Consumer Scams Cost £7 Billion
 |
November 9, 2011 TheFreshOutlook  |
Defective items, dishonest door-to-door salesmen and online fraud create loss of £7 billion for consumers. Authorities lack resources to help.
According to the government Common Public Accounts Committee, the sum of money lost through consumer scams amounts to almost £7 billion. Their report states that: “There are enforcement deserts where local authorities do not spend enough money to provide an acceptable level of protection to consumers.”
One problem is that there are many different enforcement bodies whose job it is to deal with consumer complaints, such as the Department of Business, Innovation and Skills (BIS), Office of Fair Trading, The Training Standards Institute, Consumer Focus and the Citizen’s Advice Bureau, and it is often unclear which body should be dealing with which issue.
Another problem is that these bodies are largely underfunded, incoherent and fragmented. According to the chairwoman of the committee, Margret Hodge MP: “Too often cases of consumers being ripped off fall through the cracks between enforcement bodies.”
When these enforcement bodies were first established, trading tended to be more local. Today the growing amount of consumers purchasing their goods online and the increased number of companies who operate nationally make it harder to keep track of where items are coming from, where the fraudsters are based and where money is being deposited.
The majority of enforcement work is undertaken by local authorities in their respective region. They carry out everything from weights and measures testing to ensuring that criminal traders are prosecuted. £213m million was spent by them last year. However, the amount was not equally spread out across each region. Some local authorities employed 100 enforcement officers whereas others only employed two. These regions with fewer enforcement officers are the “enforcement deserts” that the report mentions. The “enforcement deserts” are attractive to criminals intending to commit fraud because they know that they have a lower chance of being caught.
The Department for Business is to draw up plans to change how consumers are protected. These plans include getting rid of the consumer focus watchdog and reducing the work undertaken by the regulator – the Office of Fair Trading. The Department for Business will have to ensure that they do not leave any loopholes which could allow for new scams to emerge.
By Louisa Guise
[Image courtesy of Anonymous9000]
