HIGH-PRESSURE SALES PRACTICES (Hansard, 14 May 1965)

§ Mr. Robert Maxwell (Buckingham)
On a point of order, Mr. Speaker. My Motion on the reduction of the voting age has not been reached. I wondered 967 whether I would be entitled to move the suspension of Standing Orders?

§ Mr. Speaker
No. The Question is, That this House do now adjourn.

§ Mr. Norman Dodds (Erith and Crayford)
I am pleased that once again I have the opportunity to expose an aspect of the scandalous exploitation of consumers by slick businessmen, with techniques cleverly designed and ruthlessly and blatantly carried out on an increasing scale that clearly reveals the weakness of our consumer protection laws. The instigators of this technique hail from America where, because of the introduction in recent years of stiffer consumer protection laws energetically carried out by the Federal Trades Commission, they have found it more and more difficult to exploit the American public.
In Britain, however, they find a happy hunting ground amongst an increasingly affluent population, where the dice is so heavily loaded against the consumer and misleading advertising so prevalent. This importation from America is a menace of some magnitude and there is a further danger in that our own "wide boys" are quick to pick up ideas which give quick and substantial returns.
I have mentioned the Federal Trade Commission in America. Its two principal purposes are to take action against monopolies and to protect consumers against false or deceptive advertising, or commercial practices. Today, the time available enables me to deal with only a narrow aspect of the exploitation of consumers. To those who would like to know more about the rackets which are going on I recommend a first-class book on the subject, "A Foot in the Door" by Elizabeth Gundrey. I only wish that I had the time to deal with some of them, particularly the racket with hearing aids and the exploitation of the deaf, but this must be left to another occasion.
Today I am concentrating on two firms which are really one under two different names, the Concert Hall Record Club and Vitasafe Plan (England). I was informed on reliable information yesterday that they are part and parcel of the 968 greatest mail order business in the world and their activities, therefore, are immense. In fact, I have been warned on two or three occasions that so powerful are they that I shall be knocking my head against a stone wall if I endeavour to protect consumers in this respect.
The Consumers Council, which is doing an excellent job, has issued a strongly worded statement on the activities of these two firms and I congratulate the Council on its public-spirited action on behalf of consumers and on the valuable work which it is doing. I should like also to express my appreciation of the Daily Mail which has done so much in research to warn the public about the blandishments and blackmailing techniques of the sharks in its midst, and I think that Mr. Harry Longmuir in this respect has done a wonderful job of work.
The Concert Hall Record Club and Vitasafe Plan (England) use a mail order technique. The public is invited by advertisements in newspapers and magazines to fill in an original order coupon for records or pills to be sent, and they are delivered through the letter box. This is known as inertia selling, because the prospective customer whose name is on the coupon becomes a regular customer until he fills in cards saying that he does not want any more. If he does not fill in the cards, he must take the trouble to pack and return further supplies, or he is charged for them.
In theory, this does not seem to be too much to complain about, until one sees how it works out in practice. There are many instances—I have hundreds of letters and there are many other sources where letters have been received—in which even when the cards saying that the pills are not required, or that one does not want to become a member of the club, have been signed, the deliveries continue. There seem to be two different sections, that seeking the business and delivering the goods and a legal department which is the whole basis of the tactics which make people pay up rather than face the threat of being taken to court.
The principal shareholders are American, Mr. David Josefowitz, a director until recently, and Mr. Samuel Josefowitz. Their names have appeared 969 prominently in cases in the American courts. The corporation, in the American courts, while it did not admit any violation of tie law, agreed to what is called a "cease and desist" from certain advertising sales practices. That was in 1957. It signed the order, and that was the end of that case.
Last September it was found that it had not conformed with the order and the organisation was fined £6,000 for nine violations of the 1957 "Cease and Desist" order. One of the most important things to be remembered about these activities is that, while solicitors' letters are going to all and sundry in thousands of cases, they are printed just as one would print letters. They are absolutely the same. Often the person's name does not appear, or the date. The threat is that if people do not pay they will be taken to court in seven or 14 days. There is no record of court action being taken in any single case, despite the flood of threats to do so. This is not surprising, because under the law there is no basis for them. No contract has been entered into and therefore there is no basis for court action, but these unscrupulous people use the threat of court action to extort money which they would not otherwise get.
This is a big business. In the past two years the Concert Hall Group has made trading profits of £135,000. The managing director, a Mr. Leonard Joseph, came to Britain in 1963. His right-hand man and co-director is Mr. Lionel Phillips, formerly a partner in the London solicitors' firm which sends out pre-printed letters threatening legal action against non-paying customers of Concert Hall and Vitasafe. The name of the solicitors is Alan, Edmunds and Phillips. There has been remarkable criticism about the way in which this firm of solicitors fits into what is a department of a trading concern. The criticism has been such that the Law Society has asked for all letters of complaint to be sent to it so that it can look into them.
In a letter which I received yesterday, Mr. Joseph says that the Concert Hall Record Club employs over 300 people and does several million pounds worth of business per year and maintains several hundred thousand accounts and 970 customers. I believe that there are 240,000 accounts in this country. But for the slick practice of obtaining names and addresses, it would be only a shadow of that number if the business was conducted properly.
