Telephone and Online Scams

Chris Elmore Excerpts

Tuesday 4th June 2019 Westminster Hall

[Chris Elmore (Ogmore) (Lab)]

I beg to move,

That this House has considered telephone and online scams.

It is a pleasure to serve under your chairmanship, Mr Hollobone, and to have the first debate back after the brief Whitsun recess. It is good to see the Minister in her place. I am grateful to her; I understand that, due to personal circumstances, she is covering for the Minister with responsibility for this area, the right hon. Member for Wyre and Preston North (Mr Wallace). I am also grateful to my hon. Friend the Member for Torfaen (Nick Thomas-Symonds), who is covering for the shadow Minister for policing, my hon. Friend the Member for Sheffield, Heeley (Louise Haigh). It is a covering event today, but I am extremely grateful to the Front Benchers for being in their places.

We do not need to be weekly watchers of “Watchdog” to know that scams are a scourge in our communities. We all hear examples week in, week out of constituents, friends and family who have been targeted by scams. In 2019, those scams are far from the more traditional forms of fraud we have seen in the past. There is no face-to-face interaction with the perpetrators of the crimes and people are not being targeted like the celebrity scammers in “The Real Hustle”. Instead, millions upon millions of individuals are being targeted in the safety of their own homes. Whether it is through a phone call, an ad that people see on their smartphone or a rogue email, the methods used by these hidden fraudsters are becoming more and more sophisticated every day. Today, I am calling on the Government to do one thing: to expose the fraudsters and get ahead of the game so that we can stamp this scam culture out once and for all.

Why are scams such a problem? Many might say, “Don’t be stupid. Anyone can tell the difference between a scam phone call or email and a legitimate communication,” but the truth is that, with the increasingly sophisticated methods being employed and the vulnerable people being targeted, we cannot rely on that assumption, and the statistics show that. Picture an 80-year-old living alone in an area of high crime. They get a call from someone purporting to be from the Department for Work and Pensions inquiring about a problem with their pension. They rely on their pension to get by and trust the caller because they have said they are from the DWP. The caller tells them that their pension payments may be put on hold if they do not provide some personal details over the phone. Can we all honestly say that we do not know of elderly family members, friends or constituents who would not be tempted to go along with that? If someone is being told that their money might stop if they do not co-operate, they could well be driven into a false sense of security and provide the information being asked for.

One of the key problems is that, whether over the phone or online, criminals are taking on the role of responsible and trusted sources to coerce potential victims into co-operating. While that is a big problem for vulnerable populations—particularly the elderly—it by no means stops with them. Many Members may well remember the recent cases where the face of the “Money Saving Expert”, Martin Lewis, was being used on targeted online advertisements on Facebook. It was not just one Facebook advert, but some 1,000 targeted Facebook ads that were using that trusted figurehead. They were glossy and looked legitimate, but ultimately they were seeking to pillage money from those who could least afford it. That just shows how wide the problem goes. If we cannot trust an advert with the face of the “Money Saving Expert”, what and who can we trust?

One constituent even approached me recently about a scam involving emails asking for information being sent from my own parliamentary email address. That issue has been referred to the House authorities. Most recently, just last week another constituent emailed me saying that a false email had come with my name on, but that was not from my email address. The constituent rang my office, querying why I was using a different email from my normal parliamentary one. Thankfully, they had had correspondence with me before. Even as Members of Parliament, trusted as we are with handling the personal information of constituents, our names are being used. I only knew about it because of that particular constituent, who was savvy enough to realise that the email was not mine, but a fake one, which was asking for personal information, including their national insurance number and their bank details. None of us are immune from the issue.

On the one hand, it is positive that clearly not all the public think of politicians as untrustworthy if they are putting us front and centre in pushing a campaign. But on a serious note, it shows how concerned we should be about the tactics that criminals are using. In the era of fake news, where there is an ever-important need to look over anything we see or hear with a critical eye, the hidden fraudsters who seek to steal our money online will adapt their methods in ways we least expect. That is why the issue is so important. It is not going away. If we manage to hold back the tide of scams out there today, the scams of tomorrow could be completely different, and we have to be prepared for that.

How big a problem are we talking about? Age UK found that up to 5 million people over the age of 65 believe that they have been targeted by a scam. It also found that single, older people are far more likely to respond to a scam than younger, married people. As many Members will know, around half of over-75s live alone. That just illustrates how elderly people are particularly vulnerable to this menace. That, in part, is where the real injustice lies with our current approach. What would our response be if 5 million older people had been a victim of an attempted burglary? There would be an urgent question on the Floor of the House, and it would rightly be declared a crime wave.

