significant the lack of basic communication skills is for some of our constituents. In our sophisticated modern world, we need to tackle these issues. In Plymouth, Sutton, some 30 per cent. of people have greater-than-average difficulties with basic skills. A playwright from my constituency, Sue Torr, has brought her award-winning play "Shout it Out" to Westminster. I challenge any hon. Member who does not understand the issue to borrow my video of the play and to try to put themselves in the shoes of someone who has low or no basic literacy skills.

Such people, if they have employment, will almost always be in low-paid work, typically as cleaners, as Sue Torr herself was before she took to the theatre. I hope that such people are now protected from exploitation by the minimum wage. However, despite that, it is often difficult to make ends meet. Luxuries such as birthday presents, or sudden crises such as washing machines breaking down, are huge problems if debts have been run up because of previous pressures. A bit of wishful thinking in response to advertisements such as those we have heard about today, which hold out the prospect of a quick, apparently legal and easy way to earn money, is understandable.

2 Feb 2001 : Column 582

Of 684,000 home workers--as we have said, the bona fide industry, will be protected by the Bill--65 per cent. are women. One was the Paignton woman referred to in the briefing from the CAB. The hon. Member for North Cornwall (Mr. Tyler) has referred to a number of west country people who have suffered from these scams. The woman paid £40 for a kit; it was returned as unsuitable because of the work she had done on it. The second kit was also returned. When she tried to get a refund on unused kits that she had paid for, she was refused.

Plymouth's environment and consumer protection department considered a project to try to head off this attack on our vulnerable and poor constituents as part of a wider social inclusion project. Frequent press releases from the department warning of the pitfalls of such schemes seem to have had a limited effect. After seeking clearance from the legal practice, it was decided to investigate the extent of the problem. That took up the expensive time of the legal practice. Under the Bill, such test projects clearly would be legal.

The first and novel approach was to monitor how many people would respond to an advertisement for home working in the Plymouth area. With the consent of the editor of our local paper, the Evening Herald--a well-known campaigning newspaper, which won the regional newspaper of the year award last year--the trading standards unit placed the following fake advertisement:

The advertisement concluded with a PO box number. If an inquiry was received at the consumer advice desk, the instruction was to give the usual advice of not sending any money. In all, about six inquiries were received at the advice desk, and 21 people sent £10. Their money was subsequently returned with a covering letter, warning them of the potential high risk of losing their money in future if they replied to other such schemes.

The second part of the social inclusion project attempted to assess for legality and value for money 10 examples of similar get-rich-quick schemes advertised in Plymouth. Sums ranging from £3 to £39.50 were sent to 10 companies advertising various schemes. After six months, no reply had been heard from eight of the 10. It must be presumed that the advertisements were bogus and that the people behind them were the only winners. This can be taken only as a serious indictment of any similar schemes asking for money up front.

Trading standards departments in the localities of the companies that advertised were given the addresses; I hope that they were able to find time to follow them up. Of course, that is partly what the Bill is about: making such schemes illegal so that trading standards do not have to go to such lengths to crack down on them.

Of the other two schemes, one company asked for a further £35 for a starter pack of leaflets, address labels and envelopes. The work advertised involved inserting the leaflets into envelopes and attaching address labels. The decision was made not to send the company any more money--quite wisely.

It was discovered that the 10th scheme involved an illegal chain letter whereby, in order to get involved, money had to be sent to people further up the chain. With

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one's name on the list, the scheme promised £50,000 income within 60 days. That is a matter for the Office of Fair Trading, which, along with the Post Office, was notified. One method of dealing with the problem would be to outlaw demands for money up front and for premium-rate telephone calls. Like other hon. Members, my understanding is that the Bill covers that. If not, we can return to the matter in Committee.

Replying to one such local premium-rate advertisement cost £4, with no work opportunity offered. Although ICSSTIS tries to tackle this matter, the current framework is insufficient to clamp down on it. The conclusions drawn from the project showed that people are desperate to obtain extra income and will spend money that they can ill afford to lose to get such work. There is huge profit in operating such unethical and already illegal schemes, but it is difficult to enforce the law. There is an urgent need for legislation. The second part of the project reinforced the fact that these are important issues. Work is continuing in Plymouth to warn citizens of the possible risks of losing their money if they get involved in such schemes. The project was drawn to the attention of the DTI and has, no doubt, informed my hon. Friend the Member for Northfield in drawing up the Bill.

When I was elected, my constituency had the poorest ward in England. We have made huge progress in tackling unemployment and, crucially, in improving literacy and the communication skills that people need to help them make informed assessments. Quite simply, however, we still have a steep hill to climb when it comes to tackling social exclusion issues. Our resources for doing so are precious.

The Bill will make the law clearer and easier to enforce. It will allow trading standards officers to do their job better, faster and more effectively. It will stop poor constituents wasting money on crooks. It will play a small but important part in addressing social exclusion and create a fair trading environment for those businesses that are honest and above board. I support my hon. Friend the Member for Northfield and wish his Bill well.

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