Textile fibres, fibre optic cables and fibre optic routers were sold by retailers to consumers in the UK between 2009 and 2014.
The findings of the UK’s Department for Business, Innovation and Skills report, released today, found fraudsters are often “hundreds or thousands of dollars per year”, according to the Financial Times.
The report is the first government report to focus on this sector.
“In the past, it was often very difficult to trace the sources of these products, which meant that they were often sold without a license or required to be signed,” said the report’s author, Simon Kinsley.
“However, in recent years, there has been a move away from licensing and more emphasis on using software-based solutions.”
The report said it was “critical” that retailers were aware of their customers’ rights, as well as the “legal and regulatory obligations” they must be subject to.
“These requirements can be daunting and complex for the retailing industry, as they are usually complex for consumers,” the report said.
“Many retailers have limited experience and are not equipped to comply with the new requirements.”
The Department for Industry, Innovation, and Skills said retailers could be subject of criminal investigations and sanctions, including criminal penalties for fraud and breach of contract.
“Customers are entitled to compensation, with some of the largest offenders receiving more than £50,000 per person,” the Department for Financial Services said.
Kinsler told the Financial Post that it was important to take steps to make sure consumers understood the risks of their products, particularly for people who use the internet.
“We need to make it easy for consumers to understand what’s going on with their fibre optic product, because they’re buying into this scheme,” he said.
The Financial Times reported that the department is seeking advice from leading telecommunications companies on ways to make the system more secure.
“Fibre optics are a very, very big part of the market,” a source said.