§ Mr. Ben Chapman (Wirral, South)I am delighted to have secured this debate this afternoon and to have the opportunity of raising an issue of considerable concern to my constituents and others. Members of Parliament receive a phenomenal volume of mail, both junk and other, which we effectively solicit because of the nature of our work. As well as being a Member of Parliament, I am also a consumer and private citizen and in that context I receive my share of the 21 billion pieces of unsolicited mail that are sent to British citizens every year and the 14.5 billion spam e-mails that are sent every day, apart from countless telephone calls and text messages. Those constant intrusions have become part of our everyday life.
When picking up the post in the morning or checking our e-mails, we are accustomed to filtering out countless unsolicited adverts and offers. I have with me just one unsolicited offer that I received this morning telling me that I have reached the third and final stage of a £130,000 prize draw and that all I have to do to claim my winnings is to send the form back and do the necessary. We have become used to filtering out paper mail, but that applies less to e-mails and text messages. The barrage of junk correspondence constantly arriving in our homes constitutes an invasion of privacy. Now that text messaging has fallen prey to the same misuse, unsolicited messages and interruptions are sent not only to our homes but to our person.
People shy at the thought of their names, addresses, employment details and retail patterns being sold between companies and find that abhorrent. The sheer volume of unsolicited mail that is delivered in the post should not be underestimated. Last year, more than 78,000 tonnes of such mail ended up in landfill sites throughout the country. Most of it was probably never read. The industry is based on the premise of extreme over-production and if one in 1,000 recipients takes note of the mailing, the exercise is probably worth while. Mr. Colman may have made his money from the mustard that was left on the side of the plate, but wastage from ill-targeted junk mailing is uneconomic and poses an environmental hazard. With due regard to environmental concerns in 21st Britain, I do not believe that it is sensible or sustainable for the cycle of self-serving over-production and waste to continue.
There is a difference between direct mail and junk mail. Many UK charities use direct mail to generate much-needed awareness and to raise funds. The umbrella term "direct mail" incorporates many an enterprise of great substance and moment. As a sales medium, direct mail accounts for an estimated £25 billion of goods and services purchased by British consumers each year. That is why it is on the increase. Many reputable banks and businesses operate a direct mail system on entirely legitimate terms. Clearly, direct mail has a valid role to play, but it is the prevalence of junk mail that obscures its worth and blurs the lines of recognition for consumers.
Greater targeting of direct mail is necessary, as are improved measures to eliminate junk mail. Eliminating junk mail is relatively complex, as one man's—or woman's—junk mail is another person's important bit 122WH of correspondence. Direct mailers do not aim to send junk mail. It is, however, in the nature of the industry that marketing pitches are based on speculation, so although targeting is positive, wastage will always occur.
Apart from the industrial waste and hassle that unsolicited mail can cause, numerous other consumer protection issues arise from it. Misleading advertising, offers and prize draws are often delivered through direct mail. The Office of Fair Trading has issued warnings regarding unsolicited promises of cash and prizes, but its substantive involvement is relatively rare. The standard scam involves sending letters, texts or e-mail containing announcements of cash prizes to individuals, often the vulnerable. They are always personalised in a way that gives them a pseudo-legitimacy. They are, for example, addressed to the individual at their home address and make references to the area in which they live.
One becomes familiar with such scams and quickly learns to put them in the waste bin. With newer forms of communication, however, that familiarity is not yet established. Even direct mailers need to cater for the people who are vulnerable to these scams. People are often urged to send a small processing fee so that their good fortune can be realised. Of course, it is not good fortune but the opposite. Individuals who respond are not only fleeced of their money but are put on hit lists of the gullible so that they can be targeted again, no doubt with promises of bigger prizes or free gifts.
A variation on the scam is that the recipient must ring a premium line phone number to claim their prize. They are put on hold while they listen to various announcements, perhaps answer one or two questions and, I imagine, listen to music while they are waiting. They are on the line for minutes at a time and the cost soars. The person responding often does not know that they are incurring costs as they do so. They are certainly unaware of the level of those costs. Some scams even have people signing up to hospital insurance plans or transferring money to Nigerian bank accounts. Others simply require them to fill in a form to claim their winnings. I received one such form this morning.
The stop now orders, which came into force in June 2001, facilitate EU-wide action against the problem. However, misleading mail emanating from outside the Union is still almost impossible to act on. The Consumer Protection,(Distance Selling) Regulations 2000 provide for protection of the consumer when involved in transactions that do not involve face-to-face contact. However, individuals rarely pursue the offending companies via this mechanism, perhaps because of the size of the losses or embarrassment at their foolishness.
