Leave the Caller out in the Cold!

Has your co-operative been approached to advertise in magazines or directories?

Linda Barlow provides some advice to members of co-operatives about the prevalent scam of support publishing.

In the current economic climate, it is important for us all to be vigilant about our personal budgets. This is also true for businesses, as their managers and decision makers are tasked to give extra thought and consideration as to the type of contracts entered into and the value these will bring to the business.

As such, I was recently alarmed to hear that one of Co-operatives UK's members had fallen victim to the prevalent business to business scam of support publishing. The scam begins with a telesales representative contacting a small business to offer them inclusion in a wall planner, directory or some other publication for a school.  They often claim to be associated with a good cause or that part of the money will go to charity.

In this particular case, the co-operative had entered into a series of verbal contracts with companies to advertise the co-operative business in emergency services magazines.   Although, the co-operative never had sight of the advertisements, it continued to pay in the belief that it was honouring the contracts. The co-operative's suspicions were raised when calls increased from different businesses offering such services as well recognising a significant increase in the costs for providing such services.

Convinced that the co-operative was being scammed, it subsequently tried to claim back the money paid to these companies and made the decision not to respond to any further requests for payment. However, the co-operative became concerned when some of the companies threatened to seek county court judgments if the co-operative failed to pay.

As a member of Co-operatives UK, the co-operative sought advice from Legal Surgery on this issue.* The co-operative has kindly agreed for the key points of the advice to be shared with Co-operatives UK members to encourage extra vigilance of this particular scam.

1. To avoid receiving cold calls, the co-operative may wish to register with the Telephone Preference Service (TPS), which registers individuals and companies that do not wish to receive cold calls – www.tpsonline.org.uk. Cold calling an organisation on the register technically constitutes an office and a co-operative that has registered with the TPS should make this known to any cold callers once they are registered. However, the decision to register with the TPS should be taken cautiously as this may also prevent contact from organisations which could provide useful services to the co-operative as well as genuine charities from calling.
2. To be mindful that verbal and written agreements are of equivalent standing in law and it is likely that a verbal agreement to such a scheme will be recorded over the telephone. Although the recordings are likely reveal that the companies involved in the scam are in breach of contract because they have not provided services for invoices paid, it is never good practice to agree to contracts over the telephone.
3. Carry out a quick web check on the company offering to provide the service to ascertain if other clients have commented on the service received and/or complained about the service received or not received.
4. Before paying any invoices, be sure that the service and/or products have been received. In this particular case, attempts to recover sums paid to such companies tend to prove fruitless as generally monies paid in cash are distributed as soon as they are credited to the companies bank accounts and it is often difficult to sue such companies for debts because they are incorporated with false directors' details.
5. If the co-operative finds itself in a similar situation and it believes that no valid consent has been given to enter the contract(s) and/or no product has been provided, then it should write to each company stating that the co-operative does not accept that any monies are due and that no invoices shall be paid. If the companies continue to send letters to the co-operative, these should be retained but not responded to unless one of the companies makes substantive allegations (rather than general demands for payment). If substantive allegations are made, then appropriate legal advice should be sought. Co-operative UK members can access such advice from the legal surgery.

The co-operative should report the companies to the Insolvency Service, who may decide to investigate them if they are behaving improperly. Such a report can be made online.

The co-operative should report the companies to Trading Standards.

*Note on Legal Surgery

The Legal Surgery facility is a benefit open to all members of Co-operatives UK. It provides free solicitors' advice on any matter relating to the member's business. Terms and Conditions apply.