Mary Upton (Dublin South Central, Labour)
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Question 7: To ask the Minister for Enterprise, Trade and Employment if his attention has been drawn to serious concerns regarding the continued operation of so-called pyramid schemes; if, in particular, his attention has further been drawn to the operation of a such a scheme in the Cork area which is reported to have brought in up to €12 million; if he intends to provide the public with additional protection against so called pyramid schemes; if, in particular, he will amend the legislation to cover so called gifting schemes; and if he will make a statement on the matter. [11268/06]

Michael Ahern (Cork East, Fianna Fail)
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I am aware of reports of schemes operating in the Cork area whereby people are apparently prepared to hand over amounts of money in the expectation of receiving multiples of that amount in return. The Pyramid Selling Act 1980 prohibits people from inducing other people to participate in pyramid schemes. As the Act only applies to goods and services, there is a legal doubt as to whether the type of transaction in question is covered by the Act.

The Garda Siochána, the enforcing authority for the Act, is investigating some schemes in the Cork area under the Pyramid Selling Act 1980. I do not want, therefore, to interfere with their investigations. Ultimately it is for the courts to determine whether legislation applies in any particular case.

The Minister for Enterprise, Trade and Employment has instructed departmental officials to contact the Garda Deputy Commissioner responsible for the Garda Bureau of Fraud Investigation seeking the views of the Garda Siochána on any difficulties being experienced under current legislation. The official will also ask whether the Garda Siochána has any suggestions as to how the legislation might be improved, based on its experience dealing with the sort of practices employed by the people who devise and promote such schemes.

In the meanwhile work continues in the Department of Enterprise, Trade and Employment on the transposition of the Unfair Commercial Practices Directive 2005/29/EC. The directive aims to protect the consumer by, inter alia, banning certain practices. One practice is described as:

. . .establishing, operating or promoting a pyramid promotional scheme where a consumer gives consideration for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products.

Although the directive is due to be transposed by June 2007, the Minister for Enterprise, Trade and Employment hopes to have the legislation ready this year.

People should be vigilant in how they use their money. People should reflect on whether it is realistic to expect other people to give them large sums of money for nothing.

Kathleen Lynch (Cork North Central, Labour)
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Advising people to be cautious on how they use their money when legalisation preventing such pyramid schemes is not in place is like telling people to be careful when they are crossing the road but not providing any pedestrian crossings. The Minister must realise the existing legislation for pyramid schemes is inadequate and lacks the power of prosecution. That the Minister will have legislation in place this year does not fill me with any great confidence, considering his record over several years.

I urge the Minister to insert into the pyramid selling legislation the type of necessary safeguards to outlaw the practices in question. If the Garda could have prosecuted at this stage, it would have. How long will the Minister wait for the Garda Deputy Commissioner's views on the scheme in question? How long does the Department of Enterprise, Trade and Employment intend to dally on the issue? It did not have to wait for a pyramid scheme of this nature to reform the legislation. Calls for the legislation to be updated have been made for some time, yet they were ignored. I am sure the Minister hopes the matter will go away again.

Michael Ahern (Cork East, Fianna Fail)
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The Minister has acknowledged the necessity for new legislation in the area. The directive is to be introduced in 2007, but the Minister is intent on having legislation in place prior to that date. Media reports of gifting schemes emerged in January 2006. We are aware of a particular scheme taking place in the west Cork region which has expanded to the Cork North Central constituency. The Garda initiated an investigation under the Pyramid Selling Act 1980. According to the Office of the Attorney General, however, a problem exists in obtaining proof to sustain prosecutions when there is no written evidence. We recognise legislation must be introduced to control this.