Con merchants and rogue traders have never had it so good, according to a new report out today from Citizens Advice, Desperate times, desperate consumers.
The national charity says current economic conditions have paved the way for an unprecedented boom in scams that exploit people's need to save money on bills, increase their income and find work and affordable housing.
Speaking at the Trading Standards Institute (TSI) conference in Bournemouth today, Citizens Advice Chief Executive Gillian Guy will say that advisers, enforcers, regulators and consumers need to join forces and work together more closely than ever before to beat rogue traders and fraudsters.
“Con merchants have never had it so good. The recession has provided an opening for money-making scams and sharp practices disguised as sources of help. Rogue traders are taking advantage of consumers desperate to find ways of saving money, earning more, getting a job or finding somewhere affordable to live.
“At Citizens Advice, we’re helping people tackle problems with con merchants across the country. Because consumer protection funding is being squeezed, it’s hard for regulators and enforcers to keep pace with new scams and take action in every case. So consumers need advice, enforcement, regulation and redress agencies to work even more closely to stamp out fraud and scams.”
Echoing the TSI conference theme, Desperate times, desperate consumers highlights some key problem areas where scams are proliferating as people hit hard by the recession try to increase their income, cut back on their spending and manage debts.:
Jobs and training
More people out of work combined with changes to the benefits system mean that more people are vulnerable to scams that seem to offer work or jobs training. CAB evidence suggests unscrupulous employers are taking advantage of people’s desperate search for work, often advertising fake ‘jobs’ in local Jobcentres or on the internet that require fees to be paid in advance but leave people without work.
People trying to improve their chances of getting work in a tough jobs market are also falling victim to training scams that use high pressure selling tactics and promise marketable qualifications but fail to deliver, leaving prospective students seriously out of pocket.
An affordable home
At a time when it’s hard for first-time buyers to get a mortgage, council waiting lists are growing, and competition for affordable private rented accommodation is fierce, people who are desperate to find a home can be vulnerable to renting scams. CAB evidence suggests that money transfer businesses and classified ad websites are often the channels for fraud, with phantom flats offered to would-be tenants who are then asked to prove they can pay the rent by transferring money they never see again.
Saving on day-to-day bills
CAB evidence also shows how consumers hit by sharply rising prices and looking to cut their gas, electricity and phone bills and their travel-to-work costs are vulnerable to mis-selling by salespeople out to make a quick buck at their expense.
Making extra money and bringing down debt
CAB advisers are also reporting increasing problems with con merchants touting bogus claims management services, investment opportunities and debt management help.
Citizens Advice says existing consumer protection law provides the powers to tackle these problems, but with resources spread more thinly than ever, advisers, regulators and enforcers need to work smarter together to stamp out fraud and scams.
The charity wants to see the restorative justice powers contained in the Regulatory, Enforcement and Sanctions Act 2008 used to ensure sharp practice cannot pay. It is calling on the government to kick-start a civil sanctions pilot scheme that could stop businesses profiting from unfair trading practices and enable cash-strapped consumer protection enforcers to be more effective without resorting to costly criminal prosecutions, by making rogue traders pay compensation to their victims out of their profits and proceeds of crime, as well as facing fines.
Citizens Advice also warns against watering down consumers’ rights under cover of making consumer law easier to understand, arguing that what is red tape to a business can be an essential protection for vulnerable consumers.
Last year CAB advisers in England and Wales helped people with 134,000 problems involving consumer goods and services, 132,000 financial product problems and 90,000 issues with utilities and communications.
Cases seen by Citizens Advice Bureaux include the following:
A CAB in the West Midlands reported that a man responded to an advertisement on the Jobcentre Plus website for 'film extras'. He was told he had to pay £1,000 and had to have blood tests, which he did but was still not offered any work.
A CAB in the East of England saw a lone parent who urgently needed somewhere to live and answered an advert on a classified ads website for a flat. The 'landlord' said he needed proof that she could pay the rent before he would accept her as a tenant, and asked her to transfer £760 to her friend via a money transfer service and then email him a copy of the transfer documentation. The 'landlord' then collected the money, but the flat turned out to be unavailable. She could not afford to lose this amount of money, and had no money for a deposit on another flat.
A CAB in the North West of England saw a woman with three young children who had been caught out by what appeared to be a fuel savings offer. She was sold £50 worth of pay-as-you-go utility meter gas credits for £25 by someone who called at her home claiming to be from her fuel supplier. It was a scam and she was left to repay the £50 via direct deductions from her benefits.
Download the report