Westminster Hall debate on bogus charity collections

Speech by Jo Swinson MP delivered to Westminster Hall on Wed 28th Feb 2007

I welcome the opportunity to have this debate on an issue of great and growing concern. I hope that we will have a positive and productive debate, and I welcome the interest in the issue that the Minister has shown already, not least when we had a chat about it in Members Lobby last night.

People are increasingly familiar with the fliers that appear through their doors from time to time requesting donations and mimicking the appearance of charity fliers, but which are in fact issued by commercial collecting companies. However, the issue goes much deeper than just misleading advertising, and involves large-scale theft by organised criminal gangs. According to the Association of Charity Shops, the activity costs charities in this country between £2.5 million and £3 million a year, which is a lot of money in the charitable sector. I will outline the background to the issue, the problem of misleading fliers and what powers the Office of Fair Trading and the Advertising Standards Authority have to combat them. I will also detail the shocking scale of the theft that is taking place and suggest how policing can meet the challenge of tackling the root causes of the problem.

The first bogus charity company that came to my attention was Helpmates Ltd. A constituent of mine received a flier requesting "urgently needed" donations of clothes, shoes, handbags, sheets, towels and more. The flier assured the reader that they would be sent "to the third world" to be "worn again". Understandably, my constituent was angered to see a company trying to cash in on people's charitable good will by putting out a leaflet that clearly implied charitable rather than profit-making motives. I raised the case with one of my local newspapers, which was interested in the story. I took the opportunity to put across useful warnings about checking for a registered charity number and giving donations only to recognised and reputable charities. I also tabled one early-day motion in the previous Session and another in this Session-early-day motion 127, which I hope all hon. Members here will sign if they have not already done so. The motion condemns the practice of Helpmates and other such companies, and has so far attracted 52 signatures.

From there, the situation snowballed. As a result of my early-day motion, but also through an article on my website and the wonderful power that is Google, I started to receive e-mails from people throughout the country with tales of similar companies operating in their areas. Regional press stories followed, and to date I have been in contact with people from East Dunbartonshire, St. Albans, Somerset, London, Bristol, Hampshire, Fife, Gosport, Perth, Dorset and Tunbridge Wells. Often people wanted to spread knowledge about scams in their area, so that others would be not be confused and give to such companies. Mostly, however, people were looking for advice on what could be done to stop such companies from operating in that way in the first place. Often people had been caught out themselves, realising only later they had donated to a bogus charity. They were understandably upset, angry and outraged that their spirit of charity had been taken advantage of for other people's selfish ends.

The fliers distributed by bogus charities are generally of a type. They refer to an urgent need for donations, describe the destination for those donations as third world countries and give the distinct impression that the appeal has a humanitarian motive. The less unscrupulous fliers may contain a company registration number-not a registered charity number, although some people may well be confused between the two, which is sometimes the point of including a company registration number. Fliers will sometimes also include a company mobile number. Some fliers might even say in small print at the bottom that the organisation is a commercial collecting company rather than a charitable venture.

The power to regulate what is printed on such fliers lies with the Advertising Standards Authority. It is well aware of the problem, but has had only limited success in tackling it. The ASA's misleading advertising directive disallows advertising that

"deceives or is likely to deceive the persons to whom it is addressed or whom it reaches."

I contacted the ASA about the Helpmates flyer, and I was told that because it contained a company registration number, as well as a section of small print saying:

"Helpmates Limited is a commercial collecting company,"

it therefore adhered to the ASA guidelines and the complaint could not be pursued. However, the letter went on to say that the ASA faces many problems clamping down on the likes of Helpmates.

The ASA is a self-regulatory body; it relies on the co-operation of advertisers and media owners to enforce its adjudications. However, when leaflets are produced and distributed with no third-party involvement, media owner or advertising, but by somebody who just printed a flyer, the power is effectively useless.

Jim Sheridan (Paisley & Renfrewshire North, Labour)

I congratulate the hon. Lady on securing this very important debate. The problem is crucial to many in the community, and agencies are trying hard to combat it. Have any agencies that have been in touch with the hon. Lady also contacted the police so that they can do something about it? I have tried, and to date they have been unsuccessful.

Jo Swinson (East Dunbartonshire, Liberal Democrat)

I welcome the hon. Gentleman's intervention. He makes an important point, which I shall come to later in my speech. The police should be involved in the matter, but it is often difficult to get them to take it seriously as theft.

