Consumer Rights Bill

Sharon Hodgson Excerpts

Tuesday 28th January 2014 Commons Chamber

[Stella Creasy]

I am disappointed that the hon. Gentleman does not believe that we can clarify what should be included in prominent pricing and at what point in the sale that information should be provided. Perhaps that reflects the Government’s small vision for consumer rights, because we could put that basic principle into the Bill and it would help to deal with a range of issues. The Government have chosen not to do that, and we are going to challenge them about it.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

My hon. Friend is making some excellent points, especially about the secondary ticketing market. Does she agree that there is now demonstrable market failure, which is one of the measures that the Government always said they would need before they would regulate the market? Does she think that the time has now come when we need to legislate to do something about that parasitic economy?

[Stella Creasy]

I pay tribute to my hon. Friend. She has been a tireless campaigner on this issue and seen at first hand the frustration of fans denied the opportunity to go to events. There are ways we can address that market, and principles about how sales are made and who has the opportunity to sell a product. We could put those clear and simple proposals into legislation and they would benefit not just the secondary ticketing market, but also some of the other markets under discussion. The Opposition have committed to testing the Government in Committee about why they feel they cannot provide that protection for people, and I hope the hon. Member for Meon Valley (George Hollingbery) will reflect on that and agree with us. As he said, it is difficult to disagree with these issues, but we now need to act. It is no good wringing our hands when we could prevent some of those problems.

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[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

Colleagues who remember my speech during the debate on the Queen’s Speech at the start of this Session will know that I see this Consumer Rights Bill as an opportunity to address the serious failings in the secondary ticketing market. I want to explore that opportunity in my speech today. I was pleased to hear my hon. Friend the Member for Walthamstow (Stella Creasy) agree with my views on this in her excellent speech, and I am pleased that she is drafting amendments to the Bill accordingly. I know that a growing number of Government Members also agree with me.

Many colleagues will know that I have campaigned on this issue for a long time. I secured a Westminster Hall debate on the subject only last week. I see that one of my sparring partners, the hon. Member for Bury North (Mr Nuttall)—who is often on the opposite side to me on this issue—is in the Chamber today. That debate was intended as a curtain-raiser for an inquiry that is being undertaken by the newly-formed all-party parliamentary group on ticket abuse, which I am pleased to co-chair with the hon. Member for Hove (Mike Weatherley). He is also a long-term campaigner on this issue. That inquiry is intended to inform the thinking on amendments to the Bill that could be tabled in order to enhance the rights of consumers in a market that has had precious little scrutiny thus far, despite being worth around £1 billion a year.

I hope that the Government’s timetable for the Bill will allow us to conclude our evidence-gathering in time to present that evidence to Ministers for Report stage, although, for my money, there is plenty already out there that makes the case for intervention, some of which I will skim over in my speech today. If Ministers want a more detailed case, I would be happy to send them the Official Report of the debates on my Private Member’s Bill in 2011 and of last Tuesday’s Westminster Hall debate.

Like all markets, the secondary ticketing market serves a purpose. It meets a need, and that need is for people who have bought tickets for an event they can no longer attend to sell on those tickets, and for people who decide late that they want to go to an event to purchase tickets nearer the time. However, the refusal of successive Governments to get involved in this issue means that the market has moved far beyond simply performing that role, and it is now fundamentally failing consumers.

If anyone needs proof that these secondary ticketing websites are not about legitimate fans selling tickets they cannot use, they need only watch what happens on the day that tickets for a major sporting event, concert, or stage show go on sale. Within minutes—sometimes even seconds—an event or series of events for which there are thousands of tickets completely sells out on the official market, only for thousands of tickets to appear instantaneously on the secondary market at a significant mark-up. Nobody buys a ticket at 9 o’clock in the morning, only to realise at 9.5 am that they cannot go to the event. Those are tickets that are harvested in vast quantities, by fair means or foul—the foul means involve the misuse of computers or back-channel dealing—and then either dumped or drip-fed on to the secondary market for profit by industrial touts.