Companies operating a mail order system from adjacent premises in St. Ann's Crescent, London, S.W.18, are Concert Hall Record Club Limited, Vitasafe Plan (England) Limited, the Corsano Company Limited and Leisure Arts Limited. Concert Hall is a majority shareholder in the last three companies. In addition, Concert Hall Record Club operates a department of "Voice Improvement Service" which advertises and supplies records and vocal exercise books. A further company, Heron Books, Ltd., also operates from this address.
The activities of the Corsano Company Limited were publicised during September and October when promotional literature for the "Encyclopaedia of Sexual Behaviour" was widely distributed. The Corsano Company was acting as direct mail retailer of this publication. The complaints were that the promotional literature was often addressed to minors and was considered undesirable. Now the Corsano Company promotes an adjustable tailor's dummy for home use and sells a beauty treatment course. Complaints have been made that goody paid for in advance were not supplied until three months later.
With regard to the Concert Hall Record Club Ltd., here is a letter I received yesterday. It states: We have had dealings with the Concert Hall record club and have been inundated with sales literature offering not only records, but expensive books, vitamin pills and other commodities. After a time we wrote asking for our membership to be terminated. We continued for a time to receive offers of records and ultimately began to get demands for payment for a record, not ordered, which we had received. After the third demand, threatening legal action my wife, on April 20th, forwarded a cheque to clear this amount. Despite this, we received yesterday the enclosed letter making a further demand for this amount which has already been paid by the above-mentioned cheque. That is to say, three weeks after the cheque had been sent, payment was still being demanded.
971 The letter that is sent by Concert Hall Record Club is as follows: I have today advised our solicitors…Alan, Edmunds & Phillips, to institute immediate legal proceedings against you for the collection of the amount indicated on the enclosed invoice, one week from today. In the meantime I have asked our Auditors to prepare an itemized statement of your account so that when it is transmitted to our solicitors legal proceedings can be initiated immediately. In short, unless full payment is received from you immediately your debt will be in the hands of our solicitors and on proceedings being instituted, in addition to the amount you already owe us we shall ask for such legal costs as may be appropriate. To avoid this, I suggest you remit by special delivery or telegram if necessary the full amount indicated on the enclosed invoice. That is a mass-produced letter that is sent out in thousands, putting the wind up many people who owe nothing whatever but who have received records or tablets which have been sent to them, even when they have never filled in the form, but the firm claims that a friend or someone else has filled it in. The "No" card which is sent back is often received by the people at a date later than they would be able to send it in to stop these pills or records coming to them.
I should have liked a whole day in which to read out some of the letters; that, of course, is asking too much. To show one or two aspects, however, here is a letter which was received recently from Exeter: … you may be interested to hear that a record arrived here on Saturday, May 1st, addressed to a Mr. H. Pateman of this address. From inquiries I have made it appears that Mr. H. Pateman died at least five years ago and his widow left this address somewhere around July, 1962. Obviously this record must have been sent entirely unsolicited, or did Mr. Pateman rise from the dead and send in his order? Here is another, from Burnley: I ordered, paid for and received a collection of three records…. On examination I found that two of the records were the same. I returned one of them with a request for a replacement. After writing several times to them I received a handwritten note requesting the return of the remaining two records. These were sent back to them, at my expense. Since then, in spite of many requests for either a set of records or the refund of my money (£3 5s. 6d.), I have heard nothing. I can only conclude that the firm is either inefficient (which I do not believe) or is inherently dishonest. 972 I believe the second of those suggestions and there is a wealth of evidence to prove it.
Here is another: Dear Parents, We have much pleasure in inviting you to enrol your child as a founder member of 'Children's Corner' … we are making you this exceptional offer: to give your child the opportunity to enjoy a richer and more interesting life". And so it goes on. The recipient of that letter ends with these words: Incidentally, I am a single person". The clock is against me and I do not have time to read out as much as I should like to show exactly what people are putting up with and the way in which they are driven almost to become nervous wrecks by the continuation and barrage of solicitors' letters. There are, incidentally, many doubts whether these solicitors' letters come out of a solicitor's office, but there is much evidence to indicate, with the names they bear, that they are solicitors' letters and that they come from part of the department which is concerned with this business. The Pharmaceutical Society of Great Britain, giving its opinion, says that as far as it is aware no member company was responsible for the marketing of Vitasafe preparations and that if a pharmacist were to resort to this reprehensible form of advertising the statutory committee would consider taking disciplinary action.
