How to spot and then avoid getting caught out by various scams targeting businesses
This guidance is for England and Wales
There are a range of scams targeted at businesses, where scammers will use deliberately misleading selling techniques to sell advertising space.
These methods include bogus invoices, authorisation scams, repeat business scams and dishonestly using someone else's credibility.
There are a number of steps you can take to avoid rogue publishers, such as never agreeing to an advertisement over the phone, always asking for written details, and properly checking all invoices received.
There are tips on how to avoid the problems and a list of possible actions that can be taken. In addition, there are the possible penalties for anyone caught perpetrating such scams.
In the guide
What you need to know
The majority of publishers are reputable, providing valuable services to many businesses. However, a small minority will resort to dishonesty for illicit gains. 'Rogue publishers' can make huge sums of money by inducing large numbers of victims to pay for adverts in publications that do not exist, or are not what people are led to believe. Although financial losses to individual businesses are not usually large, some of the tactics used by rogue publishers (particularly when chasing payments) often cause nuisance and, on occasion, genuine alarm or distress.
A typical rogue publisher will consist of little more than a telesales team armed with a stack of telephone directories and other publications containing advertisements. Usually, smaller businesses are targeted and telesales agents employ deliberately misleading patter that is often carefully scripted to sell advertising space in various types of publications, such as wall planners, diaries, yearbooks and crime-prevention or drug-awareness booklets. Costs usually range from about £100 to £1,000, depending upon the size of advert.
Sometimes it is claimed the publication is being produced on behalf of some reputable or worthy-sounding cause, or that proceeds will go to charity. On other occasions you may be told that the publication will be targeted towards a specific sector - for example, emergency services, armed forces, councils, etc.
In reality, some of these rogue publishers produce nothing at all and, although some may produce a few token copies of the supposed publication, these are not circulated in sufficient numbers, or in the right areas, to be of any practical benefit to the advertisers.
Rogue publishers have refined the art of operating in grey areas of the law that lie between sharp (but not illegal) business practice and outright criminality. As one outfit gets closed down, several others may spring up as the members move on to set up similar operations of their own.
As with most crime, prevention is better than cure. The more that people know about such operations, the less likely they are to become victims and the harder it will be for the rogue publishers.
Common publishing scams
Rogue publishers may use one of the following methods and often a combination of several.
BOGUS INVOICE SCAM
The simplest and most blatant scam is that, without any prior contact, bogus invoices are sent to businesses for adverts in fictitious publications. This is a very crude hit and miss approach but a surprising number of victims pay the invoice without question, particularly if the amount involved is relatively small.
AGENT TRANSFER SCAM
The business receives a call from a telesales agent who falsely claims to be from a legitimate publisher that the company has used before (contact details are often obtained from genuine publications in which they have previously advertised). If the targets of this scam express an interest, they are transferred to another person, allegedly in a different department. Victims often agree to place an advert because they believe they are dealing with a publisher they have used before and it is not until an invoice arrives from a publisher they have never heard of that they suspect anything.
If attempts are made to contact the publisher concerned, they are usually told that the call in which they agreed to place an advert was recorded, which the rogue publisher then claims is 'evidence' of a 'verbal contract'. The conversation with the first agent (during which the victim has been deceived as to with whom they were doing business) is never recorded, only the conversation with the second agent who has actually done the 'selling' - and the caller is careful not to mention the name of the company that they represent.
An initial call is made to the target business and the agent asks for the details of two people who can authorise an advertisement to be placed. Later, a call is made to one of those people, who is asked to authorise an advert that they are led to believe has been provisionally booked by the other person, who is referred to by name to make the story sound genuine. Often, the victim authorises the advert without checking with the other person.
REPEAT BUSINESS SCAM
The target business is contacted by phone or letter and the victim is asked if they wish to place an advert in the next edition of a publication in which they are falsely informed that the business has advertised before (the likelihood being that there was no previous edition). In some instances where the approach is by letter, photocopies of adverts taken from publications such as Yellow Pages are included to lend an air of authenticity. Many victims authorise the 'repeat advert' without checking any further.
In order to give their supposed publication respectability and appeal, most rogue publishers will claim some connection with a worthy cause or charity. This approach is often described as 'support publishing' as it asks victims to support a good cause.
(a) Charity booklets - Some rogue publishers mislead victims to believe they are registered charities by using names very similar to well-known legitimate charitable organisations. Some do produce booklets and pamphlets on behalf of registered charities. The publisher keeps any revenue that is generated from advertising and may produce some booklets or pamphlets that it gives to the charity concerned to distribute. However, some unscrupulous publishers produce only a small number of these, and many of the adverts for which they have taken payment never appear in print. Others will claim that part of the revenue generated by their publication will be donated to a specific charity with which they claim affiliation and whose name is used to entice advertisers. Often however, only a tiny fraction of the money the publisher receives ends up with the charity involved. That in itself is not illegal but many victims only agree to place an advert because they feel they are making a substantial contribution to charity.
