Consumer Rights Bill

Viscount Younger of Leckie Excerpts

Tuesday 24th February 2015 Lords Chamber

[Lord Borwick (Con)]

My Lords, this Bill, as the name suggests, is supposed to be about protecting consumers—indeed, most of it does. However, this recently tabled amendment, which places new duties on ticket sellers in secondary markets, could actually allow consumers to be ripped off under the guise of protecting them. All the tickets which the sports and music bodies are concerned about will now go back to being sold in pubs, clubs and car parks, where no consumer protection exists, so this amendment could increase fraud by forcing customers to buy tickets on the street. It is no surprise that the amendment is completely out of step with public opinion.

I am sure that I can trade polling statistics with my noble friend. Polling by ComRes shows that 80% of the public support the right to resell tickets, 64% believe that they should be allowed to pay more than the face value of a ticket to get into a sold-out event, and 66% believe that event organisers should not be allowed to restrict what happens to a ticket once they have sold it. We could see thousands of fans criminalised if they do not provide the right information on their listings. The reality is that a seller will not provide the right information if they think that their ticket could be cancelled. They could provide adjacent seat numbers, for instance, and other fans could then see their tickets cancelled, causing havoc at the event.

The treatment of the secondary market in ticketing is completely out of step with other online markets. Is there a need to declare where what you are selling comes from when you are selling goods on Amazon, for example? These proposed new clauses try to deal with an issue that does not exist. The wording of the amendment is clever in that it seems to provide a protection against ticket cancellation, but this protection is meaningless as it does not apply where there are terms and conditions which state that tickets will be cancelled if they are resold. The wording makes it clear that terms and conditions used to enforce cancellation should not be unfair terms under the Unfair Terms in Consumer Contracts Regulations. This is because certain restrictions such as terms and conditions which allow resale at face value have been judged as not in breach of these regulations. This means that event organisers will be able to impose a de facto price cap on resale. Event organisers will be able to use the law to enforce their own commercial terms and conditions. We are about to give event organisers total control over tickets after they have been sold. This is a carefully constructed legal monopoly. Will my noble friend the Minister assure me that one of the subjects to be looked at in the review is how the number of people employed in the secondary ticket market has changed, and how the market share of the ticket issuers has changed?

[Viscount Younger of Leckie (Con)]

My Lords, following the debates on the subject of secondary ticketing in Committee and on Report, which caused considerable polarisation of views across party lines, I am pleased that today there appears to be good agreement on the way forward. I know that my noble friend the Minister has worked assiduously to find common ground. Reaching this point today is an example not just of how effective this House can be in spending the necessary time discussing the detail, analysing the issues with all those concerned, reviewing and scrutinising the law and moving forward, but also of how many company boards work with much interaction on challenging issues, which takes place initially behind the scenes, enabling the final decisions to be made in situ with relative accord and rapidity. To that extent, it would have been interesting to have secured my ticket to be a fly on the wall at some of these discussions, in which case there would have been no pillar impeding my view and I would not have needed the guarantee of a seat number. However, I would have needed a guarantee from the event organiser that there were no spiders’ webs—real or political, perhaps.

Although I welcome the Government’s willingness to act to address many of the strong concerns expressed on the secondary ticketing market through their Amendments 12B to 12H laid today, and their agreement to the amendments tabled by my noble friend Lord Moynihan, this is the beginning of a journey, as my noble friend said. First, there were clarion calls from some quarters for the secondary ticketing market to be banned. It is pleasing that there is now a general view that the secondary ticketing market has a necessary place in allowing fans to purchase seats for cultural and sporting events. A corollary of this is that it makes it more likely that seats at events will be filled—a frustration often expressed by observers and would-be fans.

It is now also accepted that the issue under debate, described generically as secondary ticketing, is much more complex. However, there is a main concern over sharp practice at best and fraud at worst. The victims are those, of course, who buy bona fide tickets and find that they are invalid. Along with some other noble Lords, I am adamant that there is legislation in place to protect against fraud but that it has to be made to work, with prosecutions, recompense for victims in relation to detriment suffered and with deterrents to putative fraudulent activity. I have also mentioned the need for more transparent and detailed guidelines for ticket operators and consumers, which is very much in the spirit of the Consumer Rights Bill, but without creating any unnecessary new bureaucracy.

