One-day sales

HC Deb 07 February 1996 vol 271 cc289-96 12.30 pm

Mr. Gordon Prentice (Pendle)

Thank you, Madam Deputy Speaker, for allowing me to raise an issue of immense concern to my constituents and to many other people throughout the country. In Lancashire, there is a scourge of one-day sales, and people are being comprehensively ripped off by silver-tongued professional swindlers.

Last October, a one-day sale was run in my constituency by William Stephen Beach, of Albert road, Cheltenham. In the previous Session of Parliament, in my early-day motion 1497, I described Mr. Beach as an unscrupulous and wholly disreputable fraudster and cheat". Beach was previously a director of Gloucester Fancy Goods Ltd. and J. B. Sales (Gloucester) Ltd., both of which are now dissolved. I believe that he is currently a director of Table Top Marketing Ltd. and Steve's Cash and Carry.

Last October, I outlined Beach's technique. He breezed into the area, having booked venues for his sales at the Great Marsden hotel in Nelson and the North Valley community centre in Colne. He leafleted the immediate area around the venues and conned people into believing that the boxes of goods that they bought contained top-quality merchandise that was bankrupt stock. In fact they were getting cheap shoddy rubbish. Beach then disappeared like a puff of blue smoke, until I tracked him down in Cheltenham.

My constituent, Mrs. Lana Ellerton, ended up with two pillows and a clock that she did not want, and she was typical of many people. She told me that people were put under immense pressure to buy goods.

I was so incensed by what had happened that, last October, I called on the Government to review the law on consumer protection and to find out how it could be more effectively applied. Unfortunately, on 30 October, the President of the Board of Trade told me that the Government had no plans to change consumer protection law as it related to liquidation and similar sales. I sincerely hope that the Government will now reconsider their position, and act.

After the experience with Beach, I called on the local council to ban one-day sales on council-owned premises, telling it that local people were being ripped off and that local traders were losing business to fly-by-night operators. Pendle council voted to ban sales in its properties, but unfortunately it displayed a misplaced generosity of spirit in allowing bookings already in the pipeline to be honoured.

At that stage, enter Mr. Steve Johnson, of 2 Princess street, Blackpool, who for £69.30 booked Barnoldswick civic hall on 23 January for what was described as a public sale. I have a copy of his leaflet, heralding an Important Announcement Owing to the harsh economic situation and collapse of many well known companies there was to be a public sale at Barnoldswick civic centre. Goods advertised for sale included a Kenwood food mixer for £8, a Black and Decker cordless powerdriver for £10, a Super Nintendo for £15 to clear, Philips, Sony, Panasonic, and other top of the range videos for £30 each, a 2 in Casio television for £10, and electronic personal organisers for £5. Please come early to avoid disappointment", said Steve Johnson. Beat the Recession and get a bargain of a lifetime", said Steve Johnson. Definitely no gimmicks, no tricks—just good value … We give 100 per cent. value—Not promises … Guarantee on all goods". All that was pure fiction.

On the leaflets that were circulated in Barnoldswick there was nothing to say who was responsible for the sale, nothing like the imprint that one would expect on political leaflets to be circulated in a general or local election; they were anonymous.

Steve Johnson knows precisely what he is doing. He is taking good money from innocent people who believe they are getting a bargain that is literally fantastic. People look at the platform piled high with goods, and willingly suspend their disbelief. They think that they will get a bargain. Johnson preys upon those people; like Beach before him, he is an evil calculating cheat and con man.

At the one-day sale at Barnoldswick on 23 January about 80 people turned up, and they left hundreds of pounds lighter in their pockets and purses. They say that they were sold cheap shoddy goods, and that misrepresentation was rife. The quality brands mentioned in the leaflet, such as Panasonic, JVC and Sony, were not there—or if they were they were not sold. They were stage props. If such goods are ever sold, they are sold only to stooges in the audience.

Johnson targeted an area of Barnoldswick for his phoney "star bargains" and "no gimmicks" sale. For obvious reasons, he did not advertise in the local press. That would have given the game away and alerted people to what was happening. Instead, 24 hours before the sale, he distributed a blizzard of leaflets with no imprint, and people duly turned up, wondering what to expect.

The caretaker of the hall, Mr. Lou Farr, told me what happened. About eight people turned up in a clapped-out van. He said that they had southern accents—but that is not a hanging offence; I do not hold that against them. While 80 people clamoured to get in, Steve Johnson and his friends put plastic bin liners over the windows so that people could not look in and see what was happening.