Credit cards are another favourite of direct marketers. Although much of this trade is legitimate, there have been numerous cases o f companies duping consumers into taking on an account without knowing about the various strong repayment clauses that are hidden in the small print. The Department of Trade and Industry has recognised the problem, as have industry leaders, and the Association for Payment Clearing Services is co-ordinating work on behalf of the industry on transparency initiatives such as the new honesty, or summary, box.
123WH All this serves to highlight the problems inherent in distance selling, which can be exploited by anyone wanting to make a quick buck. The issue of companies sending unsolicited credit ca rd cheque books to consumers remains, and I appreciate the fact that the Minister acknowledged the problem in the House. We await moves by the credit industry to address the issue.
British consumers currently owe £48 billion in outstanding debts to credit card companies. That is twice the public sector bcrrowing requirement. Consumer credit also feeds into the problem. There are currently 215,000 licences for traders to lend money under the Consumer Credit Act 1974, although I understand that the legislation is under review.
Household debt is an increasingly huge problem in the UK and across the developed world. Currently, hundreds of debt collection businesses are operating in the UK. It is perhaps unsurprising, therefore, that one of the most common services advertised in junk mail is personal loans. In my constituency it is not uncommon to receive leaflets advertising loans at an APR of 445.7 per cent. The concept of payday lending, to bridge the gap to the end of the month, is newly revamped. There was a time in my life when I needed such things, although, thankfully, I do not so much now. However, there are people who fall prey to the scam, and phenomenal rates of interest are involved.
The organisations concerned sidestep consumer credit regulations and their actions are controlled only by codes of conduct. Going down the path of debt, as many junk mailings would have us do, can lead to a person's being tarred with a bad credit rating—something that can stick for life. They then enter the murky world of the credit agency, of which I have had some experience, although I assure hon. Members that it was for no bad reason. If one has been given a black mark, it is very difficult to find cut why. Sometimes it is given erroneously and unjustly, but correcting it is a difficult job.
In my opinion, junk mail is responsible for a multitude of sins. It provides daily access to a wilderness of rip-off loans, scams and extortion, most of which people could well manage without. Consumer protection from those dangers provided through, for example, the OFT, the Financial Services Authority and the Advertising Standards Authority, but often scams are engineered—as they would be—to meet all legal criteria, and the consumer is left without recourse.
Encouragingly, there has been a great deal of action on direct mail in recent months. New measures derived from article 13 of the EC directive on processing of personal data and protection of personal privacy in the electronic communications sector, on which the DTI consulted early this year, will come into force in December. That will require senders of advertisements via e-mail and text to have the prior consent of the recipient. Without that, offenders will be liable to a fine of £5,000. However, it will remain legal to send unsolicited mail unless the material is obscene or threatening. No legislation exists that can protect a householder from receiving it. Nor, to my knowledge, are there plans to develop such legislation.
124WH The only option for besieged consumers is to register with the Mailing Preference Service, which is an effective and very worthwhile initiative. I urge people to join the 1.1 million people who are already registered. Its scope should be broadened. At present the MPS deals only with those who are responsible—srcupulous companies that want to subsrcibe. Why should not direct mail companies be placed under an obligation to subsrcibe? It will always be difficult to prevent unsolicited mail from abroad from reaching consumers here, but we can at least act to protect those consumers who do not want to be targeted from the advances of companies in the UK.
A major publicity initiative has just been launched by the environmental pressure group Planet Ark, in conjunction with the Direct Marketing Association, and with the support of the Government. It concentrates on cutting down junk mail through increased awareness of the MPS and increased emphasis on recycling. The MPS operates a strict code of practice and is essentially good for business, in that it allows companies to target only those people who want the mail.
Firmer action is required, in my view. A positive example is set by the new regulations on e-mails and text messages. Could not such a system apply to unsolicited postal mail as well? The plan of a default customer opt-out would put the responsibility in consumers' hands to opt into mailings that they wanted. Enforcement could be carried out on an EU basis. There is an EU-wide agreement on the prevention of obscene or misleading advertisements and the pursuit of those who send them. The next step might be to introduce an EU-wide version of the MPS, covering all EU direct mailing firms.