I was very much interested in what a judge, Judge Lane, in the courts in America declared: This representation is false and misleading. The evidence produced at trial conclusively proves that the above designated symptoms or conditions were caused by and associated with a great number of serious pathological diseases. Further, although some of these symptoms may be associated with vitamin and mineral deficiencies, the likelihood of their being caused by or associated with vitamin or mineral deficiencies is very small. He estimated that this was true of about 20,000 people out of 180 million in America. Yet the advertisements read, "Everybody needs this." The judge said: There is a danger involved in this type of labelling in so far as a person having one or more of the above-listed symptoms may resort to a Vitasafe product as a cure. Such a person may continue taking this vitamin product for a long continued period, as he is 973 urged to do in the labelling of this product, and thereby fail to obtain competent medical help to correct his physical illness. There are letters from all sorts of people indicating the great dangers which arise from advertising of this nature. They are sent even to people who do not want them, to people who have tried them and know they do no good.
I have letters here to show that there is some suspicion that these advertisers are obtaining the names of people who are being treated under the National Health Service, and whose fears are being played on in this way. I have here a letter addressed to a man in Ward 19 in a hospital.
I would not say it, under the protection of Privilege here in this House, if I did not believe it to be true, but I believe that professional men are being used to extort money, solicitors who know full well that there is no intention to take people to court because they know that there is no contractual agreement as a basis for legal proceedings against them. If we have this weakness in our consumer protection laws it is one which should be closed sooner rather than later.
My hon. Friend can do a great service to the public today by warning them that when they have not ordered these goods, or if these goods have been ordered in somebody else's name, they do not have to worry about solicitors' letters because the solicitors themselves know that there is no basis in law for their writing the threatening letters and that what they are doing is extorting money from people whom they frighten, but people who have never been in debt and would never be in debt but for these unscupulous sharks who will increase in numbers if we do not curb them. These people receiving these letters are decent people, and they and good decent business people find themselves at a great disadvantage. It is the job of this House to protect the people, and warn them of the dangers in this business.

§ The Minister of State, Board of Trade (Mr. George Darling)
My hon. Friend the Member for Erith and Crayford (Mr. Dodds) has done a great service in bringing this matter forward. It will render an even greater one if we can get publicity for it, drawing attention to the fact, 974 which is perfectly correct, that people who receive unsolicited goods through the post are not called upon to pay for them. They can keep them. They are under no obligation to post them back or to involve themselves in any expense of any kind. Indeed, it might be possible, if they did get involved in legal proceedings, to make a charge for storing the goods until the firm which sent them took the trouble to collect them. I am glad to have again this opportunity of saying that people are under no obligation to pay for goods sent to them without their asking for them.
The other kind of device used by the Concert Hall Record Club does not perhaps, on the face of it, seem so unreasonable in that it is supposed to be confined to people who have taken the initiative by writing for a low-price introductory offer or something like it. In practice the result is much the same, and we have received, as my hon. Friend has, complaints from people who have received goods without answering an advertisement, or even making any request of any kind. They have had demands for payment for goods they have not ordered. Sometimes the excuse is put forward that the goods were ordered on their behalf by somebody else.
Whether that is true or not one does not know. Certainly, many people who have written for these free introductory offers did not appreciate that if they did not send the card back they were going to go through all this business of having the records, or vitamin pills sent on to them month by month with requests for payments coming in. We have also had evidence—I do not know how weighty it is in relation to the total number of customers—of people who say they have sent the "No" card back, but still they have received the goods and the threatening letters insisting that they pay up.
It may be that the system which is being operated lends itself to mistakes. This is the explanation put forward by the firm concerned. They say that they have examined some of these complaints, and it seems that there has been a mix-up in the office or an administrative muddle of some kind. They say it was not their intention to practise the methods my hon. Friend has been complaining about. The firm also say, in regard to 975 records at any rate, that they have several hundred thousand satisfied customers. I do not propose to comment on that because these are matters requiring examination and investigation. But I would say that a system which lends itself to such mistakes and which causes members of the public the sort of worry and trouble described in some of the complaints I have seen and heard described today by my hon. Friend is surely an undesirable one to say the least. It ought not to continue; or at least it ought to be tightened up very considerably.
I understand that the advertising industry shares the view that this method of trading is undesirable, and that the responsible body will be making its views generally known about this as soon as possible. I understand that it recommended to its Members in December that advertisements should not be accepted from companies using this type of trading method. This recommendation has been generally adopted. I also understand that some of the advertisements which have appeared since then have, in fact, been under contracts which were entered into before December.
My hon. Friend has suggested that legislation is necessary to prohibit the sending of unsolicited goods through the post. We do not need legislation for this, 976 as I have explained. The recipient of unwanted goods is well protected by the law as it stands, which provides that he cannot be obliged to accept and pay for goods which he has not ordered or to go to the trouble and expense of returning them. In regard to Vitasafe Plan, the problem he raises is one which I should like to look at in conjunction with my hon. Friend the Minister of Health because I think that Section 6 of the Food and Drugs Act gives sufficient legal protection against misleading advertisements, if the advertisements are, in fact, misleading.
We shall look into that. These are methods of trading which, to put it on its lowest basis, the public find very irritating. This business of troubling people with persistent letters, asking them to pay for goods which they have not ordered, is something which we can, and must, bring to an end. We can do it by giving the greatest amount of publicity to the legal situation which obtains at the moment. I am very glad that my hon. Friend has given me the opportunity of saying these things, and of adding to the publicity job which he is doing so well.