The statistics show that the over-65s are a staggering three times more likely to be targeted by a scam than be burgled. Scams pose less risk for the criminal than a standard burglary, with the number of potential victims rising exponentially as a result. Half a billion pounds was lost by UK banking customers due to scams in 2018. Remarkably, the charity Think Jessica estimates that as few as 5% of scam victims report the crime committed against them. That fact alone tells us that the statistics could well be the tip of the iceberg. But unlike icebergs, the issue is not melting away. In fact, the figures from all agencies, including the Government, suggest that the issue is getting worse.

Figures from the Office for National Statistics show that in 2018, the number of reported fraud incidents rose by 12% on the previous year, equating to an astonishing 3.6 million individual cases. Sometimes that might be a fiver or a tenner stolen, but more often than not we are talking about much greater sums of money or personal information that can never be recouped. While £5 or £10 might not seem like an awful lot of money, for someone on universal credit or, worse still, appealing a universal credit decision, that £5 or £10 could be an awful lot of income for their household. Likewise, once people have become victims of fraud, it can be incredibly difficult for them to recoup the money they have lost. I recently helped a small business in my constituency get back nearly £20,000 that it lost in a scam after a long battle that the constituent had endured with his bank. That just shows how this crime can have a prolonged and significant impact on victims, and that impact is not only financial; it also puts strain on family and business. It simply is not good enough.

Just as the last Labour Government were tough on the causes of crime, it is now time we got tough on the scourge of hidden crime. Put simply, an epidemic of scams is sweeping across the country, and I know that south Wales is a particular hotspot. Every week in my inbox and during advice surgeries, I am contacted by constituents who have been targeted by the increasingly sophisticated techniques that I have outlined. Whether in written form, online, via text message or over the phone, the sophistication of the targeting seems to know no bounds. The criminals who sit behind a computer or a phone and think they are immune from the law need to be exposed as the hidden fraudsters they are. The very fact that many scams are targeted at the elderly and the vulnerable shows just how low these cowards will stoop in pursuit of a quick buck. With many communities still suffering under the strain of nearly 10 years of Government austerity, the money being stolen by scammers can push people’s finances to breaking point.

As with everything involving technology, there is no silver bullet to stop this problem, but there are things the UK Government can do to stem the tide and deter other freeloaders from seeking to cash in on our communities. We first have to look at the police’s approach. Tackling fraud online and via the telephone is not a strategic policing priority. The police watchdog, Her Majesty’s inspectorate of constabulary, found only two months ago that the public are being left at risk because forces do not consider fraud to be a priority. One officer told the inspectorate that, despite people being more likely to fall victim to fraud than any other crime, it was falling behind other offences because it does not “bang, bleed or shout”.

The inspectorate’s report warned of a “disjointed and ineffective” response across England and Wales because of the lack of a national strategy. I therefore ask that the Home Office ensures that tackling such fraud becomes a strategic policing priority across all our forces. At a national level, will the Minister—perhaps she will pass this on to the Minister responsible—update Members on the progress made by the joint fraud taskforce? As I have mentioned, the ONS has found that fraud is increasing, not going down. Members across the House therefore need to know what the taskforce is achieving.

On a more positive note, I was pleased to see the introduction of the pension cold-call ban in January. I warmly welcome that effective step from Ministers. Although I recognise that the effects might not yet have been assessed, I am sure that all Members would appreciate it if the Minister provided an early indication of the effectiveness of the policy. Likewise, given that we know that fraudsters often adapt their tactics when avenues are closed off, the Government need to outline what they are doing to prevent other fraud—for example, online scams—from increasing following the cold-call ban. As I have said, the backdrop of austerity cannot be ignored when addressing this issue. The cuts to local government across England and to the Welsh block grant have undoubtedly had an impact on trading standards’ ability to tackle scams.

I want to praise the work of my local trading standards team for its work to raise public awareness of the threats posed by scams, particularly through its Friends Against Scams initiative. I also pay tribute to my local force, South Wales Police, which has done a huge amount to try to support constituents who have been scammed. There is a wider issue, in that once someone has been scammed, particularly if they are older, vulnerable and living alone, there is an element of embarrassment and they feel they cannot report it. South Wales Police has done huge amounts of work locally and across the region to try to reassure people that the scam is a crime and they deserve justice.

It cannot be denied that trading standards could do much more to tackle the problem if they had more resources. What representations will the Minister make to the Chancellor in advance of the spending review to free up funding to get to grips with the issue? The sheer scale of the crime means that one agency cannot tackle it alone. Increasing resources will mean that trading standards can work in a much more joined-up way with other agencies, such as the police and local adult social care services.