Therefore, I welcome the move to make it mandatory for online ticket marketplaces to have to report criminal activity to both the police and the event organiser. Many of the persistent secondary ticketing troubles emanate from illegal websites, so the Action Fraud initiative as a national reporting centre for fraud and internet crime is to be welcomed. Of course, with the emergence globally of millions of websites, the question of how to regulate, monitor and harness the web is a matter for all Governments in all countries across most sectors. Therefore, my first question to my noble friend the Minister is: how proactive will this Action Fraud unit be, or is it merely a reception centre for reporting such crime?

The House may like to be reminded of the success of PIPCU—the Police Intellectual Property Crime Unit. Deep in the City of London some highly effective work is being carried out to identify fraud proactively, to intercept and to prosecute the owners of websites who are effecting and facilitating the transit of counterfeit and pirated goods into this country. In terms of the work it does, to what extent could the Action Fraud unit link up with, or learn from, PIPCU’s experience?

My main question about the statutory duty to report is: how can we know if the online marketplace is not reporting crime? Subsection (3)(b) of the new clause proposed in Amendment 12B states that the duty to report applies when,

“the operator knows that an offence has been or is being committed”.

Surely it should additionally apply to operators who suspect that an offence might be committed. Do we not seek the early tip-off? How proactive a role is the enforcement authority expected to have? To borrow a phrase used in an earlier debate by my noble friend Lord Clement-Jones, “Not a clue, guv”. There is a danger that a market operator will be able to turn a blind eye to a criminal activity, where he can legitimately say that he was not aware or could not have known. The enforcement authority will have the leeway of needing to be satisfied that on the balance of probabilities a person has breached the duty—but will the onus of proof be too difficult to establish, and too costly to work effectively, to achieve prosecution and for a fine to be imposed?

Finally on the duty to report, I wonder whether the cap of £5,000 provides an adequate deterrent for failing to report. The Minister may reply that she thinks it proportionate. However, I suggest that the stakes could be raised by doubling the maximum fine—on the basis that a fine is payable only if a suspected crime, which turns out to be an actual crime, is not reported. Your Lordships may be interested to be reminded that, for example, a fine of up to £20,000 is payable by employers for not paying the minimum wage.

I turn now to the second, welcome, element of the Government’s amendment—the statutory review. I welcome it because it will start as soon as possible and will have a tight reporting period. The purpose of the review is to address many of the complex issues relating to ticket sales, but it is as yet unclear what the terms of reference will be, and what such a seemingly catch-all review will cover. I have heard that it should encompass some aspects of the operation of the primary market—such as the sensible and proportionate block-booking of tickets by the RFU or the ECB for rugby or cricket events where clubs or schools are the beneficiaries. The review should also cover unscrupulous block-bookers who seek to make an unhealthy profit by selling on.

As my noble friend Lord Moynihan said, there is the question of who is defined as a consumer and who as a trader. Conversely, there is also the need not to have a chilling effect on the secondary marketplace. There is the issue of guidelines for contracts for ticketing for myriad events, and also the question of how to protect UK sports, theatre or concert fans who choose to book tickets for UK events through operators or sites overseas. I am pleased to hear from the Minister that the CMA is playing an active role and is taking some action. I ask the Minister for reassurance that the Government know that the review needs to be particularly wide ranging, but also tightly worded, to be effective and useful for taking the several steps forward that are needed in 2016. I note her encouraging comments today.

Finally, in repeating my support for the Government in acknowledging the valuable role of the secondary market, I add that the amendment would have been improved by the inclusion of a sunset provision for the review, perhaps at the point when it reports its recommendations. I ask my noble friend to comment on that. There will always be persistent fraudsters, but I welcome the consensus today that the review, while not providing all the solutions that some seek now, does provide us with a sensible platform from which to establish some concrete facts and to analyse the different elements of a complex landscape.