Scam Mailing

Jo Swinson Excerpts

Wednesday 30th January 2013 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

It is a delight to serve under your chairmanship Mr Sheridan, and to respond to this debate on an important issue that has been well highlighted by my hon. Friend the Member for South Derbyshire (Heather Wheeler). I congratulate her not only on securing this debate but on how eloquently she has taken up the issue, prompted by the appalling experiences of her constituent, Mrs Smith.

It is worth recognising the great campaigning work done on the issue by a range of individuals, including the hon. Member for Romsey and Southampton North (Caroline Nokes), and organisations such as Age UK, Citizens Advice and the Think Jessica campaign. It is hugely important for raising awareness, a matter that I will address shortly. I agree with the hon. Member for Edinburgh South (Ian Murray) that it is an important part of tackling the problem.

Although we are mainly discussing postal scams, it is important to recognise that scams operate in a range of different ways, and that the people perpetrating such scams do not necessarily stick exclusively with one particular avenue. The hon. Member for Newcastle upon Tyne Central (Chi Onwurah) mentioned internet scams, which as e-mail users we are all familiar with. Premium telephone line prize scams have also been a great cause for concern, although the latter have at least decreased slightly in number since the new guidance from the Independent Committee for the Supervision of Standards of Telephone Information Services was put in place.

It is important to recognise, as the hon. Member for South Derbyshire did when introducing this debate, that the vast majority of direct mail delivered to our doors is legitimate advertising material. The industry is important to the economy, generating about £16 billion in sales each year, and is a linchpin of the postal service model in this country. We would not want to jeopardise that industry, as it ensures that we have a universal postal service and that we do not pay prohibitively expensive prices when we go to post a letter. I will come to preference services, as they are important, but the real villains of this case are the fraudsters. Their goal is simple: to cheat as many people as possible out of their money by making false promises.

It is worth noting that we are all potential victims. About 3.2 million people a year are victims of such scams, and the losses incurred total about £3.5 billion. Various Members have stated that it is particularly an issue for the vulnerable and elderly. We want to ensure that we protect such individuals, but it is easy to fall into a slightly superior sense that it could not happen to us: “I am a very savvy consumer, and this would never happen to me; it’s something that only happens to vulnerable elderly people.” I was certainly surprised to find when I looked at the research that the age group most likely to fall victim to postal scams is not elderly people—over-65s make up 13% of victims—but people between the ages of 35 and 44. More than a quarter of scams affect people in that age group. It is worth bearing that in mind.

We are discussing scams that are often cleverly customised. Some involve the prospect of a tax rebate, and are often sent around the time at which tax deadlines approach. Some use information about individuals to imitate interactions with banks of which they might be customers. That is how the perpetrators of such horrible crimes try to dupe people out of their money. It is true, however, that older victims tend to lose more money—about £1,200 per scam, almost double other age groups—so we must ensure that everyone is protected.

I was interested in the different types of scam. The most common are bogus holiday clubs, then high-risk investments, which are little more than pyramid or chain-letter scams. Foreign lottery scams also lead to £260 million in losses, whereas the figure for bogus holiday clubs is about £1.17 billion. A range of different scams exist.

The hon. Member for Edinburgh South discussed awareness of the issue, which is crucial. A variety of organisations, from the Office of Fair Trading to the Trading Standards Institute and Citizens Advice, try to get the message out so that people are aware of the problem. As my hon. Friend the Member for Ceredigion (Mr Williams) said and many Members in this debate have repeated—it is a good mantra—if it sounds too good to be true, it probably is. We must have a healthy scepticism about things that come to us through the post, via e-mail, over the telephone or by other methods, and ensure that people know what sort of thing to watch out for.

Age UK has produced a helpful checklist of things to consider. Was the offer unsolicited? Is it necessary to respond quickly? Why the rush? Is it necessary to pay for a prize or free gift, or ring a premium rate number that starts with 09? Are recipients being asked for any bank or credit card details? Is the business reluctant to give its address or contact details? Is the recipient being asked to keep it confidential or secret? Those are all healthy questions to ask. It is not just parts of Government, independent agencies or charities that have a role to play in raising awareness; all of us as Members can do our bit in our constituencies as well.

Beyond awareness, enforcement is clearly a key part of the action that the Government can take. In 2010, the National Fraud Authority produced a comprehensive strategy to confront mass marketing fraud, which includes postal scams and other types of fraud. The strategy was set up under the banner of Action Fraud, and the Metropolitan police and the NFA have been working on it with a range of partners—from local government to central Government bodies and stakeholder groups—to build a cohesive response to tackling postal scams. That includes engaging with Royal Mail and other postal operators and mailing operations. Royal Mail is aware that the nature of the service that it provides—universal access to all users—makes it vulnerable to being used for scams. In recognition of that, Royal Mail is working with the police and other enforcement bodies to prevent scam mail from getting into the system at the beginning of the process. I will return to that point later.

