Consumer Rights Bill — Report (3rd Day) (Continued)

Part of the debate – in the House of Lords at 9:26 pm on 26th November 2014.

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Photo of Baroness Howe of Idlicote Baroness Howe of Idlicote Crossbench 9:26 pm, 26th November 2014

My Lords, I am pleased to have retabled this amendment, which I also tabled in Committee. As I explained then, Members of your Lordships’ House and the other place expressed serious concerns about the Gambling (Licensing and Advertising) Act 2014. The Government presented it as a great step forward, because it means that everyone accessing the UK market must get a Gambling Commission license. There are, however, two difficulties with this argument.

First, the Act dramatically widens the scope for online gambling providers which access and advertise in the UK market. Previously, only providers based in 31 jurisdictions could access and advertise in the UK market. Now, thanks to the Gambling Act (Licensing and Advertising) 2014, any provider based anywhere in the world can access the UK market and advertise here, so long as they get a Gambling Commission licence.

Secondly, this dramatic increase in the scope of online gambling advertising and supply is not backed up by an appropriate enforcement mechanism to ensure that those without a licence could not continue to access the UK market. These weaknesses were, and are, a particular concern but, as the problem gambling survey demonstrates, problem gambling is more prevalent for individuals who gamble online than those who choose other types of gambling. The 2010 prevalence figure for general problem gambling was 0.9%, but it was more than 9% for online gambling and more than 17% on a monthly basis. During the debates on the latest gambling Act, Members of another place and then your Lordships’ House suggested that the best way to provide a credible enforcement mechanism was through financial transaction blocking. Amendments to this end were tabled first in another place and then by me in your Lordships’ House. The Government resisted this until the end of the Bill’s journey through Parliament, when I tabled a Report stage amendment. The day before I was asked to meet the Minister, who said that the Government had asked the Gambling Commission to negotiate an agreement with MasterCard, Visa Europe and PayPal not to process transactions of unlicensed sites.

This is good news, but I pointed out that a statutory approach would afford consumers much better protection, because it would cover 100% of financial transaction providers and not just those processed by MasterCard, Visa Europe or PayPal. As I said, I tabled the same amendment to the Bill in Committee and made two points to the Minister. First, I argued that this amendment was necessary because it afforded us an opportunity to engage with 100% of transaction providers. Secondly, I argued that it was very appropriate, because when I tabled my Report stage amendment to the Gambling (Licensing and Advertising) Bill, the Government said that they thought a better place for it would be in a consumer rights Bill.

In response to these points the Minister said in Committee on 5 November, at column 740:

“It is worth teasing some of this out for noble Lords, because MasterCard, Visa and PayPal cover the vast majority of relevant financial transactions. The noble Baroness mentioned the others but, although they might not appear in the list, the other payment service providers also use Visa and MasterCard. The branding might not be there but, behind the system, the actual infrastructure will be Visa or MasterCard. Reputable and legally compliant payment service providers are unlikely to have any greater interest in facilitating unlawful activity than the major providers have”. [Hansard, 5/11/14; col. 740.]

I have given this a fair amount of thought and would have been happy to leave the matter there but, having spoken to experts, I have to say that I am not convinced. In the first instance, the Minster’s response did not seem to engage with the increasing tendency for customers to use e-wallets provided by Neteller or Skrill, for example. I am not convinced that MasterCard or Visa could block a payment to Neteller or Skrill on the basis that they know that the payment would be going to an unlicensed gaming company, as there are situations where the gaming company is not involved in the transaction. A Neteller customer could for instance log on to their e-wallet and decide to lodge £100 to their account to fund a range of weekend purchases.

The card company—MasterCard or Visa—would see only the transaction coming to them from Neteller. The £100 would be completed successfully and the customer would have the ability to spend that money anywhere on the web. This could include purchasing books and music, and it could include the customer lodging £10 to his online bookie. There is no record of this transaction sent back to MC or Visa. They are blind to the transactions at that point.

Gambling companies have noticed an increase in the trend for consumers to put money into e-wallets before they log on to their online gaming. I am advised that this may be to avoid any reference to their bookie on their bank statement. Instead, all their statement will say is “Neteller deposit”, rather than show a debit to a gambling company for whatever sum that the consumer chooses. There is a perception that having multiple payments to your bookie on your statement may be detrimental to your mortgage application in the future.

Another concern of mine is that there are other ways of paying online, including via Ukash or Paysafecard vouchers. These are purchased in shops for cash, which is ideal for customers without a card, and the customer is given a receipt with a voucher number. The customercan then log into their Ukash account and redeem the voucher. They are then free to gamble on any site that accepts Ukash, which is very popular in the UK.

In reality, I am told, it is quite easy to avoid making transactions that are visible to MasterCard, Visa or Paypal. Not only that but these alternative mechanisms for making payments are growing in popularity and are very likely to continue to do so if punters think that they provide a way of placing bets with unlicensed providers offering better odds that would otherwise be blocked if one went through MasterCard, Visa or Paypal.

Mindful of that, I have a number of questions for the Minister. First, does she accept that these alternative means of paying are certainly not always visible to MasterCard, Visa or PayPal? Secondly, does she acknowledge that, in this context, the provision of a statutory approach, such as set out in my Amendment 50F, covering all those facilitating financial transactions for online gambling—not just MasterCard, Visa and PayPal—is important? Thirdly, does she acknowledge that, mindful of the increased popularity of these alternative forms of payment, the need to future-proof our legislation renders the approach set out in my Amendment 50F even more pressing?

I very much look forward to what the Minister has to say. I am open to her demonstrating that I am wrong and that transactions conducted by Neteller, Skrill and Ukash are always visible to MasterCard, Visa and PayPal. However, if she cannot do that, I hope that she will support my amendment. It is absolutely vital that the consumer protection provisions in place to protect UK consumers from unlicensed websites are robust, especially given that the problem gambling prevalence figures for online gambling are significantly higher than they are for gambling generally. I beg to move.