Official Report (Hansard)

COMMITTEE FOR ENTERPRISE, TRADE AND INVESTMENT

OFFICIAL REPORT
(Hansard)

Proposed Unsolicited Goods Bill

11 December 2008

Members present for all or part of the proceedings:
Mr Mark Durkan (Chairperson)
Mr Paul Butler
Mr Leslie Cree
Mr Alan McFarland
Mr Sean Neeson
Mr Robin Newton
Mr Jim Wells

Witnesses:
Ms Deirdre Dempsey ) Department of Enterprise, Trade and Investment 
Mr John Hinds )

The Chairperson (Mr Durkan):
I welcome John Hinds, head of the consumer affairs branch of the Department of Enterprise, Trade and Investment (DETI), and Deirdre Dempsey, who is also from that branch, to this morning’s Committee meeting. They will give a briefing on the proposed unsolicited goods Bill. The Committee may wish to receive further briefing at the end of the consultation process. I remind members and visitors that this part of today’s proceedings is being reported by Hansard.

Mr John Hinds (Department of Enterprise, Trade and Investment):
Thank you for giving us the opportunity to speak to the Committee about the proposed Bill. The Committee received advance notice of our intentions on 13 May 2008. The overall intention of the proposed Bill is to bring Northern Ireland law into line with that in GB and to ensure compliance with article 9(1) of what is known as the e-commerce directive of the European Community.

The proposed Bill will make technical amendments to the provisions that control the circumstances in which businesses may be charged for the publication of entries about them in trade directories. It will allow an advertiser to place an entry in a business directory by sending the publisher an order form — or other business stationery — by electronic means. The proposed Bill will be drafted so as to ensure that safeguards for businesses will continue to be in place to act against scams that are practised in relation to the publication of real or pretended directory products.

The proposed Bill is intended to remove provisions that the Department believes are burdensome and unnecessary for businesses, to remove anomalies, and to ensure the compatibility of Northern Ireland law with the obligations that arise from membership of the European Union. It is intended that the proposed Bill will improve efficiency for businesses by relaxing and simplifying the arrangements for: first, repeats and renewals of directory entries; secondly, sending order forms electronically; and thirdly, the requirements that cover the form and content of invoices and other documents.

In summary, the Department believes that the proposed Bill will strike the right balance by removing obstacles to contracting by electronic means, ensuring compliance with the e-commerce directive and ensuring, as far as possible, that advertisers and trade directories are protected from scams. After the Committee has had the opportunity to comment on the proposed Bill, the Department intends to submit a draft policy consultation document to the Executive in February 2009 and to consult between February and April 2009.

We have spoken already to the Data Publishers Association, which supports our proposals. As part of the consultation, we will, of course, speak to the Federation of Small Businesses, the Confederation of British Industry (CBI) and the Institute of Directors (IOD) in order to alert businesses about the enhanced level of protection that the Bill will provide. Instructions will then be sent to the legislative draftsman, and we hope to have Executive clearance for the proposed Bill by November 2009. The Department’s proposals are set out in more detail in the draft consultation document that was sent to the Committee. I am happy to answer any questions that the Committee may have.

The Chairperson:
How did the issue arise? Why has the introduction of the proposed Bill become a priority for the Department?

Mr Hinds:
The proposed Bill is essentially a piece of parity legislation. GB colleagues legislated in 2005 to bring the law up to speed in the area. At that time, the Department did not attach a high priority to the matter, and we did not introduce proposals for legislation. However, with the passage of time, we felt that the anomaly needed to be addressed, and we feel that now is a good time to do so, particularly given the need to comply with the e-commerce directive.

The Chairperson:
Was anyone pushing the Department on the matter? Did anyone say that the anomaly was affecting them, or was that anomaly simply something about which the Department was conscious?

Mr Hinds:
Apart from advice from our lawyers and solicitors to the effect that we would be in contravention of the directive if we did not introduce the legislation, no other pressure has been brought to bear by outside influences.

Mr Wells:
The banes of my life are emails offering to improve various parts of my anatomy, which I am not interested in, and —

Mr Cree:
It is too late, Jim.

The Chairperson:
You have given up on them.

Mr Wells:
Another bane of my life is emails that come from the widow of some African dictator who has $10 million to invest in Europe. Those emails tell me that if I allow her to have my bank account number, I can have 10% of that money. I do not believe that too many of those are bona fide emails. Similarly, I receive a constant stream of letters and emails to say that I owe £50 to have my name inserted in some business directory in Barcelona or wherever. I have enough trouble dealing with all the people with whom I must deal at the moment, never mind including my name in a business directory.

Perhaps I picked you up wrongly, but I thought that you said that one would be able to order and confirm placements by email. I would have thought that that would have made life easier for the scammers.

Mr Hinds:
The legislation will specify arrangements to make the business in complete control of what it authorises. For example, the order form that is transmitted electronically must be filled out on business stationery or on other material that emanates directly from the business. Thus, the legislation will prescribe that the business must authorise the content and the detail of the form before it can be entered in the trade directory.

