A recent report from the Commons Public Accounts Committee has indicated that the UK’s consumer protection system is leaving people at risk of online scams.
The report from a group of government MPs suggested that the protection system is not keeping pace with the digital revolution.
Rogue traders are able to rip people off on the internet. They are basing their practices in areas where there is little policing by the authorities, running scams such as fake lotteries, counterfeiting and other questionable trading practices.
Rogue trading is estimated to cost consumers in the UK approximately £6.6 billion every year and many people are left open to email scams and fraud.
Earlier this year, the National Audit Office described the current consumer protection systems as ‘fragmented.’ There appears to be little help for consumers across the country, as the staff levels in trading standards departments vary from as few as 2 to 80.
In 2009 to 2010, local authorities have spent £213 million on consumer law enforcement whilst the central government only spent £34 million. The report from the Commons Public Accounts Committee suggested that the level of spending by local authorities is providing inadequate protection for consumers and leaving ‘enforcement deserts’ for rogue traders to exploit.
The rogue traders can operate in these local ‘enforcement deserts’ and use technology to run nationwide scams. As such, the protection system is unable to keep up with traders who can trick people out of their money over long distances.
The report went on to point out that trading was more localised when the protection system was set up. This meant that consumers tended to lose money through one off occurrences such as being overcharged. However, as the number of companies who operate on a national scale has grown along with the increasing popularity of online shopping, problems are beginning to appear on a regional and national level.
According to the report, there is no clear arrangement for the policing of these larger cases.
Under plans for the restructuring of consumer protection, the Consumer Focus watchdog is to be abolished and the work done by the Office of Fair Trading is to be scaled back. Margaret Hodge, who chaired the committee, has warned that these changes, planned by the Department for Business, must not leave the public open to new and more sophisticated scams without challenge.
Mrs Hodge added: “Doorstep selling of substandard or non-existent services is a massive issue for consumers, particularly those who are vulnerable. The department has too little information on what the cost of protecting consumers is or how successful current interventions are.”
The Department of Business confirmed that they are working with local authorities to to provide more effective national leadership and ensure that their resources are used effectively to target the bigger scams.
However, trading standards officers have suggested that their budgets are already tight and without adequate support they are unable to effectively fight rogue traders at cross-border level.
Furthermore, excessive belt tightening will continue to work against their services.