A public trigger is also important. If people suspect a scam, they should be able to do something to trigger a response. That is why awareness will always be important. The first step in stopping a scam is knowing what a scam looks like, but it is not always straightforward, as I have said. There is a range of advice on scams and clear and practical guidance to consumers about what they can do, and I will outline some of what is available.

If someone thinks that they have been the victim of a scam or would like to know how to advise a loved one who might be the victim of a scam, the Citizens Advice consumer helpline is a good first port of call. It is open during office hours on 0845 404 0506, and it gives consumers clear, practical advice on what to do. Action Fraud is the place to go to report the scams; its website is actionfraud.police.uk and its telephone line is 0300 123 2040. The process is simple and quick. If people are worried, they can go online or telephone and quickly make a report, then the appropriate authority will be alerted so that it can take action. It might not happen overnight, but action will be pursued.

Trading standards can take action locally or it can refer matters to national and international enforcement bodies, if required, depending on the nature of the scam that has been uncovered. Trading standards services and Scambusters can investigate scams under the Consumer Protection from Unfair Trading Regulations 2008, which carry criminal sanctions.

The hon. Member for Edinburgh South mentioned Scambusters and what the Government are doing. In respect of the consumer landscape changes, we are giving trading standards greater responsibility for consumer law enforcement, by transferring central Government funding to co-ordinate enforcement activity from the OFT to the new National Trading Standards Board. He rightly highlighted the success of Scambusters, mentioning figures for what it has done in the six years from 2006 to March 2012. It may be helpful for colleagues if I say that, since 2012, that work has continued and is now being co-ordinated more centrally as a result of that more national approach. The National Trading Standards Board is now responsible for the Scambusters teams and has matched previous funding levels, which is important recognition of how vital we think this issue is, particularly in the context of difficult economic circumstances. That central co-ordination will continue in 2013. I hope that I have provided hon. Members with some reassurance.

The snappily titled strategic intelligence, prevention and enforcement partnership, despite being in need of a new name, co-ordinates nationally between trading standards and the National Trading Standards Board and liaises over the border into Scotland, with the Convention of Scottish Local Authorities and agencies there, and co-ordinates with external stakeholder organisations. It is also heavily involved in other activities, particularly in considering whether consumer or business education and awareness campaigns might be able to deal with some of the detriment caused.

Various ideas have been advanced in the debate about what could be done to tackle these scams. It was either the hon. Member for Meon Valley (George Hollingbery) or the hon. Member for High Peak (Andrew Bingham) who suggested an opt-in system, whereby people could say, “I’m worried about this. Can I opt in to extra help?” There is merit in thinking about that idea, but it relies on the individual recognising that there is a problem and wanting support. The hon. Member for South Derbyshire discussed scenarios involving vulnerable people who do not realise what is going on and will not be open to such action. That said, it is worth setting out what people can do if they are worried about this, and worth doing for the many who have not, thankfully, been victims of a scam and do not want to be.

The hon. Member for Edinburgh South mentioned things that people can do. I should like to elaborate on that. The Direct Marketing Association has two different opt-out mechanisms. The hon. Gentleman mentioned the mailing preference service, under which people can sign up to opt out of addressed direct mail, but rightly made the point that that does not include unaddressed direct mail. However, that association has a second service, which is called “Your Choice”, through which people can opt out of unaddressed direct mail. It has both services because some people might be happy to receive one type but not the other, so people have that option. Details of those opt-out schemes are available at dma.org.uk. The Royal Mail opt-out, which the hon. Gentleman mentioned, stops about a quarter of unaddressed direct mail delivered by Royal Mail directly through its bulk mailing system, although that does not apply to other items in the postal system.

If people sign up to all three mechanisms, that will generally stop about 95% of direct mail. Of course, if people are freely breaking the law and trying to scam innocent people out of money, they are probably not going to be too bothered about following the rules of the mailing preference service. However, the point was rightly made that, if much less direct mail is coming in, it may be easier to spot something that is fraudulent or a scam. These services can give people a little bit more peace of mind. I recommend that individuals who would like an opt-in mechanism take that action.

There is a desire in some quarters for legislation as a solution—the hon. Member for Romsey and Southampton North has introduced a private Member’s Bill, and the hon. Member for South Derbyshire mentioned legislation—which I understand. However, there are significant drawbacks in reaching for such a solution. On the legal point, amending the Postal Services Act 2000 would not create the effect sought by the proponents of this approach, because the rules on not intercepting the post are contained not just in that Act; they are also in the Police Act 1997 and the Regulation of Investigatory Powers Act 2000, both of which, for good reason, limit intercepts and set down the process for which warrants are required. A simple amendment to the Postal Services Act would not achieve the aim, and if those other Acts were amended the unintended consequences would be significant.

