Fraudulent Sales Promotions (Hansard, 23 October 2000)

§ Dr. Howells

I am concerned about these promotions and am setting out the action the Government are taking to tackle them. The legislation which is currently in place to protect consumers includesthe Unsolicited Goods and Services (Amendment) Act 1975, which prevents traders from demanding payment for goods or services which are unsolicited and sets rules on content of invoices and directory entries; the Control of Misleading Advertisements Regulations 1988, which enable the Director General of Fair Trading (DGFT) to stop the publication of a misleading advertisement; the Consumer Protection (Distance Selling) Regulations 2000, which come into force on 31 October, protect consumers shopping on the Internet, by mail order, on the telephone or by fax. If suppliers do not fulfil contracts or fail to return consumers' money, the DOFF and local authority Trading Standards Departments can seek injunctions. If fraudulent use is made of a consumer's credit or debit card he or she can cancel the payment; the Lotteries and Amusement Act 1976, which sets the rules on competitions (which must entail a degree of skill) and lotteries (which generally cannot be run for private or commercial gain). It is unlawful to promote or advertise a foreign lottery in the UK.

In addition, when the European Community Directive No. 98/27/EC on injunctions for the protection of consumers' interests is implemented in the UK next year, the DGFT and other qualifying bodies will be able to seek injunctions in the courts of other member states to stop operators there from directing false and misleading sales promotions at UK consumers.

I recognise the problems of taking enforcement action against sales promotion scams originating outside the UK—land particularly from beyond Europe. Apart from jurisdictional constraints on the DGFT and other UK authorities, it is often hard to trace the sales promotion operator. They may hide behind PO box addresses, which are used as solely collection or distribution points for mail. Operators move from country to country to avoid detection and frequently change the postal services they use.

The Government are working with industry and our regulatory authorities to address this situation. We are determined in particular to improve co-operation and information sharing between authorities in Europe and around the world. The following actions are being taken: the Office of Fair Trading (OFT) works closely with its overseas counterparts from the 30 or so OECD countries, through the International Marketing Supervision Network (IMSN). OFT's counterparts have had some success in stopping some of the worst cases targeting UK consumers; the Government are pursuing closer bi-lateral enforcement links with other major trading nations outside the EU. We are in discussion with the United States Federal Trade Commission (FTC) about a possible memorandum of understanding on co-operation between the DGFT, UK trading standard departments and the FTC; the Royal Mail can refuse to deliver material from abroad which contravenes the law, once it has been notified about it (it cannot intercept or open mail addressed to a PO box). The Advertising Standards Authority (the independent self-regulatory body for the industry), the police, trading standards officers and magistrates can notify Royal Mail about material which contravenes the law. Any UK PO box being used fraudulently will be withdrawn. We are ensuring that ways of bringing scams to the attention of the Post Office are effective and that the avenues by which scam promoters reach consumers are closed off; the ASA, which supervises the British Codes of Advertising and Sales Promotion, investigates complaints about misleading promotions and is working with national and international 9W regulators. The ASA refers mailings to the appropriate regulatory body in the country in question; those from Europe are channelled via the European Advertising Standards Alliance (EASA).