The goods were brought in by the back door and piled high, and at half-past seven the sale started. There were a few sweeteners. Video tapes and cassettes were sold for £1 or 50p. Torches in blister packs that would ordinarily retail for a tenner were sold for £1. After about 15 minutes, the doors to the hall were closed, a couple of heavies were stationed outside and latecomers were told that the sale had started and were turned away.

At that point, Johnson and his team of rogues moved into top gear. He started piling boxes of goods into plastic bin liners, saying that ghetto blasters, toasters and other goods worth £300 were there for the asking, and that he would take only £60 for them. Twenty-seven people fell for it. They bought goods that were not top of the range merchandise but inferior shoddy rubbish manufactured in China, Taiwan and other such places.

The con did not stop there. People who bought goods were told that they could not open their purchases during the sale—only afterwards. They were asked to leave a blank space for the payee when writing cheques. One victim, my constituent Mrs. Yvonne Farrelly, said that Johnson agreed to take cheques only up to a limit of £100 and if they were backed by a cheque guarantee card, so she wrote four cheques totalling £320 for her purchases. She told my local paper, the excellent, campaigning Barnoldswick and Earby Times: Don't be ripped off like I was … The hi-fi cost £60 and I am sure in my own mind that the organisers said that it was a CD player. However, when we opened up the box, it only plays cassettes and you can buy the same thing from Argos for just £34 … There are no guarantees in the box or nothing". Johnson claimed that the goods had guarantees. Mrs. Farrelly added: I consider it to be a complete rip-off. She also bought a camera for £60 and told me that it was worth £10. Twenty-seven people bought a cheap clock radio for £10 and were promised that they would get something three times as valuable at the end of the evening. They never did.

Given the fuss that I created in October by drawing the matter to the attention of the House and contacting my local council, I was furious when I discovered what had happened on 23 January. On Sunday, I got in my car and drove from Pendle on the Lancashire side of the Lancashire-Yorkshire border to Blackpool to beard the lion in his den—I was going to have it out with Mr. Steve Johnson—but the shutters of his shop were down and he was not about. I took photographs of his shop, which I have distributed among the local papers, and I tried to telephone him, but the contact number that he gave the council when booking the hall was unobtainable. I suspect that he has not paid his telephone bill and BT has cut him off. The sign outside the seedy, crumbling corner shop off the front in Blackpool from where Mr. Steve Johnson operates says that fancy goods and gifts are for sale and that there is also an adult section.

I want a very bright spotlight to be shone on the swindler Johnson, and I do not want him or his friends ever to be within 30 miles of my constituency. One-day sales always end in tears. People who cannot afford to shell out money, who live on council estates and in poorer areas are targeted and find themselves paying out good money for rubbish.

The problem is not confined to my constituency or Lancashire; it occurs elsewhere and it is growing. Last year, the Financial Times estimated that about 90 such crooks were operating in the United Kingdom. Last year's annual conference of the Institute of Trading Standards Administration was told that fly-by-night operators were of increasing concern, especially in seaside towns.

There is protection at the moment, but it is inadequate and limited. The Trade Descriptions Act 1968, the Consumer Protection Act 1987, the Sale of Goods (Amendment) Acts 1994 and 1995 and the Sale and Supply of Goods Act 1994 are good but they do not go far enough. It is often virtually impossible to track down people such as Johnson and Beach for the reasons that I have already given. Commercial leaflets, like political leaflets, should carry an imprint of the name of the person organising the sale and the business address and telephone number of the salesman or saleswoman. By law, a sign should be displayed outside the sale's venue explaining the purpose of the sale—whether it is a liquidation sale or a bankruptcy sale, for example—and again stating the name and address of the sale promoter.

Trading standards officers should be given adequate notice of sales. The North Yorkshire County Council Act 1991 already provides for such notice, but obviously applies only to North Yorkshire, next door to Lancashire. That provision should be extended nationwide. I want local authorities to give Johnson, Beach and other such crooks a very wide birth and not to allow them to hire council premises unless the council is prepared to take out joint liability so that if there were misrepresentation or people were defrauded and the sale promoter could not be tracked down, the council hiring out the hall would be liable.

