Consumer Rights Bill

Stella Creasy Excerpts

Monday 12th January 2015 Commons Chamber

[Ben Gummer (Ipswich) (Con)]

I came late to this debate and picked up on some interesting arguments being put by Members on both sides of the House. At first glance, my one concern about the amendments is that they do not seem to address some of the valid points about robots that have been raised by Members on both sides. I am sure that the Minister will want to address that point when she answers the debate.

One point that has not been raised about the nature of the free market and how it operates for secondary ticketing is that there is not an absolute property right to a ticket when it is sold, because it is not like any other good. The hon. Member for Eltham (Clive Efford) mentioned second-hand cars, which someone might buy and then sell at a later date, but of course the ticket is merely a promise to provide a service or a piece of entertainment in a given period of time, and therefore the original vendor must retain some sort of property right. If the original vendor wishes to sell a ticket to someone at one price, perhaps because they are a certain age, come from a particular area or belong to a particular club, that vendor might still have some property rights that enable them to enforce the terms of that sale. I am sure that the Minister will want to address that issue as it pertains to the secondary market, because those people who sell tickets should be able to have some control at some point, if they wish, over who they sell those tickets to.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

It has been a year since we started to scrutinise the Bill, time during which much has changed, not least the Minister leading on it. As she can tell from today’s debate, she missed many treats during our debates, although I am not sure whether a repeat performance of the arguments made by the hon. Members for Bury North (Mr Nuttall) and for Shipley (Philip Davies) was what she intended to generate.

It has been a long journey and I pay tribute to all those Members who have sought to scrutinise and improve the legislation. Many debates have taken place to meet the test we set, as this is a once-in-a-lifetime opportunity to create a nation that is on top of its rights and can play a full and active part in the market in both the public and private sectors. Labour certainly recognises that helping people to make the most of their money is vital in a country that is drowning in personal debt—£1.43 trillion of it. Little wonder that StepChange Debt Charity says that six out of 10 people in this country believe that politicians must do more in the next five years to help them stay out of financial difficulty. Making sure that they do not get ripped off should therefore be absolutely paramount in the work we do and in this Bill.

I pay tribute to the hon. Member for Hove (Mike Weatherley) and my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) for tabling the amendment and for their perseverance on ticket touting, which is a clear example of people being ripped off. I also want to pay tribute to the hon. Members for Bury North and for Shipley for their persistence in making their arguments and possibly making Friedrich Hayek spin in his grave through their interpretation of a free market. Let me deal with their arguments, because I think we will have to come back to them otherwise.

Few other markets would be characterised as free in which a limited number of sellers hoard a product, buying it up in bulk using underhand methods and then colluding to sell at hyped prices. Just because this is happening on the internet does not make it any different. One of the golden rules of the free market is that people should deal with each other honestly and require honesty in return, and that is clearly not what is happening in this industry. It is clearly not a free market. I am also delighted that both hon. Gentlemen outed themselves as fans of St Trinian’s, because that can be the only explanation of why they believe that this is about spivs in pork-pie hats looking at the types of shoes people are wearing rather than a billion-pound ticket-touting industry that is damaging the pockets of fans of sport and music.

One reason we support the amendment tabled by the all-party group on ticket abuse and reject the Government’s call to reject the cross-party call from the Lords to address this issue is that we do not agree with the Secretary of State for Culture, Media and Sport that this is classic entrepreneurship, precisely because we know that it is not an open market. We know that botnets are hoovering up tickets the second they go on sale. Fans simply do not stand a chance.

Some estimates put the figure at 60% of tickets being taken up in this way. One expert looking at the sporting industry in the past year has identified around 30% of tickets being bought up in this way, so fans cannot click fast enough to beat the botnets. The Secretary of State challenged my hon. Friend the Member for Washington and Sunderland West and said:

“The interests that the hon. Lady is representing are probably those of the chattering middle classes and champagne socialists”—

I noted that the hon. Member for Shipley called me a socialist earlier; I have amended my Twitter biography accordingly, with his praise—

“who have no interest in helping the common working man earn a decent living by acting as a middleman in the sale of a proper service.”—[Official Report, 21 January 2011; Vol. 521, c. 1187.]

This is no Flash Harry and this is no decent living.