There are consequences relating to privacy of individuals who want their mail to be delivered without it being opened by somebody else: I think that is the vast majority of people. I do not like to say it would be using a sledgehammer to crack a nut, because this is a significant problem, but given the total number of items going through the mail—60 million items a day through Royal Mail, for example, making 21.9 billion a year—and even taking into account the 3 million people a year who are victims, trying to identify which items are causing the problems is like looking for a needle in a haystack. They do not have a big stamp on the front of the envelope saying, “This is scam mail”.

[George Hollingbery]

The Minister mentioned my opt-in suggestion. My thinking was that there could be an option for people to sign into, such that their mail could be intercepted by their local post office worker. We have heard about postal workers’ frustration about not being able to get involved. If somebody could opt in, giving a postal worker the right to intercept at the door, there might be some scope for that.

[Jo Swinson]

I thank the hon. Gentleman for his suggestion. I will mention Royal Mail’s response and what we could do to enhance that.

Volume is just one issue that we face. It is not easy to tell which letters are scam mail, because they can arrive in plain envelopes. Indeed, the people designing scams try to stay one step ahead of any regime.

[Heather Wheeler]

With 12 minutes to go, I am not going to fall out with the hon. Lady. Unfortunately, given protocol, I did not wave around the envelopes, but they really are obvious.

[Jo Swinson]

I take the hon. Lady’s point that some may be obvious. I do not think that all of them are. We are talking about 3.2 million victims of scams a year, so there will be a wide range.

If we begin to give people licence to intercept mail, that creates a fundamental change in the postal workers’ role. There is a related issue—a genuine operational issue—about feasibility and the resource required. The postal service is universal and is welcomed and valued. We need to think about the resource impact, given the 60 million items of mail a day.

There are, however, things that Royal Mail can do, given the communication channel in which it operates. Hon. Members have mentioned Royal Mail employees feeling frustrated because they want to ensure that they can help. That is often because the local posties will have a pleasant chat and pass the time of day with people, or say hello to them, in particular someone who is housebound or in during the day. They are frequently the people who notice if someone has had a fall or been ill, because the mail is piling up at the door, and many of them take a real interest as upstanding members of the community. There is no reason why they should not be part of the solution, and that is why there is specific awareness among postal workers of such issues—general awareness in the population is vital, but such front-line workers have particular access to individuals, where things are happening.

Such awareness has already started to develop. The hon. Member for Edinburgh South mentioned the lack of funds for advertising campaigns, which is right, but there are other ways of communicating and getting information out there. For example, Royal Mail has an employee magazine, in which the Think Jessica campaign has been publicised, including contact details and its aims. If postal workers are concerned about someone on their regular round, they have a way of being able to pass on those complaints to Action Fraud to ensure that the police and the authorities can deal with the issues. That is important.

At the other end—not the mail delivery end, but at the beginning, trying to stop things before they get into the postal system—Royal Mail is working alongside the police and the UK Border Agency to identify some of the scam mailing houses. Royal Mail has the ability to cancel contracts, and it has done so with particular bulk mailing houses if they are found to have been used to facilitate scams. Such action in the early stages is important, as is the role of that trusted individual with access as a conduit for good advice.

One idea was that postal workers could have an information leaflet to give out, which would be less intrusive than a power to open mail—I have outlined some of the problems with that proposal. Royal Mail does not leaflet at the moment, but I am happy to go away and take up the idea with Royal Mail, to see if it is feasible and useful. In the scenarios outlined by my hon. Friend the Member for South Derbyshire—I can imagine the brandishing of the envelopes that were pretty obvious—a leaflet could provide targeted and useful information without being intrusive or invading privacy. With awareness and enforcement, we can ensure that people understand the risks and can clamp down hard on the people who are abusing the system and conning innocent people out of money, causing a great deal of distress. That is vital.

I accept that my response is slightly disappointing for my hon. Friend, because I cannot say that the Government will support the proposed legislative change. I can, however, say that the Government are sympathetic to the problem she has rightly outlined. The victims of such scams are people who should not be conned out of their money. The practice is unacceptable and, to use a word used earlier, cruel. I disagree that we should deal with it by putting the onus on Royal Mail front-line staff and giving them an extra responsibility to identify things, then intercept and open the mail. Such an approach would be heavy-handed and there would be a raft of unintended consequences.

Another general principle is that legislation is a last resort. Some good ideas have been proposed in the debate today, and we can take those forward to see whether they can have a further impact. Indeed, excellent work is already going on, started through Scambusters under the previous Government, continued under this Government, to ensure awareness and that proper enforcement is followed up. Trading standards, Citizens Advice, individual MPs, UKBA and the police all have an important role to play in raising awareness, in improving enforcement and in putting a stop to this unacceptable practice.