The Institute of Licensing has raised "severe concerns" over the exclusion of door-to-door collections from the draft Charities Bill, and is urging the Government to include provisions to stop mass fraud in the name of charities.
The section of the Bill dealing with collections "will undermine all efforts made to try to eradicate this type of collection", and would allow fraudsters to increase their incomes while undermining legitimate charity collections, said the institute's submission to the scrutiny committee.
It warned that bogus charities operating across the UK are collecting quality second-hand clothing on people's doorsteps and selling it on in Eastern Europe or Africa for between £550 and £600 per tonne.
The institute is also concerned about recycling bins that are stationed next to bins belonging to legitimate charities. It warns that these are deceiving the public into donating to what they assume are genuine charities.
Clothing collections generate a huge amount of money and are exploited by organised non-charitable cartels, the institute said. It warned that the lack of any proposals to deal with the problem in the Bill will allow such fraud to flourish.
Pippa Coombes, a licensing officer at Leeds City Council, told the parliamentary scrutiny panel that some 48 prosecutions were being brought against bogus charities in Leeds alone, dating back to 2002. So far, its conviction rate was 100 per cent.
Each collection of goods that involved two people and one vehicle could generate an average annual income of £169,000, Coombes said.
"These are Eastern European, usually run from central London. We would estimate that across the country as a whole the operations run into millions of pounds," she told the committee.
Coombes welcomed the proposal in the draft Bill to increase fines for fraud from £200 to £5,000. But she added this would only curb the problem if the London boroughs - which are proposed in the Bill as "lead authorities" responsible for issuing certificates of fitness for charities based in the capital - are able to cope with their new role.
"The level of fines indicated for fraudulent collection of £5,000 will deal with a lot of this. At the current level of £200 it is no deterrent - they make that in an hour. But if it cannot be enforced it will have no bearing on these illegal collections. I know that there are lots of authorities that will not be able to enforce it."
The institute points out that the cost of the new regulatory role of local authorities has been estimated at around £100,000 for each London borough.
Members of the institute include local authority licensing professionals in 350 authorities, as well as other licensing professionals.