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It's perfectly possible to set yourself up as a 'virtual ISP' (VISP) - a company that resells another provider's broadband - in less than a week, for around £500. No awkward questions, no minimum service requirement, no licence required. Telecoms regulator Ofcom has, in consultation with the industry and government, left the market to develop based on pure competition - survival of the fittest. Unfortunately, as the PC Pro inbox regularly confirms, many companies purporting to be ISPs aren't fit to provide a decent service. The remarkably low barrier to entry for wannabe service providers has created a vibrant market, with almost 700 ISPs in the UK alone. But it's also an invitation to print money for less well-intentioned entrepreneurs.

One phone call to broadband wholesaler NetServices, posing as a potential customer, shows just how easy it is to become a VISP. 'We can provide everything needed. And you don't need to register with anyone,' a company salesperson told us. 'If you're looking to resell our broadband, you can have your company name on your customers' bills. In effect, we'll be invisible.' To all intents and purposes, you look like a proper ISP for as little as £500, plus monthly charges.

'Anyone with a reasonable credit history can apply to sell one of several white-label services, and even all the billing can be handled by your wholesale provider,' confirmed Andrew Ferguson, network expert at ISP watchdog ThinkBroadband.com. 'Being a reseller (VISP) isn't necessarily bad, many provide a great service, alas a few do see it as a 'gold-rush' and a chance to make their fortune. Often these seem to vanish when things get tough.'

Privately, respectable ISPs admit that selected VISPs give the industry a bad name. Why? Because customers can and do lose out. Take E7even, which shut down its Internet service last summer, after complaints that its customers weren't getting the service they'd paid upfront for. As EzeeDSL, which took

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over E7even's accounts, told subscribers: 'Unfortunately, any agreement made with E7even UK Limited is between you and them, and we cannot intervene. We cannot honour any agreement you may have previously had, nor can we help you with claiming back any payment.'

Although ISPs don't need a licence, there are industry guidelines in place. Anyone setting up an ISP should conform to the General Conditions of Entitlement, which state that an ISP must have a recognised code of practice and be a member of an Alternative Dispute Resolution (ADR) scheme - either Otelo or CISAS. All 120 members of the Internet Service Providers' Association are covered, but Ofcom's figures suggest that hundreds of ISPs have slipped through the net. Last year, the regulator claimed 300 ISPs were ADR members, yet the regulator recently claimed there were almost 700 providers in Britain. Anyone not adhering to the guidelines faces censure from Ofcom, but the regulator wouldn't discuss how many staff monitor the market, nor explain the anomaly. 'We focus our resources to targeting those areas where there is most potential for consumer harm,' a spokesperson said.

Lack of regulation also means consumers need to take privacy precautions: membership of an ADR isn't a guarantee that a provider will adhere to other commitments, such as data protection. 'Consumers need to look at a company's privacy policy carefully,' said Ferguson. 'For example, does the company reserve the right to sell your details for marketing purposes, which could potentially include lists of websites you visit? Are the mail servers UK-hosted or at a cheap overseas location that may not be subject to the same data-protection laws as the UK and EU?'

As with other breaches of guidelines, Ofcom admits action can only be taken retrospectively, by which time it's usually too late. Similarly, consumers can only approach either CISAS or Otelo once they've obtained a 'letter of deadlock' from the provider, or a staggering 12 weeks has lapsed from the initial complaint.

Of course, it isn't only small ISPs that mistreat consumers, although the bigger players are less likely to ride off into the sunset with your subscription. So should consumers avoid small ISPs and resellers? Absolutely not. Smaller players, as revealed by our own Reliability & Service awards, are among the best at providing service. Zen and Madasafish are both minnows compared to BT and TalkTalk, but provide superb customer service according to our survey. Sadly, a few bad eggs spoil the mix. It's a case of buyer beware.