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[Jo Swinson]

I am delighted to speak on the Bill for the first time—a Bill whose development and gestation took far longer than my pregnancy. Although the hon. Member for Walthamstow (Stella Creasy) says that I missed many a treat, she does not know that I did watch Second Reading on BBC Parliament during my maternity leave, although I had to use the pause function occasionally. It seemed to have a fairly soporific effect on my son. Perhaps that is a tip for all new parents—the delights of BBC Parliament.

The debate often seems polarised, with on the one hand the advocacy of very prescriptive primary legislation to deal with the issues, and on the other, the speeches of my hon. Friends the Members for Shipley (Philip Davies) and for Bury North (Mr Nuttall), who argue that the free market is working perfectly and no intervention is required. I recognise that there are issues and difficulties. We have to find the best way forward to deal with those so that the interests of consumers are well looked after.

A careful balancing act is needed. We want to make sure that as many people as possible can access events, whatever their means. We want sports and entertainment in the UK to flourish. We have some of the best events and tournaments in the world, which bring in large numbers of international visitors and businesses. We also, of course, want to protect consumers and allow the ticket resale market to work as well as it can.

There has been an encouraging trend in recent years towards safer and more tailored online ticket marketplaces and away from the touts outside venues. These websites can offer much more consumer protection than was available before, often in excess of what the law requires. The sites have processes in place to try to prevent, discourage and punish fraud. Although no market is perfect, we know how much time, money and emotion fans invest in attending events, so we want fans, as consumers, to be able to operate safely in this market.

There are already protections in place for consumers. The consumer contracts regulations came into force just six months ago to ensure that consumers are fully informed before they buy from a trader. At the time, the Government announced guidance specifically on internet ticket sales to accompany those regulations, which build on existing law such as the Consumer Protection from Unfair Trading Regulations 2008, which protect consumers from being misled by practices such as claiming that a seat is on the front row when it patently is not.

The regulations complement the Fraud Act 2006 and the Computer Misuse Act 1998, which list a range of offences available to law enforcement to tackle the fraudulent sale of tickets and the criminal harvesting of tickets from online ticket sales. Botnets and hacking into sites have been mentioned, but these proposals would not only cover cases of hacking. Botnets could also be illegal if, for example, they were being used to gain unauthorised access to a website that clearly states that it deals with real individuals.

We are absolutely committed to ensuring that the law is properly enforced. We have a powerful economic crime command within the National Crime Agency to drive forward this work. We have invested about £86 million to build law enforcement capabilities to respond to cyber-crime, including online fraud. We have strengthened the reporting and intelligence arrangements for fraud. Action Fraud is now the single national reporting centre for fraud and financially motivated cyber-crime. Since 1 April last year, responsibility for Action Fraud rests with the City of London police, bringing it closer to the National Fraud Intelligence Bureau.

The City of London police are also working with the organisation behind the rugby world cup to exclude participants in the ticketing lottery who have links with previous reports of fraud. In October last year, the police reported that they had foiled “hundreds” of fraudulent attempts to gain tickets via the official ballot. The Competition and Markets Authority and trading standards bodies lead consumer law enforcement in this area. Through their hard work, trading standards officers have successfully enforced consumer law—for example, right here in Westminster in reducing the number of consumers being caught out by bogus theatre tickets.

My right hon. Friend the Member for Cardiff Central (Jenny Willott) and Baroness Neville-Rolfe have previously set out the Government’s position. We do not think that there are no problems in this market, but we have to find the best way to tackle them.

In that context, I will set out the difficulties involved in Lords amendment 12. Although it purports to add further transparency requirements to protect consumers, it could have the opposite effect. It would mean that all sellers, whether as a business or as one friend selling to another, would have to provide detailed information about themselves and the ticket they were selling, including the seat number and the booking reference number. That would enable the event organisers to cancel tickets put up for resale, as is intended by the amendment. That would mean that a fan with a spare ticket, perhaps because their friend is ill, could not resell it without risking having all their tickets cancelled. Someone who had bought a resold ticket could arrive at the venue only to be refused entry on that basis. That does not seem very fair or proportionate.

[Stella Creasy]

Will the Minister clarify two things? First, does she think that the amendment applies to individual-to-individual sales? It is actually aimed at the marketplace that secondary ticket sites create. Secondly, if she is worried about resales and tickets being cancelled, will she accept the amendment proposed by the all-party group, which would specifically deal with that to ensure that it does not happen?