I am not a single voice crying in the wilderness. The chief trading standards officer of my county council, Mr. J. H. Potts, has been in touch with me. In his letter of yesterday, he says In my 25 years experience"— in trading standards— I have to say that the majority of itinerant traders operating 'rostrum' sales of general goods (rather than the specialist suppliers e.g. textiles pottery, paintings etc or who allow consumers to browse and self select goods) generate high numbers of consumer complaints and often mislead customers into buying shoddy goods at high prices. The Mock Auctions Act 1961 is totally ineffective". I know that that is true. Mr. Potts says that, although the Act controls "free" gifts, restricted bidding and "reduced" bids, they are easily evaded by fast-talking salesman. How true that is. Like me, Mr. Potts wants, at the very least, the introduction of national legislation, and at best, the licensing of all one-day sellers. He reminds me that licensing already operates in the credit industry and for street traders, for example. It must be the right way forward to require one-day wonders to trade fairly.

I hope that I have made it clear that one-day sales are an absolute scourge and that the people responsible for them are loathsome because they target among the poorest people in our communities. I request that the issue not be put to one side as something trivial, but that the concerns of so many people be responded to and that action be taken.

12.47 pm

The Minister for Competition and Consumer Affairs (Mr. John M. Taylor)

I certainly do not think that one-day sales are trivial. I congratulate the hon. Member for Pendle (Mr. Prentice) on raising the matter again. I have listened to his speech with great interest and I am glad to have the opportunity to set out the Government's views.

A one-day sale is, as the name suggests, a sale held on only one day, although the term is often applied to more permanent sales that use similar sales techniques. Generally, the sales are held in public halls, hotels and other such local venues, which are hired for the purpose. Attention is usually drawn to the events by extensive local advertising, which will often take the form of leaflets delivered door to door, although advertisements also frequently placed in local newspapers.

To make such events attractive, most offer fantastic bargains of some sort. Various reasons are given for the ability to offer such bargains. It may be claimed, for example, that the event is a warehouse clearance, or that the goods are stock clearance lines or bankrupt stock.

One-day sales need not, of course, be in any way fraudulent. Some traders offer genuine bargains to the public in this way. Unfortunately, in the past 18 months or so in particular, there have been an increasing number of complaints about one-day sales involving operators who are less scrupulous about the selling methods that they adopt. I am aware that feelings can run high as a result of the way in which many sales are conducted. The practices employed by operators are many and varied.

Essentially, the salesman—who generally conducts the sale from a rostrum like an auctioneer—spends a long time convincing customers of the bargains on offer. A few genuine bargains are usually distributed, although it is alleged that they are often passed to accomplices of the organiser. The salesman builds the atmosphere to a pitch at which customers are persuaded to purchase lots, often consisting of unspecified items, in the belief that they will receive some of the valuable items they were shown or told about earlier. What they receive is generally worth a fraction of what they pay—as was the case with the hon. Gentleman's constituent—and are not the goods that tempted them in the first place.

At a typical sale, the salesman will hook his audience by offering a single item at a modest price—usually around £5. He will suggest that purchase of the item will show that they are genuine bargain hunters. He may even pass disparaging remarks about those not showing what he often calls their good faith in this way.

Often, non-buyers will be asked to leave. After seeing piles of expensive electronic goods practically given away, they are asked to pledge a larger sum for unspecified items.

The salesman might say something like, "I want to see all your hands up now. Who will give me £50 for what's on my mind?" All hands usually shoot up at this point. If they do not, he will affect to give away more bargains. As soon as most customers indicate their willingness to buy, the salesman has reached the point he was aiming at. The money is then collected and goods handed out, but not visibly. They are distributed in black plastic dustbin liners.

The customers will be told not to open the bag until they get home, and they are given various reasons for this—perhaps it would cause too much litter in a crowded hall, or it prevents those who have not purchased from satisfying their curiosity. People usually comply. As soon as the salesman judges that he has squeezed the maximum amount out of his audience, he will close the proceedings and everybody will be quickly ushered out by his heavy accomplices. Anybody returning to complain usually receives short shrift.