The ASA has problems even when it upholds complaints. For example, in the case of one company, Kraslava Services Seven, the ASA found that despite a complaint having being upheld against the company, it simply continued to print and distribute its leaflets. There was nothing the ASA could do. To pursue legal action, it passes such a case to the Office of Fair Trading. However, the OFT does not have a good record of prosecuting bogus charities under the Control of Misleading Advertisements Regulations 1988, mainly because the illegitimate actions of the companies make prosecutions very difficult.

The companies effectively operate outside the law. They regularly move premises from one area to another, and they can often be traced only by a mobile number, which can be changed at short notice. The OFT therefore finds it difficult to trace the people responsible for the publication of leaflets in the first place. I should be keen to hear from the Minister whether he has any suggestions on ways in which the OFT might operate more effectively against bogus charity collection companies.

The Charity Commission is the regulator for charities in England and Wales. Its Scottish equivalent is the Office of the Scottish Charity Regulator.

James McGovern (Dundee West, Labour)

I congratulate the hon. Lady on securing the debate and on the forthright way in which she is setting out her case. She mentioned the Scottish charity regulator, which is, incidentally, based in my constituency, and which I congratulate on its work. A member of my staff here in London received a flyer last week from the Straightforward Company. The company makes it crystal clear that it is not a charity, but it helps remove household clutter and it provides employment for people. Does the hon. Lady agree that the pressure that charity regulators and hon. Members are bringing to bear is having a beneficial effect?

Jo Swinson (East Dunbartonshire, Liberal Democrat)

I welcome that intervention. That is true to an extent, and certainly with the less unscrupulous companies. They have started putting their company registration numbers on their leaflets, and in some cases, they have started prominently saying that they are a commercial collecting company, that that is their aim and that they make money from it, which is very welcome. However, it does not deal with the more unscrupulous companies that decide that faking charity status is the easiest way to secure donations and to make profits.

The Charity Commission and the OSCR play an important role, but they will not solve the problem on their own. The Charities Act 2006 is new legislation; it will come into force in 2009 and it should, in theory, help with the issue. It has greatly expanded the commission's regulatory role. In respect of door-to-door collections, it has taken responsibility for issuing public collections certificates, which will be needed before any collection can take place.

The Liberal Democrats broadly welcomed the Act, but we pointed out that although it transferred a raft of new responsibilities to the Charity Commission, the extra resources needed to cope with them did not follow. Given the acknowledgement that the law regulating charities was not well enforced before the Act, we are worried that although it gets things right in theory, in practice the commission will have difficulty carrying out its extra duties without additional resources. Does the Minister accept that the Charity Commission's lack of resources must be addressed? What discussions has he had to try to resolve the problem?

One might hope that because the new charities legislation requires the certification of door-to-door collectors, bogus companies will find it harder to operate their scams. However, if the Charity Commission cannot set up the infrastructure to properly vet collection certificates applications, some bogus collection companies could slip through the net, obtain the certificates and continue with their misleading work. Basically, the 2006 Act is welcome because it provides the commission with the power to fulfil its role effectively and act against those companies, but without the resources to match, it will be a blunt weapon.

Companies misrepresenting themselves through false advertising is a real problem, and it causes difficulties for the authorities that try to clamp down on it. However, a more serious crime lies behind those operations: the outright doorstep theft of charitable clothing donations. The criminals behind those thefts target legitimate doorstep collections, arriving shortly before the genuine collection and helping themselves to the bags of clothes and goods left out on doorsteps.

I have had discussions with Clothes Aid, the fundraising and collection company that has an exclusive contract with Great Ormond Street hospital for children, and carries out fundraising and collections for other charities, including Alder Hey children's hospital. Clothes Aid has compiled a dossier on the organised nature of clothes criminals at work. It contains the details of almost 100 different bogus companies conducting illicit clothing collections. Several such companies are operated by the same few criminals, including one individual, known to Clothes Aid, who operates more than 25 different bogus companies.

Clothes Aid, taking matters into its own hands, has begun using motorcycle patrols to catch the thieves at work. Two riders patrol collection areas in London when they expect thefts to take place. They then call the police if they see a theft, and they provide the community with a visible reassurance that its donations will reach their intended destinations.

The temptations for thieves are obvious. It is estimated that 1 tonne of second-hand clothing can fetch more than £500 on the black market, and that each week, more than 50 tonnes of donated items are stolen. Between 20 and 30 vehicle loads of clothes stolen in this country arrive on foreign shores each month, and the losses are huge. Great Ormond Street alone loses an estimated £300,000 a year through stolen donations. That £300,000 would go to the hospital, but it does not. It is the equivalent of 4,000 new syringe pumps or one and a half mass spectrometers, which are used to research the causes of childhood diseases such as leukaemia and diabetes.