[Jo Swinson]

I recognise the attempts made in that amendment, although they do not address all the difficulties that I have outlined. Many people who are unable to attend an event at short notice will find that they have another friend who is happy to go along to it with them, but others will not, so they will use online marketplaces, in which case these issues will apply.

One of the main difficulties with the Lords amendment is that it would require sellers to provide their name. That should raise concerns, because it would include private individuals who could be young people or vulnerable consumers. Perhaps a 14-year-old One Direction fan who is unable to attend the concert she has bought tickets for will want to resell them, and in doing so would have to provide her name online. This is a concern not about ticket sales but about things such as identity theft and the difficulties involved when private individuals have to place their names online. There were over 100,000 reports of ID fraud in 2013, and we do not want to support proposals that could—albeit inadvertently —push that number higher.

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[Jo Swinson]

I will come to enforcement, because I accept that there are issues that need to be looked at, but I want to complete my explanation of the difficulties with amendment 12.

There is a real risk that introducing these additional, more stringent information requirements would go beyond the provisions set out in the consumer rights directive, which EU law does not allow us to do. Compliance with EU law might be further harmed in relation to the technical standards and regulations directive. To comply with that directive, the amendment would have to be notified to the Commission at least three months before the Bill was due to finish its passage through Parliament, meaning that it remained in draft form during that standstill period. We have clearly run out of time for such steps to be taken now. The consequence, which I know the proposers of the amendment would not want, is that amendment 12 could end up being unenforceable if it were passed in its current form.

[Stella Creasy]

It is interesting that the Minister raises the EU directive, which talks about the importance of providing the characteristics of an item that is being sold. If the characteristics of a ticket are not to say where the event is, what time it is, and which seat it is, what does she think would be included under the directive?

[Jo Swinson]

Much of this information already has to be provided under the consumer contracts regulations, and that is absolutely fine. However, amendment 12 goes beyond that—for example, in requiring individuals to give their name. I do not think that people would wish to run the risk that it ended up being unenforceable, but unfortunately that is the legal situation.

The amendment tabled by the hon. Member for Washington and Sunderland West (Mrs Hodgson) talks about stating the face value on the ticket. I understand what she is getting at, but this is not a particularly helpful concept to use in legislation because the face value is not clearly defined. A ticket does not necessarily have just one value—there may be delivery and administration charges, and the seller might not know which of those needed to be included in the face value. If the fan selling the ticket got that wrong, the ticket could end up being cancelled without their knowledge. The value stated on the ticket might not be what the fan paid because of the fan club or early-purchase discounts that have been discussed. People would not want consumers to lose money when they cannot attend an event, and the face value would not always cover what the consumer had actually paid.

There is a more substantive issue of principle. Is it right for Government to tell consumers that they cannot sell items that they have bought second-hand at above the price that they paid for them? If I buy a book for £4.99 and then a very popular film is made of it and a friend offers me £10 for the book, why should the Government get involved and say that it cannot be sold on?

Perhaps unintentionally, the amendment suggests that it is acceptable for an event organiser to cancel tickets that have been sold for above face value. Many hon. Members have addressed the issue of terms and conditions, and some have said that organisations should be able to cancel such tickets, but that would not necessarily always be a fair term. Under the Unfair Terms in Consumer Contracts Regulations 1999, it would be up to a court to decide on a case-by-case basis, but it may not always be a fair term.

There are problems in the market—as is the case in any market—which is why we have listened and are taking action. We agree on many of the issues relating to consumer information, including consumers not knowing where to go to get redress when they have a problem with a resold ticket. Consumers sometimes raise concerns with event organisers when they should approach the online marketplace where they bought the tickets. Of course, that can be inconvenient and frustrating for both the organiser and the fans.

There is also a problem with bulk selling and the people who have been referred to as bedroom touts. Like the organisers, I am not comfortable that there are people who buy tickets as if they were real fans, but with the sole intention of reselling for a profit. I am, therefore, pleased to announce various actions that we have taken. We have been working closely with the secondary ticket marketplaces and continue to have constructive discussions with them and the event organisers.