Just last week, the BBC highlighted the resale of state-subsidised theatre tickets at the Donmar Warehouse and the National Theatre for up to 10 times their face value. Those tickets are rightly subsidised to increase access to the arts, but those arrangements are being exploited by faceless individuals who are pricing out the very people the tickets are supposed to be for. The same happens with art tickets—the Da Vinci exhibition in 2012 and the David Bowie exhibition last year are prime examples. This applies to more commercial enterprises as well. The last big example of that was tickets for the Monty Python reunion being snapped up and resold at eye-watering mark-ups within minutes.

I do not know whether the Secretary of State for Business, Innovation and Skills is a fan of the Arctic Monkeys—it is not exactly ballroom dancing music—but that band has done more than most to try to stop touts cashing in on its hard work. Even it cannot stop the practice, however, despite trying to do so and despite doing nothing to encourage it, as some bands and promoters are accused of doing. If the Secretary of State wanted to see the Arctic Monkeys at Finsbury park in May, the minimum he would have to pay for a ticket on the secondary market would be double its face value. On one of the websites, I counted seven pages of listings, with some entries allowing up to 10 tickets per applicant.

This is not about random gig-goers; this is large-scale manipulation of a market, and an exploitation of copyright and intellectual property by individuals who put nothing into the industry that they are capitalising on. It is a parasitic market that is now out of control. In many cases, the practice severely undermines the strategic objectives that are factored into ticket pricing decisions, such as the need for artists or sports to develop long-standing relationships with fans or, as in the case of National Theatre and exhibition tickets, access to the arts.

More importantly for me, this practice is obviously bad for consumers. Many never get a chance to buy a ticket at face value, and if they can bear the cost of going to the secondary market, they do not know who they are buying from or whether the ticket will be genuine or still valid, as event holders have the right to cancel tickets they identify as having been resold. They cannot even be sure whether the ticket was ever available on the primary market at the face value printed on it, as more and more event-holders try to cash in on the secondary market by directly allocating tickets to it, passing themselves off as fans selling to fans so as not to damage their reputation with fans.

The report from Operation Podium, the Metropolitan police unit set up to monitor crime related to the Olympic games, shows that the complete and intentional lack of transparency in the market creates a front for fraud and large-scale money-laundering. The market is therefore attractive to organised criminal networks, which are of course more likely to use illegal means such as botnets to harvest genuine tickets, making it even harder for consumers to buy tickets at face value. The report, “Ticket Crime: Problem Profile”, clearly states:

“The lack of legislation outlawing the unauthorised resale of tickets and the absence of regulation of the primary and secondary ticket market encourages unscrupulous practices, a lack of transparency and fraud.”

Those are not my words but those of the Metropolitan police report.

I hope that the Government will have heard the excellent exposé that Radio 4’s “You and Yours” produced in conjunction with ticketing expert Reg Walker last summer, which uncovered a large-scale fraud perpetrated through the main secondary websites by their so-called power sellers, whose privileged status allowed them to do that. This was able to happen precisely because of the opaque nature of the market and the way in which those websites operate.

What better way of addressing this kind of problem than through the Consumer Rights Bill? At the very least, the Government need to ensure that there is a right to transparency. After all, there are very few markets in which we think that it is fine not to have at least some basic knowledge about who we are buying from. To ensure that consumers have the information they need to make an informed choice, these websites must ensure three things. First, they must ensure that all ticket listings display the face value, and seat number where appropriate, of the tickets being purchased. That would prove that it was a real ticket that was already in existence.

Secondly, websites selling tickets that they have acquired themselves, or that have been directly allocated to them by an event-holder, must disclose that clearly to buyers, instead of passing the tickets off as being sold by fellow fans. Thirdly, individuals selling tickets via the websites must be able to provide proof that they actually own the ticket. When we buy from eBay or Amazon, we are at least able to see a profile of the individual or company we are buying from. We can see what they have sold in the past, and what other consumers are saying about them. The secondary ticket market could learn a lot from that approach.