The issue goes beyond bogus collection companies. For the criminals, it is a lucrative operation, taking place throughout the country in a highly organised and systematic way. And as the hon. Member for Paisley and Renfrewshire, North (Jim Sheridan) suggested, we need an improved policing strategy to combat it.

Last month, the Clothes Aid team out on their rounds witnessed stolen clothes being unloaded to a warehouse in Romford. They contacted Havering police, who did respond. They attended the scene, arresting 10 gang members and impounding six vehicles. However, when the police could find neither accommodation in cells nor translators to communicate with the gang members, they were all released without charge. I hope that the Minister accepts that that is a regrettable situation, and that such a story cannot and should not be repeated if we are to tackle the problem.

It is understandable why local police forces have problems. They struggle to find the resources to combat antisocial behaviour and other local crimes, and communication between different regions is often limited. A regional police force will have limited success against a gang that operates in a wider geographical area than comes under the force's remit. A higher level of policing is needed to crack the organised crime.

Last year, the Serious Organised Crime Agency was established, and it promised to bring new vigour to the fight against organised crime. The Liberal Democrats welcomed it, but we noted the importance of ensuring that it had sufficient funding to enable it to fulfil its role properly. Rightly, its top priorities are drug and human trafficking, and it gives lesser priority to high-tech crime, counterfeiting and firearms misuse. However, donation theft is also an organised crime. I understand that it does not have as high a profile, but it could and should come under SOCA's remit. Is SOCA doing any work in this country or abroad to combat such organised theft?

When such organised crime happens, there is also the question of what else is going on. I am keen to know whether the Minister has concrete evidence of links between the organised theft of clothing donations and other forms of organised crime. SOCA is dealing with the level 3 crimes-international organised crimes of the most serious nature-and local police are dealing with level 1 crimes that happen in the community. However, I am not convinced that we have an effective middle tier to deal with level 2 crimes, which are typically inter-regional and require co-operation between different police forces.

Regional crime squads were abolished by the Government in 1998 and replaced by the National Crime Squad, but that has caused problems when different regions have had to work together. In recent correspondence with the Home Office through a local MP, Clothes Aid raised the problem of organised donation theft. The Minister's reply to its letter mentions the new powers contained in the Charities Act 2006, as well as the powers held by the OFT. However, the reply did not acknowledge the serious and organised nature of the crimes taking place, or the need for new policing perspectives to tackle it. Is the Minister aware of any plans to reintroduce the regional crime squads that were around before 1998? Will he raise that issue with his hon. and right hon. Friends in the Home Office to find a way to improve the effectiveness of the police response to that problem? Without such an effective policing response, the criminals involved will continue to fall between the cracks in the system and get away with the most cynical and heartless of crimes.

In conclusion, I am grateful to have been able to highlight this important problem, which worries my constituents in East Dunbartonshire and people throughout the UK. ASA guidance and the powers held by the OFT to police the peddlers of misleading advertising material are important in a limited context, but the scope for extending them is perhaps limited. The new powers given to the Charities Commission are welcome and they might bring about changes for the better, but only if the Commission has sufficient resources.

Jim Sheridan (Paisley & Renfrewshire North, Labour)

Is the hon. Lady aware of anyone who has been convicted and charged, and if so, what sentence was passed?

Jo Swinson (East Dunbartonshire, Liberal Democrat)

I am not aware of any convictions, but there have been occasions where there was an opportunity for them, such as in the case I outlined earlier where the opportunity was spectacularly missed. Perhaps the Minister will have further information on whether there have been any convictions so far.

A greater concentration of minds is needed on the issue of policing to deal with the criminal gangs carrying out this widespread theft. An inter-regional approach would seem to be the logical middle way. The crimes that I have described do not have as high a human cost as drug trafficking and their financial impact is not as great as the most serious forms of fraud, but the victims that they target-charities and the beneficiaries of charity work-are some of the most vulnerable in society. Theft from the children of Great Ormond Street should not be happening full stop, let alone on the scale that we are talking about here.

In a wider sense, such crimes make us all victims, because they threaten our charitable institutions and our trust in giving. The legacy of failing to tackle such thefts and of failing to allow people to give to charities without fear that their donation is funding criminals will not only be damaging to charities' work. It will be a loss of trust, good will and charitable spirit among the public as a whole. Once lost, that is something that will be very hard to win back.