The online ticket marketplaces have made a range of commitments, as outlined in the letters that have been placed in the Library of the House and are available from the Vote Office in the Lobby. They have committed to providing further information and transparency, to make sure that consumers have appropriate information. The commitment covers much of the information that Lords amendment 12 would require, but it will not breach EU rules, result in unintended consequences for privacy and fraud, or give event organisers the opportunity to cancel tickets put up for resale.

Secondly, the marketplaces have confirmed their commitment to consumer protection. When consumers have a problem with a ticket they have bought on an online marketplace, they should have access to redress. The marketplaces have set out the guarantees they provide to users and how they work to protect consumers. Thirdly, the marketplaces have committed to ensuring that consumers know where to go to get redress by providing the information prominently on their websites. Alongside those common commitments, they have committed to a range of different improvements specific to their individual sites. They are all welcome commitments.

In addition to the action taken by industry at a practical level, we want to ensure that the Government address the issues with an evidence-based approach. The Department for Culture, Media and Sport has today launched an independent review of the effectiveness of the current law—and, indeed, what can be done to improve it. The review will survey enforcement of the current consumer law as it applies to online marketplaces as facilitators of transactions in tickets, and it will assess the challenges of enforcement of that law. We invite the review to suggest how that enforcement could be improved. That will include looking at how to tackle bulk selling, which has been raised by many Members today, and how to effectively enforce the law against traders impersonating consumers in order to evade consumer law.

I have written to trading standards to gather evidence on what more can be done to enforce consumer law as it applies to buyers and sellers of tickets. That will complement the DCMS review. To respond to the hon. Member for Eltham (Clive Efford), I have not yet received a response from trading standards, but I will, of course, keep the House informed.

Given the ongoing commitments to tackle the genuine issues, I urge the House to reject Lords amendment 12 and the amendment to it, and to welcome the package of measures that I have announced.

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[Jo Swinson]

I am delighted that we are bringing the Bill back to the House in such good shape. There was a good debate in the other place and a number of amendments build on and improve the Bill. We listened to concerns in both Houses about consumers being out of pocket if they have to pay to return rejected goods, and as a result we agree that it is sensible to make it clear in the Bill that the trader bears responsibility for the reasonable costs of returning goods that have been rejected by the consumer. That provides clarity and sets a sensible balance between the parties, without causing significant burden to business.

The Bill has always contained a provision that if a consumer exercises the final right to reject, the trader may reduce the refund to take account of the use that the consumer has had of the goods, unless the goods are rejected in the first six months, in which case the general rule is that no deduction may be applied. That is intended to balance the interests of consumers and traders, and for that reason the Bill provides a limited exception to the general six-month rule. However, we understand the concern that that exception could be interpreted too broadly, and in response we have narrowed the exception to address specifically the impact on the motor industry.

The particular nature of motor vehicles may affect the balance between traders’ and consumers’ interests because cars are high-cost items that lose value quickly. They are also complex, so it is more likely that a car will develop two faults in the first six months than, for example, a piece of furniture. The option to make a deduction for use in the first six months is therefore particularly significant for traders in motor vehicles.

The amendments include a power to increase the scope of the exception if appropriate in future. We think that is important, as it is not possible to predict the goods and technologies that may develop. We are conscious of the need to reflect the dynamic nature of digital content. Many forms of digital content are not static products and change over time with updates to software and apps. The Bill provides that the digital content must meet the quality rights—satisfactory quality, being fit for a particular purpose and as described—following an update. We listened to concerns raised in the other place that as originally drafted the requirement could prevent traders from improving digital content or offering flexible products. That outcome would not be good for consumers, so we have clarified that the requirement does not prevent traders from adding new features or enhancing existing features, as long as the original description is still met.

We have amended the provision on digital content that causes damage to a consumer’s device or other digital content. That will allow traders to exclude or restrict their liability under the Bill for damage to the consumer’s device or other digital content, to the extent that it would be fair under the unfair terms provisions in part 2 of the Bill. That provision will apply even to free digital content, specifically when it causes damage and the consumer can show that the trader failed to use reasonable care and skill to prevent the damage occurring. We have clarified the maximum fining penalty that the regulator of premium rate services can impose on non-compliant and rogue operators, and we are making clear that where appropriate and proportionate, the regulator can impose the maximum fine for each contravention of the code. That maximum is £250,000, so in the event of a company making two serious contraventions of the code, the regulator could impose a fine of up to £500,000 if that was considered appropriate and proportionate.