I call for more responsibility and more power to be placed in the hands of consumers. The new agreement on producer responsibility is very welcome, but consumer choice and control should come first. Companies' ability to write to individuals without their prior consent constitutes an invasion of privacy, a hassle, an environmental threat and, sometimes, just plain fraud. It should be tackled and narrowed. I call on my good friend the Minister to address the problem as forcefully as he can in the interests of my constituents and the wider public.
§ The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe)I congratulate my hon. Friend the Member for Wirral, South (Mr. Chapman) on his success in obtaining a debate on a matter about which I share many of his concerns, not only as the Minister with responsibility for consumers but as a constituency MP with a mailbag similar to the one that he mentioned. I am pleased that he dealt with the breadth of the issues that consumers face.
Direct marketing is a legitimate and valuable method for companies to promote products, services and special offers, but it can be regarded as a nuisance. For that reason, the Direct Marketing Association operates the Mailing Preference Service, which provides a means whereby consumers can have their names removed from the lists of legitimate marketers.
Consumers can also reduce the volume of unaddressed mail such as leaflets by registering with the Royal Mail "Door to Door" service. In addition, the 125WH draft code of practice launched by the DMA in May requires its members to have in place a structure to enable every effort to be made to respect a householder's wish not to receive unaddressed items.
A national campaign launched by the DMA this month aims to promote the recycling of direct mail and the MPS as the means for consumers who view all direct mail as junk to exercise their choice not to receive it. The MPS cannot function as it should if consumers are not aware of its existence. Consumer awareness of the MPS is not as high as it should be. I commend the DMA's initiative.
The DMA code of practice makes registration with the MPS obligatory for its members. It is also a condition of the British code of advertising, sales promotion and direct marketing, which is administered by the Advertising Standards Authority. Nearly all such suppliers are DMA members and, if marketing companies act on a supplier's behalf, they will use the MPS because it is an efficient way of approaching customers.
The DMA has global links and the MPS operates globally. The latter is regularly accessed by overseas companies, either directly or via their local trade associations. There is wide compliance with the MPS. Nevertheless, the DMA regularly researches consumers' views on the service. According to the most recent survey, consumers appear to be satisfied with it. The DMA continues to monitor their views regularly.
Of course, new communications technology means that unsolicited mail now appears in other forms, as my hon. Friend the Member for Wirral, South said. Regulations implementing the EU directive on privacy and electronic communications regulations will give individuals more control over the marketing that they receive through electronic communications networks such as e-mail or text messages.
However, to some extent, the new measures reflect the particular nature of the new marketing media. In a competitive market, the contact data used—e-mail addresses and mobile phone numbers—change very quickly. That is generally not the case with postal addresses. There needs to be a fair balance between the interests of consumers and the interests of business in this as in other areas. As my hon. Friend pointed out, consumers spend £25 billion per annum via the new media. The MPS, in conjunction with the Data Protection Act 1998, which ensures that consumers are able to prevent their details being passed on to other companies, provides the balance at present.
The real risk to consumers comes from mail, frequently from abroad, which aims to persuade them to part with their money through misleading claims or promises. Unfortunately, once a consumer replies to such an approach, contact details are passed among scam operators and more mailings follow.
Scam mailings can present particular problems because most are sent from outside the UK. However, we have started to address that—we are not powerless. The Office of Fair Trading European enforcement team investigates scam mailings from outside the UK. The OFT can now pursue injunctive actions in other EU member states against scams based there by ultimately seeking enforcement orders under the Enterprise Act 2002.
126WH The OFT currently has under review more than 420 different mailings from overseas and is gathering intelligence on each deceptive mailing in order to trace the originators and pursue those responsible. It has taken a lead in Europe in using the new powers. That has been acknowledged by the European Commission and even featured in a report by the European Consumer Centre. The OFT also works with the European branch of the International Consumer Protection Enforcement Network. ICPEN-Europe co-ordinates Europe-wide action against cross-border scams and supports fast and effective communication between enforcers.
My hon. Friend touched on mailings that originate from countries outside the EU, which represent a more difficult problem. However, the OFT also works with ICPEN-Main, which supports communication and enforcement in the same way as ICPEN-Europe, but on a global scale. Member countries include the US, Canada, Australia and Japan. Complaints from UK consumers are regularly sent to ICPEN for investigation. For example, the Canadian authorities have initiated several successful civil and criminal investigations and the OFT continues to assist with the preparation of evidence to ensure that it can act against the perpetrators.