Although public awareness tactics have been used in the past, there is a need for a much more far-reaching and targeted campaign. Simply using Facebook adverts or leaflets in Government-owned buildings will not work. There is an irony, in that while many of those targeted are over 65, there is an issue about digital inclusion, access to broadband across the United Kingdom, and access to computers and the digital technologies through which advertising campaigns could work, yet lots of the people targeted do not have access to those services, so we arguably need to raise public awareness through television and other sources. We need to reach out to our communities, particularly our elderly residents, with the latest information on what types of scams are out there and how they can prevent themselves from becoming victims. The Government must see that as an investment in our communities against a problem that will only worsen if we allow the epidemic to continue to take hold.

Nobody likes the feeling of being violated by a criminal. No matter what the scale of the crime is, the feeling is still there to an extent, and yet there is a silent crime wave sweeping across the UK that very few people talk about, and the Government are not doing nearly enough to address it. It is time we got real with these hidden fraudsters and prevented them from inflicting any more damage on the communities we represent. Whether it is a family member, a friend or someone living down the street who we do not know, nobody deserves to have their money or personal information stolen from them. It is time we shouted louder and stemmed the tide. Whether it is £20 or £20,000, the Government must show today that they are serious about tackling the criminal black hole being inflicted on people’s finances. Warm words and sympathy are welcome, but they do not resolve the problem.

We are going backwards on tackling this problem. We need to get on the front foot and ensure we are ahead of the criminals. The word “scam” has become synonymous with something we cannot control of late. Today the Government—I know the Minister will do her best—need to step up and show that that is simply not the case.

[Mr Philip Hollobone (in the Chair)]

I remind Members that the debate can last until 1 o’clock.

[Tim Farron (Westmorland and Lonsdale) (LD)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I am grateful to the hon. Member for Ogmore (Chris Elmore) for securing this extremely important debate. As he has rightly set out, the growth in recent years of online and telephone scams, which are often combined, is a deeply troubling development. The impact on individuals is colossal.

I can think of three examples that I am working on in my constituency. An early-retired teacher was recently scammed into investing £25,000 into a fake bond through an incredibly plausible copied website of a reputable bank. A young man who works in the arts was recently scammed out of an amount just shy of £50,000; he was presented with what was apparently a bill from Her Majesty’s Revenue and Customs, and was told that if he did not pay, he could be subject to prosecution. A couple who had no conventional pension were convinced by a combination of telephone and online scamming—their computer, but not their online banking operation, was hacked—into transferring nearly £200,000, which has utterly destroyed their retirement. Those are three instances of bright, not terribly elderly people being scammed by sophisticated criminals. It has had a massive impact on those people’s self-esteem; the hon. Member for Ogmore rightly talked about the sense of violation felt by victims of these scams. They have had their lives trashed, and, in one case, their retirement turned upside-down. The impact on the victims of online and telephone fraud is colossal, and we need to be aware of it.

My quick assessment of the people I am supporting through my constituency office is that there has been roughly £1 million of personal fraud perpetrated on individuals across the age ranges. Almost all the cases focused on online fraud. As the three cases I mentioned have not been resolved, we have been successful in getting significant amounts of compensation—full compensation for some—for victims of fraud in my constituency, but in the other cases, there has been nothing as yet, which is completely unacceptable. The hon. Member for Ogmore rightly pointed out the rise in fraud and the amounts of money involved. In the first half of 2018, there was some £95.7 million of online fraud.

I want to draw a correlation, which is not complete, but is hugely significant, with the loss of bank branches and physical banking opportunities in our communities. My constituency of Westmorland and Lonsdale has pretty much the same geographical area as Greater London, though it has a slightly smaller population. Of all our towns and villages, only two retain physical bank branches. In the past three or four years, we have seen the closure of branches in the villages and towns of Milnthorpe, Grange, Ambleside, Sedbergh, Kirkby Lonsdale and others. To a degree, bank branch closures have come about because banks have responded to our changing banking habits. I understand that, but they have pushed it. It makes life a lot easier and cheaper for the banks if we completely relate to them online. It saves them a fortune. Think of the hundreds of thousands of pounds that banks will have saved, in my constituency alone, in wages, rent and overheads by closing down branches. When they have owned the buildings, they have had a huge cash sale capital receipt, and the money they have saved has gone into their profits.