We are determined to tackle the minority of rogue letting agents who offer poor service, and in Committee we added provisions to ensure transparency of letting agent fees, to give consumers the information they want while supporting good letting agents. It is important that that requirement comes into effect as soon as possible to ensure that tenants have certainty over the payments that they make, and for that reason we are putting the enforcement details in the Bill. We are also applying the duty on letting agents to publicise fees in Wales as well as England. That was requested by the Welsh Government and has the added advantage of minimising any cross-border enforcement problems.

Existing legislation requires landlords and letting agents acting on their behalf to protect the tenant’s security deposit. That is the most significant money likely to be held by an agent, but they might hold other money on their client’s behalf, which is why the Government already encourage agents to join client money protection schemes. Public awareness of that is not as high as we would like, so we are also requiring agents to state whether they are a member of a client money protection scheme.

From 1 October last year all letting agents and property managers must belong to one of our three approved redress schemes that provide tenants with an effective way to address complaints. We will now require letting agents to publicise which redress scheme they have joined. Those changes will level the playing field for agents by raising awareness of what best practice looks like, put downward pressure on fees, and provide consumers with the information they need without introducing significant new costs to the sector.

As set out in our 2011 White Paper on higher education, we are providing all higher education students who receive public support with access to external dispute resolution. That reflects the fact that increasingly, new and different providers are offering higher education, not just the traditional university sector, yet only a handful of alternative providers—seven in total—have so far voluntarily joined the Office of the Independent Adjudicator’s complaints handling scheme. We are making it mandatory for alternative providers whose courses are designated for student support to join.

I convey my grateful thanks to the Delegated Powers and Regulatory Reform Committee. It published the outcome of its scrutiny on 11 July 2014, and I was delighted to accept its recommendations that the exercise of certain powers in the Bill be subject to the affirmative resolution procedure, as reflected in the amendments. We also addressed concerns that current provisions for the appointment of the Competition Appeal Tribunal—or CAT—effectively exclude judges from the Scottish Court of Session or the Northern Ireland High Court. We have now ensured that Lord Chief Justices of England, Wales and Northern Ireland, and the Lord President of the Court of Session, may nominate any suitably qualified individual who is already a judge sitting in a relevant court to be deployed as a CAT chair.

We have improved provision for private actions in competition law. First, we are allowing the Competition and Markets Authority—the CMA—to approve an outline of a voluntary redress scheme, and for the business to create a full scheme afterwards. That is part of a wider Government initiative to promote alternative dispute resolution, and it allows responsible businesses who wish to make redress to those they have wronged an avenue to do so. The amendment allows the CMA to impose conditions necessary to set up a full scheme. If those conditions are not complied with when the full scheme is set up, the CMA can withdraw approval or consider a revised scheme.

We are enabling provision to be made for claimants to incur costs if they apply to have the representative to the action removed but lose the application. That is in line with the wider “loser pays” principle that exists in domestic law, and should deter vexatious applications. The Government recognise that during collective proceedings, not all damages are claimed. Therefore the Bill makes provision that the CAT may award unclaimed damages from opt-out collective action proceedings to a prescribed charity—currently the Access to Justice Foundation. Although the body to receive unclaimed damages may be changed, we are ensuring that it must always be a charity.

The Bill consolidates and simplifies important provisions on investigatory powers of consumer law enforcers, and the Government greatly value the vital work that enforcers such as trading standards do in protecting consumers and legitimate businesses. We now require enforcers to give two days’ written notice for routine inspections, and we have set out clear exemptions to that. We are firmly underlining that provision by putting it beyond doubt that notice need be given only for routine inspections, which is when there is no reason to doubt that the business in question is operating properly without any significant breaches of legislation. We have committed to review the practical effect of the notice requirement within two years of the commencement of the Bill. As a result, we are confident that the powers and safeguards strike the right balance between protecting civil liberties, reducing business burdens, and ensuring effective enforcement, and I invite the House to agree with the amendments.

[Stella Creasy]

In the short time available let me say that I think we are looking at a form of alternative dispute resolution this evening, so let me first flag up the positive in terms of the customer service feedback we would like to give to the Government on these Lords amendments: we will be supporting all the Lords amendments. In particular, there are three that are worthy of consideration, following the rule about the six in 10 Britons who believe that politicians should do more in the coming years to help them stay out of financial difficulty.