The Advertising Standards Authority also investigates misleading mailings, and when they originate outside the UK, it liaises with overseas regulatory bodies via the European Advertising Standards Alliance. The Royal Mail cannot intercept or open mail that quotes or is addressed to a UK post-office box. It can, however, withdraw individual UK PO box contracts when complaints are upheld and mailings are not corrected. The ASA and the Royal Mail work together closely on that.
This week, the Chairman of the OFT and I are announcing new arrangements to strengthen international co-operation between consumer law enforcers. We have concluded two memorandums of understanding, one with Canada and one with Australia and New Zealand. They follow arrangements that we have already implemented with the United States. The memorandums provide practical frameworks for day-to-day enforcement, liaison and information exchange. That reflects a shared determination to tackle global abuses that harm consumers.
This summer, the Organisation for Economic Co-operation and Development announced the publication of new guidelines for international co-operation to combat international scams and internet fraud. The guidelines seek to ensure that every country has the necessary authority and powers to take action in cross-border cases. They also set the stage for future work on consumer redress.
The European Commission has proposed more formal co-operation between member states. We are currently negotiating a regulation on consumer protection co-operation to strengthen the ability of EU enforcers to share information and co-operate effectively to challenge cross-border scams. We hope that the regulation will reach the statute book in the next couple of years.
My hon. Friend made some serious points about the use of credit cards. Some 30 years ago, one credit card was available, but now there are 1,300. The industry has 127WH grown tremendously, which has created some attendant problems. He will be aware of the work of the Select Committee on the Treasury. Hopefully the consumer credit White Paper, which is the result of a lot of work, will appear in the next few days.
I welcome moves by the credit industry to address credit cards. I commend the Association of Payment Clearing Services on its best practice guidelines, which it recently issued to its members. The guidelines cover the responsible assessment of a consumer's ability to handle new credit and improving the information on charges, costs and other important features.
I hope that that action sorts out the current problems, but I stress that enforcement authorities stand ready to intervene when the industry does not adopt the necessary high standards. For example, the OFT recently acted promptly to stop Marks and Spencer from mailing unsolicited credit cards to store card holders. The OFT took the view that that clearly breached section 51 of the Consumer Credit Act 1974, and Marks and Spencer has agreed to stop such marketing methods.
Legislation and enforcement are important in combating rogue trading practices of all kinds, but they are only part of the answer. Legislation may create loopholes, which the unscrupulous can exploit. Enforcement action can be taken only when bad practices have come to the attention of the authorities, by which time consumers may have suffered detriment. The most effective weapon against bad trading practices of all kinds is greater awareness on the part of consumers. The Government's objective is to place informed and protected consumers at the heart of an effective competition regime.
My predecessor, now the Under-Secretary of State for Health, my hon. Friend the Member for Welwyn Hatfield (Miss Johnson), launched a public awareness campaign on postal scams last summer that aimed to raise consumer awareness of the risks and warning signs associated with scam mailings; help consumers to avoid becoming scam victims by ignoring bogus promises and claims, and encourage consumers to send suspect 128WH mailings to the OFT for investigation. That campaign received wide media coverage. The campaign posters and leaflets are much in demand, and the OFT is investigating substantially more suspect mailings.
Public awareness is vital to putting the scam merchants and rogue traders out of business, and I want the work of increasing that awareness to continue. Like my predecessor, I want consumers to be informed and empowered. My Department will work closely with the OFT and other authorities to achieve that objective. It is important for us, as Members of Parliament, if we are aware of scams, to make sure that the OFT knows about them and to work with the other agencies involved.
Tackling mail scams in the form of unsolicited approaches, in a variety of forms and via a variety of media, is a challenging task. However, the level of detriment suffered by consumers necessitates an appropriate response. The OFT estimates that UK consumers lose about £100 million a year to postal scams alone. Legislation and effective enforcement play an important part in tackling the scam operators. Close co-operation with overseas authorities to form effective cross-border partnerships and tackle the scam operators is also vital and will continue.
For the measures to achieve optimum affect, we must have informed and empowered consumers. I am grateful that my hon. Friend has brought the issue to the attention of the Chamber today and that he and other hon. Members are working to make sure that we put the right mechanisms in place to prevent people from being exposed to scams. We must ensure that consumers have the confidence of knowing where to go to complain. As has been said, it is usually the vulnerable, particularly the elderly, who are the targets of unsolicited mail and who are tempted to respond. Once they have responded, they are hit with many more scams and end up worse off. In many cases, they feel so embarrassed that they do not report the matter.
I look forward to working with my hon. Friend and other hon. Members to ensure that we put a stop to such exploitation.
§ Sitting suspended.