Mr Wells:
Surely somebody in a hothouse in Barcelona, the Dominican Republic or the Cayman Islands — places from where such emails tend to come — could be clever about their scams. Given that many companies advertise, it would be easy to prepare a pro forma of a mock order form after copying the logo on the stationery and then to send that by email. Someone would sign up to the arrangement by hitting the “confirm” button, and a secretary sitting in a busy office might think that the scam is authentic.

Every day, I receive authentic-looking correspondence that is supposedly from the Abbey National or the Halifax. However, that correspondence is a scam; the scammers are trying to get me to feed back my account details so that they can take money from my account. Surely if such scams can be carried out electronically, a completely new industry opens up for the scam merchants.

Mr Hinds:
Other provisions in the proposed Bill will insist that any documents that emanate from the directory publisher must have comprehensive details about the charges. The publisher will have to specify whether any demands will be placed on the business regarding the price of the directory and when and how many directories will be published. Therefore, the proposed Bill will be quite prescriptive about informing businesses of every aspect of the transaction before an order is placed.

Mr Wells:
I am sure that the folks working in the boiler rooms will include all that. However, I am slightly worried about a hard-pressed secretary in a front office somewhere who receives correspondence that looks authentic, and, by simply pushing a button, she produces a liability. Email is now the most popular method of scamming.

Mr Hinds:
The onus is on the directory publisher to prove that the order in the stipulated design was legitimate and that it emanated from the business. The business can take some control over that. Therefore, the directory publisher cannot receive a fake authorisation willy-nilly in the way that you described, because they would be subject to prosecution.

Mr Wells:
Yes, but if the scammer is in the Cayman Islands, the invoice could be paid electronically before the scan is discovered. In my email in-box today, I will have received at least 40 scam emails from various sources, some of which appear to be incredibly authentic. Every day in life I delete such emails. The only reason that I know that some of the emails are scams is because I do not have accounts with the banks that allegedly want me to confirm my account details. For instance, the Bank of America wrote to ask me to confirm my account details, but I do not have an account with that bank. However, it would be a different matter if I were to receive an email that came supposedly from the Ulster Bank using the same wonderfully prepared and extremely accurate documents.

There is a huge postal scamming industry, so it must be made particularly difficult for people to be scammed by email. However, people regard emails as junk currency. Some £11 million a year is defrauded from people in Britain from Nigerian scams alone. There is a name for the particular scam, but I do not recall it. We must be worldly-wise so far as these characters are concerned, because they are so good at what they do.

Mr Hinds:
The Department will advise companies about the protection that the proposed Bill will provide. We have warned them, and we will continue to alert them to specific scams that target businesses. We have not had any complaints, and no companies have told us that they have been the victims of the type of scam that you mentioned. However, we intend to liaise with business organisations to ensure that their members are aware of what the provisions in the proposed Bill will allow for and of what they should be alert to.

Mr Wells:
I think that signing up should be doable by email. However, there should be no liability, and nothing should be forcibly paid until something is followed up by a hard copy.

The Chairperson:
I think that that point has been well made now.

Mr Cree:
I have tried to get excited by this issue, but I have been unsuccessful. Is it fair to say that the proposed Bill will make our legislation compliant with that in the UK and Europe and that it will afford the same protections and benefits that exist in the rest of the UK? Is it as simple as that?

Mr Hinds:
Yes.

Mr Cree:
I am happy enough, then.

The Chairperson:
The proposed Bill will make a difference to a local business directory. If a firm compiles a UK-wide sectoral business directory, on what basis does it deal with Northern Ireland firms? Does that happen under existing GB law or under existing Northern Ireland law?

Mr Hinds:
The UK trade directory publishers are caught by GB legislation, but Northern Ireland trade directory publishers are not. Therefore, any transactions between Northern Ireland businesses and Northern Ireland-based trade directory publishers will be caught by the Bill.

The Chairperson:
Does that mean that they will be in the same position? At present, do firms that deal with directory propositions that come from somewhere such as Birmingham have to comply with laws that are different to those that cover propositions that come from somewhere else?

Mr Hinds:
That is exactly right.

Mr Newton:
My point is a small one. The Bill will offer no protection for the individual; it is orientated more towards businesses.

Mr Hinds:
That is correct.

Mr Newton:
Therefore, Jim’s point is valid. The proposed Bill will not cover the majority of the scam emails such as those that he receives.

Mr Hinds:
The proposed legislation will not cover such situations. However, The Consumer Protection from Unfair Trading Regulations 2008 updated the law on several unfair practices, including scams that affect individual consumers. Therefore, comprehensive protection has been introduced already. That was done on foot of the introduction of the Unfair Commercial Practices Directive, which was European led.

The Chairperson:
The Committee will want to pick up on the feedback from the consultation. You said that you will be talking to members of the Federation of Small Businesses. I assume that they will refer to their colleagues across the water about those elements of the legislation have or have not worked and about what positive or negative differences have been made. There may come a time, Leslie, when the proposed Bill generates some excitement. That will depend on the feedback that emerges from the consultation. For now, members have nothing further to add.

Thank you for attending today’s meeting.