Many of the one-day sales that are causing problems have similarities to a mock auction. Organisers of one-day sales, however, are now tailoring their techniques so as to fall outside the scope of the Mock Auctions Act 1961. The Act made it an offence to promote, conduct or assist in the conduct of a mock auction. A sale of goods by way of competitive bidding is a mock auction if various conditions are met. These are: a lot is sold to a buyer at a price lower than his highest bid; or part of the price is repaid or credited to him; or the right to bid for any lot is restricted to persons who have agreed to buy other articles; or any articles are given away. Organisers of new-style one-day sales are now careful to avoid using the actual techniques that would classify the sale as a mock auction, although they may lead unwary participants to react as if the sale were a mock auction. Publicity literature often emphasises that the sale is not an auction. Goods are no longer given away, but are sold at giveaway prices.

While no statement may specifically be made about the right to bid for any lots unless something else is purchased, there is an implication that that is the case. Prospective purchasers are asked, for example, to show their genuineness by making a small standard purchase and are told that they will not be disappointed by subsequent bargains if they do. Quite often, those not taking part are asked to leave. The salesman conducting the sale will not offer any money back, but may suggest that, on top of any purchase that is made, purchasers will be given other items of great value.

One-day sales are by no means as prevalent as were mock auctions in their heyday. Although one-day sales take place throughout the country, they appear to be attributable to a comparatively small number of operators. Some are quite permanent sales that use similar selling techniques. These are generally situated at places where the organisers can rely on a constant stream of new customers—for example, at seaside resorts or shopping centres of major cities where tourists are found. Many such sales are held at empty shops without the owner's permission. When the organiser is eventually evicted, he will merely move on to a similar unoccupied shop.

There is a considerable body of consumer protection legislation that is relevant to one-day sales and it has already been used by enforcement authorities at various times. The Sale of Goods Act 1979 provides that a buyer can expect goods that he purchases to be as described, and of satisfactory quality. There is also the Trade Descriptions Act 1968, which makes it an offence for a person to give—by whatever means—any false or misleading information on a wide range of characteristics of the goods he supplies or offers to supply.

In addition, the Consumer Protection Act 1987 makes it an offence to give a misleading price indication. Furthermore, if the organiser issues a misleading advertisement and will not withdraw it, the Director General of Fair Trading has powers under the Control of Misleading Advertisements Regulations 1988. Ultimately he can seek an injunction to stop the advertisement.

In the late 1970s, the Director General of Fair Trading considered the question of one-day sales in detail. He concluded that there was insufficient evidence of economic detriment to support a call for new legislation to control such events, but he publicised the dangers of one-day sales that use mock auction techniques. He advised consumers to be on their guard at such sales. Once enticed by the prospect of a bargain, it is only too easy to be caught up in an atmosphere skilfully created and manipulated by the salesman and to part with large sums of money for items of little value. That advice is as valid today as it was then. The director general has also taken action and given warnings in a number of cases where the law was infringed, using his powers under part III of the Fair Trading Act 1973.

Mr. Gordon Prentice

May I bring the Minister forward to 7 February 1996? A report in today's Daily Express states that Department of Trade and Industry officials are looking at whether legislation might be needed for one-day sales. Can he confirm in the time remaining to him whether that is the case?

Mr. Taylor

I confess that I have not read the Daily Express this morning, but I can assure the hon. Gentleman that, under my instruction, DTI officials will continue to consider the problem.

Some trading standards departments have suggested, and the hon. Gentleman has today reiterated, that further legislation is necessary to deal with the problem— for example, by amending the Mock Auctions Act 1961 or introducing a nationwide requirement reflecting the provisions of the North Yorkshire County Council Act 1991, to which the hon. Gentleman referred. The Act requires organisers to give 21 days notice of a one-day or occasional sale with a description of the goods for sale and the names and addresses of the organisers, and the name and address of a person appointed to receive and answer complaints about the sale. The organisers must also describe whether the sale is to be held on other days, the extent of the premises to be occupied and an estimate of the number of people who will attend.

One of the deficiencies of public life is that it is impossible to legislate for human nature, particularly when our fellow citizens—acting in good faith and good hope—are being manipulated by the kind of rogues to whom the hon. Gentleman has referred. My officials have periodically discussed the issues raised by one-day sales with trading standards officers, and they will shortly meet the Local Authorities Co-ordinating Body on Trading Standards and other trading standards representatives to review the situation. We shall continue to keep the situation under review.

I hope that that reply confirms to the hon. Gentleman that we are fully aware of the problems that some one-day sales can create. We share his concern, and I believe that the consumer needs to be very wary. I am not at present persuaded, however, that that wariness can be aroused effectively by further legislation.