(b) Crime prevention 'yearbooks' - Rogue publishers may claim that these are being produced in conjunction with agencies such as the police when in fact they have no involvement at all.
(c) 'Drug awareness' or 'youth action' booklets - Rogue publishers often claim that these will be distributed in schools and colleges. The key question is which schools and colleges because, for most small businesses, that form of advertising is only effective if it is done in their local area.
Irrespective of which of the above tactics are used, once a victim has received an invoice from a rogue publisher, it is almost certain that they will be pursued relentlessly for the money. Some victims pay up even though they feel they have been 'conned' because they feel it is simply not worth the time and effort to make a stand. However, the likelihood is that they will be identified as an 'easy touch' and will be targeted again. The details of businesses that can be relied upon to pay up are a valuable commodity, and these details are saved and shared by the more organised rogue publishing outfits in so-called 'sucker lists'.
Some rogue publishers chase payment through 'debt collection agencies', but these are often owned and run by the publishers themselves, sometimes from the same premises. They are likely to use methods that legitimate agencies would not.
What to look out for
Below is some information that will be of use in helping to prevent you becoming the victim of a publishing scam, or if you believe you are already being targeted by a rogue publishing company. In all cases you should also report the matter to your local trading standards service, which may wish to investigate further.
Do not agree to place an advert over the telephone unless you are absolutely happy with the publisher with whom you are dealing and what you are being offered. Insist on seeing written details and a copy of the publisher's full terms and conditions before placing an order.
Some victims have received a string of calls that have become increasingly threatening and abusive. Try to keep a record of such calls including the time, date, name of caller and a note of what was said. By law, any callers should identify themselves and the company from which they are calling.
Be particularly wary if the initial caller transfers you to someone else during the call and always ask the next person you speak to for their name, the name of the company, which department they work in and their contact number. If the person you are speaking to cannot or will not provide these details, or if they become abusive, end the call straight away.
In relation to the recording of telephone calls, you may be able to request a copy of the recording if it is claimed one of your employees placed a definite order during a phone call. However, be aware that some rogue publishers are suspected of editing recordings, to their own benefit, before sending out copies. Consider signing up for the Corporate Telephone Preference Service to cut down the amount of unsolicited marketing calls your company receives (see 'What can I do?' below).
If you receive demands for payments for something you believe you have not ordered, it is well worth taking a few minutes to send a written reply, stating clearly why you feel you do not owe any money. Always keep a copy for your records.
SEIZURE OF GOODS
Some victims have been threatened with having their goods or belongings seized to pay the alleged 'debt'. The only lawful way the publisher can do this is to first obtain an order in the County Court, instructing you to pay (for which there has to be a hearing that you are entitled to attend and defend yourself). Then, if you do not pay, the publisher must go back to court for a warrant that empowers the holder to seize goods to the value of the debt.
THREATS OF COURT ACTION
Victims are known to have received letters that have stated something like '... this is your last chance to pay. Attached is a summons we have obtained to take you to court if you do not pay now...'. The document that accompanied such letters was not, in fact, a summons but a copy of the application form that must be submitted to a County Court to request a hearing (this form is freely available in the public domain).
Some victims have been limited companies and the rogue publisher threatened to start insolvency proceedings by applying to the courts for a 'winding up order'. In most cases, the threat was an empty one because such proceedings can only be started for debts in excess of £750 and the amount owed was less than that.
It is useful to note that it would cost the rogue publisher money to take you to court, often much more than it claims you owe. The rogue publisher will have to prove that you owe the money before the court can make a decision against you, and you will have the chance to defend yourself. The last thing the rogue publisher would want is for its underhand tactics to be paraded before a court.
Rogue publishers will not spend money chasing an illegitimate debt - they are much more likely to look for another victim who will pay up without a fuss. Take independent legal advice if you are in any doubt.
Other business scams
DATA PROTECTION REGISTRATION
Thousands of businesses have received letters from companies asking for payment for registration under the Data Protection Act 1998. Such letters give the impression that they come from an official body and that you are legally obliged to register with that company immediately at a cost of up to £100 plus VAT.
While many businesses processing personal data are required, by law, to notify the Information Commissioner's Office (ICO), they can do so directly for a fee of £35 per year. Often, small firms that process such data for limited purposes are exempt from notification altogether. For more information, visit the ICO website or call the helpline on 0303 123 1113.
HEALTH AND SAFETY REGISTRATION
Businesses also need to beware of bogus health and safety organisations. Small firms have been sent letters requesting between £125 and £250 to become registered with a false enforcement agency that promises to run checks on their health and safety provisions.