There is also a correlation between the increase in online fraud and the decrease in the number of bank branches in our communities. Recklessly, banks have put customers—particularly, but not exclusively, older ones—at greater risk, while saving millions upon millions of pounds. I do not say that there is no business case for some branch closures, but the banks have been reckless, and have done nothing—or very little, having left it very late to do anything—to help victims of the increase in fraud as people who feel less comfortable going online have become more likely to feel obliged to do so. The banks have increased risks to their customers—our constituents—while saving themselves a fortune.

Authorised push payment scams are key to what we are talking about. We should welcome the voluntary code that came in just a few days ago, which I hope will result in significant changes. At the moment, if someone has been the victim of an unauthorised scam—in other words, if someone else has got hold of their details and taken money out of their account—nine times out of 10, or perhaps 99 out of 100, the bank will compensate them. If, however, someone has been fooled into moving some money out of their account themselves, as in the three instances I just related, nine times out of 10 they are on their own. The authorised push payment scams voluntary code ought to mean that future victims of authorised push payment fraud will be compensated.

Of course, all the people I have spoken about—indeed, all the people we will talk about today—are historical victims. Whether they were scammed in the last few weeks or the last few years, they stand to get not a penny of compensation. It is very good to see the Minister in her place. I really want her to focus on what we will do to help people who have been victims historically, which is everybody apart from those scammed in the last week. I ask her to take action so that the code can be applied retrospectively to all victims of authorised push payment scams.

The hon. Member for Ogmore rightly talked about the need to catch the criminals who do something so utterly despicable. My police force in Cumbria is under enormous resource constraints, but is doing a good job, in so far as it can, in providing support. In recent days, local media have reported on the relatively small number of police available to respond to incidents in our community. One of the reasons for that is that many have been taken off to do this kind of work. It is important to recognise that our police force must be given additional resource to catch those who are guilty of such crimes, and to support victims.

[Chris Elmore]

I thank the hon. Gentleman for taking part in the debate. I am in the police service parliamentary scheme. What struck me when I met one of the victims of such fraud is the sheer scale of the paperwork that the police have to complete. They told me that that is because the back-office functions have been cut, as there is no funding, which creates additional pressure. The police want to deal with these cases. The hon. Gentleman is right that there are not enough officers to do so, but it is also about the paperwork involved, because the fraud is so complicated. The police have to have an hour’s discussion with the person who has been defrauded. Does he agree that there has to be specific funding, not just for trading standards but within the police, so that they can tackle the problem as broadly as possible?

[Tim Farron]

I am grateful to the hon. Gentleman for raising an important point. One issue is resource; another is time and expertise. We are not dealing with stuff that is simple to fix. He is right that one of the impacts of, let us be honest, the underfunding of our police service in the last few years has been that police commissioners seek to protect the number of visible police officers, for good reasons and because it is politically sensitive. How do they then save money? They get rid of all the admin staff. Police are therefore unable to focus on frontline policing, because they are taken off to do the admin work that the back-office staff used to perform.

Banks are saving perhaps hundreds of millions of pounds by closing branches and changing the way in which we relate to them, but they thereby put our communities at greater risk of online and telephone fraud. There is a real opportunity for the Government to take—not in a punitive way—a small fraction of the profits that banks have made by closing those branches. That windfall tax could be used for two purposes: compensating victims and resourcing our police service properly, so that we can protect people.

I would love the Minister to give us more information on those two points. First, will she backdate the code and ensure that it has teeth, so that historical victims of authorised push payment scams are compensated, as well as future victims? Secondly, will she consider a windfall tax on the banks, based on the profits they make from closing so many branches, so that we can resource our police properly, in order to protect the victims and pursue the criminals?

--- Later in debate ---

[Chris Elmore]

I am exceedingly grateful to the hon. Members for Westmorland and Lonsdale (Tim Farron) and for Strangford (Jim Shannon) for their contributions, as well as to the SNP spokesperson and the shadow Minister. I thank the Minister for stepping in for the Security Minister. I do not doubt for one second hers or the Security Minister’s sincerity in trying to tackle what should be a cross-party issue. No one wants to see constituents defrauded in any way. Certainly, I know that we all want to work constructively to resolve those issues. In the Minister’s typical style, it was refreshing of her to acknowledge that problems still need to be resolved, but that she is trying to do her bit within her portfolio, while encouraging other Home Office Ministers to find a way forward.

I sincerely believe that there is more to be done, and I hope to continue—over my next 18 months as an MP and in future—raising the profile of this issue, working with Ministers and those on the Opposition Front Bench, to ensure that we have robust processes in place to protect our constituents and get ahead of the scammers, rather than what feels like forever catching up with them.

Question put and agreed to.

Resolved,

That this House has considered telephone and online scams.