Business related scams

This information is intended to assist businesses in protecting themselves. It is suggested that it is made accessible to as many staff as possible throughout your organisation.

  1. What you need to know
  2. Common publishing scams
  3. Debt Collection
  4. Rules relating to charities
  5. Other marketing scams
  6. What can I do?
  7. Publishing/marketing company questionnaire

1. 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. Smaller businesses are usually targeted and operatives use deliberately misleading patter, that is often carefully scripted, to sell advertising space in various types of publications - wall planners, diaries, yearbooks, crime prevention or drugs awareness booklets, etc. 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.

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. They have proliferated because in every telesales team there will be a few bright sparks who see how easy it is to make money in this way. 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; hopefully to the point where they are put where they deserve to be - out of business.

2. 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.

Operative transfer scam

The business receives a call from a telesales operative 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, however, they are usually told that the call in which they agreed to place an advert was tape recorded, which the rogue publisher then claims is evidence of a verbal contract. Of course, the conversation with the first operative (during which the victim has been deceived as to with whom he/she was doing business) is never recorded, only the conversation with the second operative who has actually done the selling - and the caller is careful not to mention the name of the company that he/she represents.

Authorisation scam

An initial call is made to the target business and the operative 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 he/she is 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 he/she wishes to place an advert in the next edition of a publication which he/she is falsely informed that the business has advertised in 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 like Yellow Pages are included to lend an air of authenticity. Many victims authorise the repeat advert without checking any further.

Credibility scams

In order to give their supposed publication respectability and appeal, most rogue publishers will claim some connection with a worthy cause or charity:

  • 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. Some unscrupulous publishers, however, only produce a small amount 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 who agree to place an advert because they feel they are making a substantial contribution to charity might not do so if they knew how much was going straight into the pockets of the publishers involved.
  • 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.
  • 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.

3. Debt collection

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 he/she 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. The likelihood is, however, that they will be identified as an easy touch and will be targeted again. The details of businesses that can be relied on to pay up are a valuable commodity that is saved and shared by the more organised rogue publishing outfits.

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 you can do

Below is some useful information and some actions you could consider taking which might prevent you from becoming the victim of a publishing scam, or if you believe you are already being targeted by a rogue publishing company.

Telephone calls

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 - time, date, name of caller, and a note of what was said. Always know to whom you are speaking. 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 his/her name, the name of the company, in which department he/she works and his/her contact number. If the person you are speaking to cannot, or will not, provide these details, or if he/she becomes 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.

Demand letters

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 which empowers the holder to seize goods to the value of the debt.

Threats of court action

Victims are known to have received letters which have stated, effectively, 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. Some victims have been limited companies and the rogue publisher involved 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 remember 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 will 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.

4. Rules relating to charities

Under the Charities Act 1992 and Charitable Institutions (Fund Raising) Regulations 1994, all charity-related publishing houses have a responsibility to provide prospective donors and clients with a solicitation statement. This must set out what proportion of their donation will be used for charitable purposes, and has to be given during the course of any, and each, representation made by the publisher. It is an offence to fail to give this solicitation statement.

Where a donation of more than £50 is made as a result of a telephone call, the fund raiser must issue a notice explaining which institutions will benefit and how, as well as providing full details of the right to cancel (this is usually included on the invoice). The donor then has seven days to cancel, at which point the donation must be refunded.

5. Other marketing scams

Data protection registration

Thousands of businesses have received letters from companies asking for payment for registration under the Data Protection Act. 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, 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: 01625 545745.

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.

All UK organisations are required, by law, to register with a health and safety enforcement agency – either the HSE or their local authority – but this service is free of charge. The Health & Safety Executive (HSE) never sends out unsolicited demands for money. It does offer free leaflets and can advise on who you need to register with. Visit the HSE website. Alternatively, call your local Environmental Health Service for advice.

Business directories

Another regular scam relates to business listings either in published directories, electronic directories (CD-Roms) or on websites. Beware of official-looking invoices from trade directories asking for your fax, internet and e-mail details. These might appear to be simple requests inviting a free listing but watch out for small print commitments to pay hundreds of pounds for an entry. If you reply, it is then claimed that 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.

Business rates

Unscrupulous rate-reduction firms are also targeting small firms. In exchange for large fees, businesses 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. 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.
  • Do they? 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.
  • Ensure 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: 0870 3331600.

Business stationery

This is another commonly targeted area. One common practice is the unfulfilled order. The business 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 his/her protestations, is told to pay.

6. What can I do?

If you do not wish to receive unsolicited sales and marketing calls, you should register with the Telephone Preference Service (TPS) which operates a central opt out register covering everybody from individuals to companies. It is a legal requirement that companies do not make such calls to numbers registered on the TPS. This service is free of charge; more information can be found at the TPS website.

Circulate this leaflet 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 your local police or local Trading Standards Service.

7. Publishing/marketing company 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 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? YES / NO
  • If YES, what is the name and address of that organisation?
  • Is that organisation or your company a registered charity? YES / NO
  • 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?).

This information is not an authoritative interpretation of the law and is intended only for guidance. For further information, please contact your local Trading Standards Service.