Some organisations are required by law to register with a health and safety enforcement agency, either the Health and Safety Executive (HSE) or their local authority, but this service is free of charge. The HSE never sends out unsolicited demands for money. Visit the HSE website or call the HSE Advisory Team on 0300 003 1747. Alternatively, call your local environmental health service for advice.
Another regular scam relates to business listings either in published directories, electronic directories or on websites. Beware of 'official-looking' invoices from trade directories asking for your fax, website and email details. These might appear to be simple requests inviting a free listing but there are often small-print commitments to pay hundreds of pounds for an entry. If you reply it is claimed you have entered into a contract for an expensive, yet worthless, listing obliging you to pay.
One example was a CD-ROM directory - free for the first issue but, in the small print, a commitment to pay £661 for three further issues. If the directory is actually published, there may be no criminal offence and an enforceable contract in place.
Unscrupulous 'rate-reduction' firms are also targeting small businesses. In exchange for large fees, they are led to believe they will get their business rates reduced on appeal. In fact, the fees for the service may outweigh any benefit gained, and rates may also be increased. Although it can be hard to spot rogue advisers, it is possible to make background checks on some of the claims they will typically make:
- 'we have a team of fully qualified professionals'
- check with the professional bodies they claim to belong to
- 'we have achieved big reductions for several clients'
- ask for the names and contact details of past clients
- 'we can get huge reductions on your rates'
- don't believe these claims if they are made before an investigation of your property has even been undertaken
- 'you will have nothing to pay unless we succeed'
- make sure you get a written contract, and check it carefully to establish how much you will be liable to pay and when
Your local valuation officer can discuss your rateable value and provide an appeal form for free - information is also available on the Valuation Office Agency website. The Royal Institute of Chartered Surveyors also operates a business rates helpline offering a free half-hour consultation on business rates appeals: 024 7686 8555.
This is another commonly targeted area. One common practice is the 'unfulfilled order'. The rogue trader legitimately supplies an order and, some months later, says it has made a mistake and there are some items still to be supplied. The unsuspecting business agrees to the offer of the remaining items and is also given some vouchers or another item to make up for the supposed mistake. When the goods arrive, they do not come with an invoice and are incorporated into the business. A short while later an invoice for a huge amount arrives and the receiver, despite their protestations, is told to pay.
What can I do?
If you do not wish to receive unsolicited sales and marketing calls, you should register with the Corporate Telephone Preference Service (CTPS), which operates a central opt-out register. It is a legal requirement that companies do not make such calls to numbers registered on the CTPS. This service is free of charge.
Circulate this guide to members of staff who take external calls, and make copies of the questionnaire below available to such staff.
Audit your systems/procedures for invoicing and payment to satisfy yourself that you are adequately protected from practices of this nature.
If you wish to complain about what you suspect is a rogue publisher, or want further information, you can contact Action Fraud or your local trading standards service.
Publishing/marketing company 'anti-scam' questionnaire
Here are some questions you can ask if you are 'cold called' by a publishing company you have never dealt with before. The answers will help you to decide whether you want to do business with them, and may help to protect you if they try to operate some sort of scam.
- how did you get my/our contact details?
- what is your name?
- what is your contact number?
- what is the name of your company?
- what is your company address (or, at least, where are you based)?
- what is the name of the publication in which you want me to place an advert?
- what type of publication is it (for example, a wall planner, year book, other booklet)?
- how many copies will be printed?
- where will they be distributed/circulated?
- how will the publication be distributed/circulated?
- how can I get hold of a copy of your publication?
- is the publication being produced on behalf of another organisation?
- if YES, what is the name and address of that organisation?
- is that organisation or your company a registered charity?
- if YES, what is the registered number of the charity?
- if I agree to place an advert, what percentage of the cost will go to that charity?
Make a note of the outcome of the call (have you agreed to place an advert or not?). On your questionnaire, sign your name, put the time of call, and the date. Insist on getting information in writing before committing to any publications.
Where a contract is made verbally over the phone, it is just as binding as if it had been made in writing (although if, for example, a fraudster is pretending to be somebody else it may not be binding at all). Although the law generally gives private consumers a cooling-off period when they make such contracts, business customers do not benefit from this protection.
Under the Business Protection from Misleading Marketing Regulations 2008, it is illegal to mislead business customers in any advertising. This includes anything said by a telesales agent or in direct mail.
The maximum penalty on conviction in the Magistrates' Court is a fine of £5,000 per offence. The maximum penalty on conviction in the Crown Court is an unlimited fine and/or two years' imprisonment.
Action can also be taken under the Fraud Act 2006, where the maximum penalties in the Crown Court are an unlimited fine and/or 10 years' imprisonment.
This information is intended for guidance; only the courts can give an authoritative interpretation of the law. Any legislation referred to, while still current, may have been amended from the form in which it was originally enacted. Please contact us for further information.
Last reviewed/updated: October 2014
© 2014 itsa Ltd on behalf of the Trading Standards Institute.