Those measures would cover the right to information, but there must also be a right to recourse when the market lets consumers down. As I demonstrated earlier, the way in which the market works at the moment is allowing fraud to be perpetrated under the anonymity that the secondary websites offer to sellers. When someone turns up at a venue and finds that they cannot get in because they have been sold a fraudulent or invalidated ticket—or a ticket that has rightly been cancelled because it has been resold without permission, in contravention of its terms and conditions—it is not just the price of the ticket that that person loses.

[Mr David Nuttall (Bury North) (Con)]

The hon. Lady has mentioned the word “fraud” twice now. If a fraud has been committed, does she not agree that a crime will have been committed and is therefore actionable by the police as a crime?

[Mrs Hodgson]

I do agree, but people who report fraud or illegal activities to Action Fraud are finding that the offence is not being taken forward. Perhaps it is because it is seen as a minor fraud or a minor criminal offence. The Metropolitan Police have recommended that we pass legislation to ensure that we take forward such offences as criminal activity. We need to put such a measure in the Bill so that we can follow their recommendations.

A new report by UK Music on music tourism and its value in our economy calls on the Government to tackle the problems of the secondary market. It says that people who travel from one country to another or from one end of the country to another for the sole purpose of going to a gig or seeing a show incur substantial costs, such as those for travel, airfares, accommodation and subsistence. Consumers who are sold fake or invalid tickets should not expect to have just the cost of the ticket refunded promptly. That guarantee, which they actually pay for as part of the service charge that is slapped on the tickets when they buy from these sites, is not always honoured judging by some of the stories that people have sent me over the years. Consumers should also have the right to be able to reclaim all of the associated costs they have incurred where they can be proven with receipts.

Such measures would not prevent the secondary market from functioning, but it would ensure that it is focused on the rights of consumers, rather than on the rights of a handful of industrial touts who want to make unlimited amounts of money off the hard work and investment of others. Personally I would like to go even further, and allow rights holders properly to protect their tickets from being resold without authorisation. I hope that a future Government would look more favourably on such a measure than the current Government do.

It is ludicrous that the Government have ignored the calls of the Rugby Football Union and England Rugby 2015 to ban the unauthorised resale of world cup tickets as they did for the Olympics. I hope that when the world cup comes around, our streets are not littered with those who have, in all innocence, bought counterfeit tickets, because they are being sold all over the place and are available from unofficial outlets, and fans have not been able to tell the difference.

Given that two of the four secondary ticketing platforms are already listing tickets for the final and for numerous other games and were doing so as far back as December, despite the fact they do not go on general sale until October, there is clearly a question about whether every ticket that is listed on those sites actually exists. However, the best should never be the enemy of the good. The measures I propose are very much in keeping with the spirit and intentions of this Bill, and will be widely supported by the live events industry and consumers alike. I hope that Ministers and other Members will look on them favourably—perhaps they can be incorporated into the Bill before its later stages—and take action to put consumers of live ticketed sporting and cultural events first and to tackle once and for all the parasitical ticket touts who prey upon them.

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[Jenny Willott]

If the hon. Lady would listen, I just said that the Department has written to public enforcers to ask them to enforce the law properly. The problem is clearly still happening, and we are all aware of instances of it. Recently, there were reports about the issue on the radio, particularly about the fake HMRC websites. There are lots of things that are illegal that still go on until there is a crackdown. This is one such thing, and we are doing what we can to encourage public enforcers to take action to close down websites that are clearly in breach of the law.

On a technical point, the issue of devolution was raised by a number of Members from Northern Ireland, and I should like to clarify the situation. The issues covered in the Bill are reserved to Westminster with regard to Scotland and Wales, but they are devolved to the Northern Ireland Assembly. The devolved Administrations in all three nations were consulted throughout the drafting process, and both Cardiff and Edinburgh are perfectly satisfied with the measures and are happy for them to be implemented across England, Wales and Scotland. I completely agree with the hon. Member for Strangford (Jim Shannon) that we are all part of one country and that it is important to be consistent across it. I am glad to be able to tell him that the Northern Ireland Assembly has agreed to a legislative competence order so that the Bill will apply across the board to the whole of England, Scotland, Wales and Northern Ireland. There will be consistency in the application of all the measures to the whole of the UK.

