By Simon Gompertz Business Correspondent

Thousands of businesses are being tricked by official-looking agencies into paying more than they need to to comply with the Data Protection Act.

Working Lunch warned about the ruse a year ago.

It involves sending letters demanding a registration fee of £95 or more to avoid a substantial fine.

The office of the Information Commissioner, which monitors the Act, has been trying to crack down on the perpetrators.

But the problem is getting worse.

Overwhelmed

The commissioner, Richard Thomas, has received 60,000 complaints.

Cheques were found at Fleetwood Pier

His office is said to be almost overwhelmed by the problem.

The latest twist was the discovery of 4,000 cheques for £95 at Fleetwood Pier in Lancashire, the false address given by one of the agencies.

Luckily, trading standards officers found the cheques and are trying to return them to the businesses involved.

Jim Potts of Lancashire Trading Standards wants new legislation to prevent the letters from arriving.

"We need to waylay them in the postal system. There has to be a quick fix," he says.

According to the Data Protection Act, all businesses which handle personal data, usually about customers, have to notify the Information Commissioner so that he can include them on a public register.

Simple procedure

Most businesses register themselves for just £35, following a simple procedure.

Last week Working Lunch viewer Jane Holloway received an "urgent notice" from Crown Data Collection Enforcement Agency, based in Cheshire.

It informed her that her business had not registered under the Act, that it would be liable to a large fine.

It urged "to avoid further action please return your forms immediately", enclosing £95.

Frightened

"I was immediately suspicious that it just didn't look official enough, though the content of the words was quite alarming," Jane said.

"I'd like to see publicity about this type of scam."

Stephen Alambritis: Very angry

Another agency frightened a viewer with the prospect of a £5,000 fine.

Business leaders fear that the Fleetwood find is the tip of the iceberg.

"We're very aggrieved and very angry," complains Stephen Alambritis of the Federation of Small Businesses.

"Thousands of small businesses are still paying up when they shouldn't. The government's Stop Now legislation doesn't seem to apply in this area."

Richard Thomas has no power to close down the agencies. There is nothing illegal about providing a service to businesses to help them register and meet their legal obligations.

The problems arise because the victims are fooled into believing that they have been contacted directly by the authorities.

Injunctions

The Office of Fair Trading has tried to help by enforcing rules against misleading advertising.

Last year the OFT thought it had halted the mailshots after slapping a series of court injunctions on the directors of several agencies.

But the enforcement process can take months, by which time the individuals responsible may have closed down, moved elsewhere and started again under a different name.

The Information Commissioner told Working Lunch that he was angling for a different change in the law.

He wants to make it illegal for firms to pass themselves off as an official body.

But such a reform could take years to implement.