By Marcus Leach
A report published by MPs today (Wednesday) reveals that the UK consumer protection system has failed to keep pace with the digital revolution, leaving people at risk of scams.
Individual consumers lose around £6.6 billion every year because of the malpractices of traders, for example by purchasing defective goods, being misled by advertising or being offered inadequate redress by traders.
At least a further £4.8 billion is lost through malpractices which occur at a regional or national level, such as mass market scams, counterfeiting, and unscrupulous traders who operate over large geographical areas.
The Department for Business, Innovation and Skills (the Department) has overall responsibility for policy on consumer protection. However, the majority of enforcement work, from weights and measures testing to the prosecution of rogue traders, is carried out by local authority Trading Standards Services, each with jurisdiction in only its own local area.
The Office of Fair Trading enforces some laws at a national level, such as breaches of competition law, the Unfair Terms in Consumer Contracts Regulations and the regulation of consumer credit.
The enforcement of consumer law cost taxpayers £247 million in 2009-10. Local authorities spent £213 million of this on the provision of Trading Standards Services, and the remaining £34 million was spent by Central Government, to support regional and national enforcement work, including that of the Office of Fair Trading.
"Consumers are being ripped off to the tune of £7 billion a year by sellers of defective goods, dodgy doorstep traders and online fraudsters," The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, said.
"But the arrangements for protecting victims are incoherent and fragmented.
Local authority Trading Standard Services deal with cases within their areas, but rogue traders do not respect local authority boundaries. The NAO reports that consumers lose an estimated £4.8 billion each year through regional or national malpractice and the enforcement system for dealing with scams at this level is inadequate. It was established to deal with single instances of trader malpractice, such as selling short measures, and has not kept pace with the rise of mass market scams, often perpetrated online.
"Too often cases of consumers being ripped off fall through the cracks between enforcement bodies. £247 million was spent on enforcing consumer law in 2009-10, mostly by local authorities, but most Trading Standards Services are too poorly resourced to take on regional work. In 2009-10, the Department provided £8 million of funding to tackle scams and malpractice that occurred at a regional level. This funding has now ended.
"The Department must ensure that there is funding and proper systems in place to escalate cases to the right enforcement body. It plans to abolish Consumer Focus and scale back the work of the Office of Fair Trading. The Department must ensure that these changes do not allow new sophisticated scams to emerge and persist without challenge.
"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."
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