[Mrs Hodgson]

Will the hon. Lady clarify something? I think I heard her say that some of the issues raised by hon. Members did not fall within the remit of the Bill, including the point that I made about the secondary market in controlling ticket touts. Am I correct in thinking that she is not going to respond to any of my points?

[Jenny Willott]

Some of the issues that the hon. Lady raised related to unfair contract terms, which I shall come on to in a minute. Many other issues relating to banking legislation and the regulation of energy markets do not fall within the remit of the Bill, and they are the responsibility of other Departments. However, I shall come on to the points that she made about ticket touting.

As the hon. Member for Mid Norfolk (George Freeman) said, many good businesses already offer enhanced rights to their customers. The Bill will help them, because it will create a level playing field, and it will help us to have fair competition. The hon. Member for Windsor (Adam Afriyie) made it clear that the Bill will bring significant benefits to businesses, saving them time and money, and helping them to provide a better service to customers. It will also make the market more competitive, which helps everyone.

On the specific matters raised, the hon. Member for West Bromwich West mentioned the issue of deductions for use when a product is returned to the trader. As he said, we accepted some of his Committee’s recommendations, and it is vital that we begin the debate by recognising the fact that current legislation allows for a deduction for use whenever the customer exercises their second-tier right to reject. The Bill strengthens that by saying that a deduction for use cannot be made until after the first six months from purchase with a limited exception. As a result of the pre-legislative scrutiny, ably led by the hon. Gentleman, we decided to tighten and limit that exception even further. It is important to maintain the ability to deduct for use, but to ensure that there is a fair balance between the rights of consumers and the pressures on business.

The hon. Member for East Antrim (Sammy Wilson) raised the issue of time- limiting the period available for repairing products, as did another hon. Member. A number of factors will be beyond the control of the trader and a fixed time limit may impose a significant burden on them. When providing a repair the trader must carry out a number of actions, including taking delivery of the goods, diagnosing the faults, and perhaps sending the goods away for repair or ordering in parts. Similarly, the trader may have to order in a replacement. We are concerned that imposing a time limit may lead to a reduction in the quality of the repairs, which may in turn lead to a loss of faith in the repairs, and ultimately to an increase in the number of goods being rejected. We do not want to see that, so we do not propose to lay down a specific time limit in legislation because it could be counter-productive to the interests of consumers.

A number of hon. Members raised the issue of digital content. For the first time, the Bill introduces consumer rights for digital content. We are one of the first countries in the world to legislate in this area. I hope that as well as benefiting consumers, this will help to give this sector of the economy a competitive edge in the future. Such an important and rapidly growing industry needs to be governed by a clear and effective consumer framework. Many consumers assume that they have rights at the moment and are confused and concerned when they find out that they do not. We heard from a number of Members about the scale of this. During the last year, 16 million consumers have had a problem with downloaded material. I accept that, where possible, we should align the digital regime with goods and services to make it as clear and simple as possible for consumers, but we should do that only where it makes sense, and we need to ensure that we neither over nor under-regulate this important sector to ensure that it can grow.

Another issue that was raised by the hon. Member for West Bromwich West concerned the outcome-based quality standard for services. The Bill reflects the current position, which, as he knows, requires services to be undertaken with reasonable care and skill. As part of the consultation ahead of the Bill, the Government asked for comments on additional proposals to move the services regime closer to the regime for goods by introducing an outcome-based quality standard for certain services, but the responses that we received gave a wide range of views, including contradictory views on whether an outcome-based standard would be easier to understand. While in some cases, such as repair or certain installation services, it may be quite simple, in other cases a view on the quality of a service is subjective, and therefore much harder to determine.

As the hon. Gentleman said, the issue is complicated and difficult. I completely understand where he and his Committee are coming from, but the Government feel that the evidence does not fully support the conclusion that they came to and we have decided to stick with the current legal position requiring reasonable care and skill rather than introducing an outcomes-based quality standard. The current system is understood and it seems easier to apply, rather than introducing a new system that could be complicated and subjective, particularly as there are strong views on either side.