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Fighting Fraud: Virtual regulation and confidence in ecommerce
The Trading Standards Service is there to help us all, big or small, business or consumer. But how can it tackle the looming cyber-threat? Against the backdrop of silicon.com's Fighting Fraud campaign, Richard Webb from the Institute of Trading Standards explains the current situation...

By editorial@silicon.com

Published: Tuesday 24 April 2001

The Trading Standards Service is the principal consumer protection body in the UK, working to stamp out fraudulent trade practices and create a level playing field for business. Applying and advising on retail laws, most Trading Standards Services operate advice lines where consumers and businesses can report potential problems and seek advice on their rights.

And over the last two years, the Trading Standards Service has increasingly been asked to look at the internet-related complaints.

Reporting a purchase that has gone wrong can feel strange, and it can feel even stranger when it comes to an internet purchase. However, in total over one million calls are received each year from consumers or businesses and each receives a response. Frequently, these calls lead to detailed investigations.

When it comes to internet matters, online auctions seem to cause the greatest frustration for consumers. Items that never turn up, are over-hyped or simply don't work are common causes of difficulty. Counterfeit or unsafe items have also been reported.

Complaints have been received from individuals and businesses that have been targeted by services offering advice on net-related get-rich-quick schemes. In most cases, these services exist but simply inform any 'clients' of the way in which to market an idea, leaving the idea to the client. Strangely, services don't usually wish to make this clear and charge a large fee for their time.

UK consumers are increasingly becoming the targets of US and other overseas operators. In particular, the high-profile of US agencies investigating internet fraud has led to a general move to target non-US consumers with low value, high volume fraud. The internet is the perfect medium for these scams, allowing global coverage for minimal outlay. UK Trading Standards authorities have been contacted by consumers in relation to overseas frauds of this kind.

There is a worrying growth in complaints relating to internet-based scams, designed to obtain as much money as possible for the operators in as short a period as possible. Promises of goods at remarkably low prices are made and orders are taken, accompanied by advance payments. Few customers actually receive what they have paid for. Inevitably, the scam operators disappear once the number of dissatisfied consumers reaches a level sufficient to highlight mismanagement.

For businesses, problems are different. Web services generate a considerable proportion of B2B complaints. These may be due to the poor level of service from a website designer or host, for example when a service is not provided as promised. Considering the high cost of many internet services, the effects of substandard service on small businesses can be damaging.

What's more, the ploy of invoices being sent for services never ordered has transferred to the internet. Either the invoice is for internet services that have never been received or email is used to deliver the invoice, again for something that has never been ordered.

The high profile of the net, coupled with the government's drive to get businesses online, has led to an unexpected side effect for enterprises new to the medium. Domain name registration has become a big business in its own right and some unscrupulous business practices have emerged. Businesses are often targeted with marketing materials from domain name registration services, in particular stating their ideal domain name is about to be registered by a competitor.

The proposal to create new top-level domain names has also led to complaints concerning pre-registration sales methods. Also, domain names have been stated to be available for a fee when they are in fact either not registerable under current rules or have previously been registered by someone else. A refund of any monies paid is typically slow. The practice of sending commercial invitations disguised as invoices, in particular for the transfer of a domain name from one host to another, is also growing.

Trading standards services will investigate these matters and have good networks in place to take action. Information can be collated and rapidly exchanged with other Trading Standards Services as well as other enforcement bodies. Education and publicity is used as a means to highlight ways to avoid problems on the internet and new tools and skills are being developed to ensure we are effective in solving the problems.

What does this all mean? Quite simply, if you have a problem, report it to your local Trading Standards body. In this way we can reduce the chances of others being affected in the same way.

The challenge we face at this time is adapting to the growing use of the internet. New network variations such as mobile internet access and digital television force us to reconsider how we work and consume. In June this year a detailed report on how ecommerce affects Trading Standards is to be launched. This will form a framework for the development of this body so the needs of the entire internet community can be met.

See http://www.tradingstandards.gov.uk for details of where to find your local Trading Standards service.

Richard Webb is the lead officer for ecommerce at the Trading Standards Institute.